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Top congressional leaders join 2014 GAC lineup

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WASHINGTON (1/15/14)--Congressional leaders of key committees  and supporters of credit union issues have signed on to speak at the 2014 Credit Union National Association Governmental Affairs Conference (GAC), Feb. 23-27 in Washington, D.C. at the Walter E. Washington Convention Center.
CUNA announced Tuesday that the following federal lawmakers already are slated for sessions at the GAC:
  • Sen. Mark Begich (D-Alaska), a member of the Senate Appropriations Committee and a vocal supporter of the credit union tax exemption;
  • Rep. Shelley Moore Capito (R-W.Va.), chairman of the House Financial Services subcommittee on financial institutions and consumer credit;
  • House Minority Whip Steny Hoyer (D-Md.), the second-highest ranking Democrat in the House; and,
  • Rep. Peter King (R-N.Y.), a member of the House Financial Services Committee and co-sponsor of crucial credit union-backed legislation to modify the definition of credit union net worth to include supplemental forms of capital for credit unions and allow federal regulators to develop risk-based capital standards for the purposes of prompt corrective action--or PCA.
The GAC also has attracted two world-renowned figures to address the credit union participants.
Tony Blair, one of the most respected and admired world leaders in the last 50 years, will offer GAC attendees an unparalleled analysis of the world's most difficult and complex issues. Blair, former Prime Minister of Great Britain and Northern Ireland, will bring his worldly perspective to the credit union system's top annual event at a key time not only for the U.S. economy, but for the future of the U.S. credit union system.
The first speaker booked for 2014, was Madeleine Albright, one of the highest ranking women in U.S. government history.

Albright made countless contributions to the nation's international presence as Secretary of State and in her other roles.  She will share her remarkable story and experience as a keynote speaker on the GAC stage.
The CUNA GAC--long considered credit unions premier conference--annually draws about 4,000 credit union supporters and advocates. Over the four days of the event, the credit union representatives hear from lawmakers, regulators and policymakers about issues of interest to credit unions and financial services providers.
Use the resource link for more information on the GAC.

Reduce costs, unintended consequences of ACH network changes, CUNA tells NACHA

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WASHINGTON (1/14/14)--NACHA--The Electronic Payments Association must minimize costs and unintended consequences for credit unions as it takes steps to improve automated clearinghouse network risk management and enforcement, the Credit Union National Association said in a comment letter.

The NACHA plan could improve NACHA's ability to identify and enforce rules against "outlier" originators, those responsible for the highest levels of exceptions. An originator is any individual, corporation or other entity that initiates entries into the Automated Clearing House Network.

The NACHA proposal would:
  • Reduce the existing return rate threshold for unauthorized debits from 1% to 0.5%;
  • Establish a return rate threshold for account data quality returns (i.e., administrative returns) at 3% and an overall debit return rate threshold (for all return reason codes) at 15%;
  • Clarify the definition of a "reinitiated entry";
  • Apply risk management rules to third-party senders; and
  • Expand NACHA's enforcement authority.
In the letter, CUNA Assistant General Counsel Dennis Tsang noted that credit unions generally originate higher quality transactions and generally support many of the proposed changes to reduce exceptions from "outlier" Originators. However, he noted, originating financial institutions may not be able to fully control the transactions originated by the Originator and may make risk management changes that would reduce access to the ACH network for some consumers, including the underserved.

CUNA also recommended that NACHA:
  • Provide additional risk management tools and resources to assist Originating Depository Financial Institutions (ODFIs);
  • Continue to coordinate closely with, and consider the actions taken by, various federal financial regulators;
  • Conduct additional research and provide more data about enforcement actions and existing return rate thresholds before proceeding with the proposed changes; and
  • Delay compliance dates at least three months beyond the proposed dates of March 20, 2015 for the return and reinitiation changes, and Sept. 19, 2014 for third-party sender and enforcement authority changes.
For the full comment letter, use the resource link.

New risk policy guidance would aid CUs, World Council says

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WASHINGTON (1/15/13)--More detailed guidance from the Financial Action Task Force would help reduce confusion regarding when risk-based policies and procedures for anti-money laundering and countering the financing of terrorism are appropriate, and better ensure consistency in application of the Risk-Based Approach (RBA) to anti-money laundering compliance from jurisdiction to jurisdiction, the World Council of Credit Unions wrote this week.

The WOCCU letter is a response to FATF consultative document, RBA Questions for the Private Sector on Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT).

Michael Edwards, World Council vice-president and chief counsel, said the FATF should revise its RBA high level principles guidance paper, which was released in 2007.

Many credit unions have reported that the risk-assessment process can be subjective and that individual credit union examiners may not have a consistent view of the level of risk presented by a particular service or type of business, Edwards said. He also aid many small and mid-sized credit unions would welcome additional guidance on the likely risks of many common credit union and banking activities, up to and including standardized risk-assessments for particular products and services. "Detailed guidance on specific ML/TF risks would help credit union managers and examiners conduct risk-assessments and better understand the RBA on a practical level," he noted.

However, Edwards also encouraged FATF to limit regulatory burden in general, and said that the introduction of new technologies does not necessarily mean that significant changes to existing AML/CFT compliance rules are needed.

"Many situations involving new technologies are analogous to longstanding credit union products or customer profiles--e.g., reloadable pre-paid debit cards are in many ways similar to a current account or checking account at a credit union, virtual currency companies are often similar to other types of money services businesses," he wrote. New risks can often be addressed using preexisting AML/CFT compliance solutions such as robust customer due diligence or enhanced monitoring of account activity, Edwards said.

For the full World Council letter, use the resource link.

CUNA-requested CDRLF, CDFI Fund funding levels restored under House bill

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WASHINGTON (1/15/14)--Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said CUNA is gratified that federal that lawmakers took note of the trade association's requests that credit union priorities receive increased funding for the remainder of fiscal year 2014.
"Credit unions did quite well in the omnibus appropriations bill released Tuesday evening," Donovan said, referencing increased funding for the Community Development Revolving Loan Fund (CDRLF) at an annualized rate of $1,144,746 and the Community Development Financial Institutions Fund (CDFIF) at $210 million.
CUNA had urged lawmakers, in a Jan. 7 letter to key House Appropriations Committee members, to restore funding to these two vital programs at levels proscribed in a 2012 law; the CDRLF at an annualized rate of  $1,247,000, and the CDFIF $221 million.
The fiscal year 2014 Continuing Resolution (H.J.Res. 59) that funded the government through today, set funding for the credit union programs at a lower annualized rate of $1,144,746 for CDRLF and $210 million for CDFIF.
The maximum loan limitation of the National Credit Union Administration's Central Liquidity Facility (CLF) would continue under the House-approved bill at its current statutory ceiling of 12 times its paid-in capital.
Also good news for credit unions, CUNA and the World Council of Credit Union requested $10 million for the cooperative development programs of the U.S. Agency for International Development and $265 million for microenterprise and microfinance. 
"Both funding amounts are included in the new omnibus appropriations agreement," Donovan noted.
Also in the funding bill, the director of the Office of Management and Budget is required to submit within 90 days after the date of enactment a report to the House and Senate appropriations committees a report on the costs of implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The funding described above is, of course, part of the $1.1 trillion package approved by the House late Monday, which provides the details of the budget deal passed by Congress in December. 
It is expected that the House will vote on the bill today. The Senate has until midnight Saturday to finish its spending bill.

CUNA: Retailers responsible for breaches must be responsible for costs

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WASHINGTON (1/15/14)--Credit Union National Association President/CEO Bill Cheney is calling on Target and other merchants responsible for breaches in the security of the personal financial information of their customers to step up and do the right thing.
"We think Target's concern for consumers is commendable," Cheney said of Target's recent admission of responsibility in the massive breach that has hit as many at 70 million of its customers' transactions. "However, conspicuously missing from their statement is any commitment to avoid leaving card issuers holding the bag for what went wrong in their own systems."
Cheney emphasized: "Their admission should mean that the retailer, not credit unions and other financial institutions, should pay for the costs associated with making consumers whole, including reissuing payment cards."
Target's admission of responsibility comes just days before oral arguments will be heard in a debit card interchange case known as NACS, et al. v. Board of Governors of the Federal Reserve System.  In that case, a merchants' coalition has challenged the Federal Reserve's implementation of a Dodd-Frank Act-imposed debit interchange cap as too high. CUNA and its partner maintain that the cap, in fact, is too restrictive.
The current cap limits fees for issuers with assets of $10 billion or more to 21 cents. It allows only an additional five basis points per transaction to be charged to cover fraud losses. An extra penny may be charged by financial institutions that are in compliance with established fraud prevention standards.
On Friday, CUNA and its partner members of The Clearing House coalition will be in court to present 10 minutes of oral arguments in the case, along with the Fed and the merchants group. The Fed is assigned 15 minutes for oral arguments and the merchants have 25 minutes.

House subcommittee examines QM rule

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WASHINGTON (1/15/14)--Rep. Shelley Moore Capito (R-WVa.), chairman of the House Financial Services subcommittee on financial institutions and consumer credit, said at a Tuesday hearing that she is concerned that the Consumer Financial Protection Bureau's Qualified Mortgage regulation takes a "one-size-fits-all approach" that will "severely hamper the ability of community lenders to tailor products to borrowers."
"No two borrowers have the same credit profile," Capito noted during her subcommittee's hearing entitled, "How Prospective and Current Homeowners Will Be Harmed by the CFPB's Qualified Mortgage Rule."
The Credit Union National Association submitted a statement for the hearing record, calling for credit unions to be exempt from new Ability to Repay/Qualified Mortgage (ATR/QM) rules and stating that the CFPB has the legal authority to provide an exemption from the ATR/QM rule.
The CUNA statement tells lawmakers that, although it is early to assess the impact on the housing market of the ATR/QM rule that went into effect Jan. 10, credit unions are concerned that it will have a negative impact on their mortgage lending and operations.
"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 says.

CUNA warns that 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.
During the hearing, Rep. Patrick Murphy (D-Fla.) broached concerns regarding the amount of time lenders have to implement the new CFPB mortgage rules, which is another key issue raised by CUNA.
The panel of witnesses, which included Daniel Weickenand, CEO of  Orion FCU, testifying on behalf of the National Association of Federal Credit Unions, warned that it will be challenging if not impossible to offer non-QM loans and that the rules will drive up consumers' costs for non-QM mortgages.
Also testifying at the hearing were:
  • Jack Hartings, president/CEO, The Peoples Bank Co., on behalf of the Independent Community Bankers of America;
  • Bill Emerson, CEO, Quicken Loans, Inc., on behalf of the Mortgage Bankers Association; 
  • Frank Spencer, president/CEO, Habitat for Humanity Charlotte; and,
  • Michael D. Calhoun, president, Center for Responsible Lending.