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CUNA urges Congress, CFPB to exempt CUs from QM rule

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WASHINGTON (1/13/14)--The Credit Union National Association is calling for credit unions to be exempt from new Ability to Repay/Qualified Mortgage rules on two fronts: A letter that will be submitted for the record of a Tuesday congressional hearing, and a Friday letter to Consumer Financial Protection Bureau Director Richard Cordray.

The letter to Congress will be submitted for the record of the House Financial Services subcommittee on financial institutions and consumer credit hearing titled, "How Prospective and Current Homeowners Will Be Harmed by the CFPB's Qualified Mortgage Rule."

The CFPB has the legal authority to provide an exemption from the ATR/QM rule, according to the CUNA congressional statement.

In a separate letter to Cordray, CUNA noted that portions of the Dodd-Frank Act and other related consumer laws provide the CFPB with express authority to provide exemptions from the requirements of statutes or implementing regulations generally or the requirements of certain provisions specifically.

While it is early to assess the impact of the ATR/QM rule, which went into effect Jan. 10, on the housing market, credit unions are concerned that it will have a negative impact on their mortgage lending and operations, CUNA says in the statement to Congress.

"Credit unions agree that it is always in the best interest of the credit union to assess a member's ability to repay when offering them a loan. That is what credit unions routinely did, even before the adoption of the rule," the CUNA statement adds.

However, the ATR/QM rule was designed to address problems credit unions did not engage in, and there is a very strong statutory and public policy case to be made that credit unions ought to be fully exempt from the QM rule. "That case is also based on how credit unions are structured, which produces a set of operational incentives that is different from for-profit financial institutions, and also on the historical performance of credit union mortgage loan portfolios," CUNA says in the statement.

"Only Congress can protect credit unions and other lenders from this threat, and we continue to urge you to take action on this matter as soon as possible," the statement adds.

CUs can re-submit breach survey responses if costs grow

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WASHINGTON (1/13/14)--With news of the impact of the recent Target data breach continuing to unfold, the Credit Union National Association encouraged the 500 credit unions that have already participated in its data breach survey to resubmit their responses with updated impact information.

Target on Friday revealed that the names, mail and email addresses, and phone numbers of up to 70 million individuals were compromised in the breach. The retailer initially reported that the data breach resulted in the theft of 40 million debit and credit cards, and encrypted PIN data. ASE CU, Montgomery, Ala., has taken legal action against Target as a result of the breach. (See News Now story: ASE CU first to take legal action after Target breach.)

"There is no deadline to complete the survey because some of the costs are yet to be incurred," CUNA Chief Economist Bill Hampel said. "Please complete the survey as soon as you have reasonable estimates of any costs to your credit union associated with the breach."

Those that have already completed the survey and have learned of additional costs since that time can complete the full survey again, reporting total costs since the beginning of the breach, he added. Questions in the 14-item survey on the effects of the Target data breach include when credit unions were first notified of the breach, how many of their cards were impacted by the breach, whether or not any of the affected cards were EMV cards, how much call volume has been affected by members asking about the Target breach, and whether credit unions have had to increase staffing as a result of the breach.

The survey will help CUNA better represent credit union interests to lawmakers, regulators and the media.

For the full survey, use the resource link.

Watt names four FHFA special advisors

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WASHINGTON (1/13/14)--Director of the Federal Housing Finance Agency Mel Watt has appointed four special advisors to provide counsel on policy and strategic decisions at the agency. They are Megan Moore, Bob Ryan, Eric Stein and Mario Ugoletti.
 
Watt, sworn into his FHFA seat Jan. 6, said the new hires, along with a strong staff already in place, will "provide solid advice and perspective on the important issues I will be facing as director of the agency."
 
Stein's name, in particular, may be familiar to credit unions, as he previously worked at the Center for Community Self-Help, Durham, N.C., as chief operating officer and for the Center for Responsible Lending as senior vice president.  He is also the former deputy assistant secretary for consumer protection at the U.S. Treasury Department.
 
At FHFA, Stein will serve initially as special advisor and acting chief of staff and later will become special advisor--consumer.
 
Moore will join the FHFA as special advisor--intergovernmental. She has worked at Treasury since June 2009, most recently as deputy assistant secretary for housing, small business and TARP in the Office of Legislative Affairs. Moore also worked in the U.S. House of Representatives from 2006 to 2009.
 
Ryan, who most recently served as a senior vice president of capital markets at Wells Fargo Home Mortgage, will join the FHFA as special advisor--industry. From 2009 to 2012 he was a senior advisor to U.S. Department of Housing and Urban Development Secretary Shaun Donovan and served as the first chief risk officer at the Federal Housing Administration. Ryan also spent 26 years at Freddie Mac.
 
Ugoletti, special advisor to the acting director of the FHFA since 2009, has been appointed by Watt as special advisor--agency. Prior to joining the FHFA, Ugoletti spent 14 years at Treasury Department and served as director of the Office of Financial Institutions Policy from 2004 to 2009.

CULAC set a fundraising record in 2013

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WASHINGTON (1/13/14)--CULAC, the Credit Union National Association's federal political action committee had a record-setting fundraising year in 2013, which followed a banner-flying 2012. 2013's fundraising total of $2.14 million represents CULAC's best non-election year ever.

"This represents nearly an increase of more than 5% over 2012 gross receipts. While it wasn't our best year overall for gross, given that in recent years we have reduced our overhead to effectively zero, 2013 also represents the most raised net of fundraising costs in the history of CULAC," CUNA Vice President of Political Affairs Trey Hawkins said.

A total of $1.5 million was disbursed to candidates and committees in 2013, with 51% of those funds going to Democrats and 49% going to Republicans.

CULAC also saw a 10% increase in new payroll deduction credit unions in 2013. The total number of credit unions participating is now 512.

These results show credit union supporters nationwide continue to strongly support their credit union candidates, Trey Hawkins said.

CULAC finished 2013 strong, with supported candidate Corey Booker (D-N.J.) winning his Senate special election seat. CUNA's PAC starts 2014 on solid footing, with more than $922,000 in cash available.

Risk, simpler exams are NCUA 2014 supervisory priorities

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ALEXANDRIA, Va. (1/13/14)--High-risk activities and a simplified, forward-looking exam will be the National Credit Union Administration's supervisory focus in 2014, NCUA Chairman Debbie Matz said Friday in her Letter to Credit Unions (14-CU-02).

"As credit unions have steadily recovered from the financial crisis, NCUA is now able to devote more resources to focusing on the future of the credit union industry," Matz said, in letter to credit union CEOs and directors. She said that the agency's priority is to identify and minimize risks "before they threaten the viability of credit unions and the stability of the (National Credit Union) Share Insurance Fund." 

NCUA examinations will hone in on new rules, such as those dealing with loan participations, mortgages and credit union service organizations (CUSOs). They also, penned Matz, will gauge how credit unions are managing risks on the balance sheet, in technology and with new loan products.

Matz said that the NCUA will "streamline the exam process," and will issue a revised examination policy allowing examiners more leeway to expand or narrow an examination based on an initial evaluation. The agency, she said, will address which areas of review are required for an exam, which areas are recommended, and other aspects of a credit union that examiners might want to assess based on its risks.

The Credit Union National Association has regularly pushed for the NCUA to provide "increased clarity" in its oversight process, and has asked examiners to refrain from punishing credit unions or conducting supplementary reviews "for subjective reasons that are not based on legitimate and material safety and soundness concerns." 

Matz wrote that interest-rate risk, cybersecurity threats, money service businesses, and private student lending will specifically be scrutinized this year.

"NCUA's primary responsibility is maintaining the safety and soundness of the credit union system," she said. "This involves supervising credit unions and enforcing compliance with rules intended to strengthen them."
 
CUNA is again encouraging member credit unions to complete its online National Examinations Survey after taking the exam this year. It will aggregate the information and use it when advocating with the NCUA on behalf of federally insured credit unions. 
The NCUA, meanwhile, is hosting a Jan. 22 webinar on its exam modernization efforts.
 

ASE CU first to take legal action after Target breach

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WASHINGTON (1/13/14)--Alabama State Employees CU has become the first credit union to take legal action following last year's Target data breach, and more lawsuits from other institutions are expected to be offered soon.

In its class action complaint, Montgomery-based credit union alleges that it was damaged when the Target breach forced it to refund member losses, close accounts and reissue new checks, debit cards, and credit cards to certain members. The credit union claimed Target breached implied contracts when it failed to safeguard the private and confidential financial and personal information of members.

The credit union class action suit was filed in the U.S. District Court for the Middle District of Alabama, Northern Division. Commercial Bancshares, Inc., also filed suit against Target on Friday.

The Target data breach compromised 40 million debit and credit cards and included stolen encrypted PIN data. Target revealed late last week that the names, mail and email addresses, and phone numbers of up to 70 million individuals were also compromised in the breach.

The breach is being examined by state attorneys general from across the country, and Senate Banking Committee Chairman Tim Johnson (D-S.D.) said last week he is considering holding a hearing. The Credit Union National Association has reached out both to Senate Banking and House Financial Services Committee leaders to encourage them to "fully examine the chronic issue of merchant data breaches, their impact on consumers and financial institutions."

Sen. Patrick Leahy (D-Vt.) took action last week, reintroducing the Personal Data Privacy and Security Act. That bill would establish consumer data security standards for companies, and require them to notify consumers when a data breach has occurred.

The introduction of this legislation, while not specific to the credit union industry,  "is great news for credit unions," Association of Vermont Credit Unions President Joe Bergeron said, because it favorably addresses growing marketplace issues that are detrimental to credit unions.

CUNA continues to track the Target breach court cases and related legislative and regulatory actions, and has set up an email account, targetbreach@cuna.coop, to take credit union questions on the issue. CUNA also continues to encourage credit unions to respond to its data breach survey. CUNA has received 500 responses so far.

"In demonstrating to lawmakers, regulators and the media the impact of the breach, we need as much information as possible from credit unions," CUNA President/CEO Bill Cheney wrote in this week's Cheney Report.

For the CUNA Target breach survey and the full Cheney Report, use the resource links.