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CUNA analysis New FTC ceiling on disclosure charge

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WASHINGTON (1/7/08)—The Credit Union National Association (CUNA) has issued a final rule analysis of the Federal Trade Commission notice regarding charges permitted under the Fair Credit Reporting Act (FCRA). FCRA allows a credit bureau to charge a reasonable fee for making a disclosure to a consumer, up to a certain amount. Under the new FTC rule, the maximum amount will be increased from $10.00 to $10.50. The fee was originally set at $8 and is required to be adjusted periodically based on the Consumer Price Index. Adjustments are rounded to the nearest fifty cents. The higher ceiling went into effect on Jan. 1. However, CUNA notes, this fee will not apply to consumers’ requests for a free annual credit report under the provisions of the Fair and Accurate Credit Transactions Act (FACTA) of 2003. Use the resource links below for more information.

Compliance Is a declined transaction a blocked one

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WASHINGTON (1/4/08)—What is a credit union to do when asked by a member to make a wire transfer to a country under U.S. sanctions? For instance, if a credit union declines a request to wire, say, $500 to a member’s aunt in Cuba, does it have to follow its action with a report to the Office of Foreign Assets Control (OFAC)? The Credit Union National Association’s (CUNA’s) Compliance Challenge advises credit unions that no OFAC reporting is triggered in situations like the one described. “There’s a big difference between responding to a person’s inquiry and blocking or rejecting a prohibited transaction under (OFAC) regulations,” says the Challenge. CUNA’s compliance experts point out that OFAC’s blocking provisions require financial institutions to block all "property" in which a target has an interest. The term "property" is very broadly defined, including present, future or contingent interests. However, in the case above, the credit union wouldn’t be holding blocked property until it received actual payment instructions from the member to send the funds. Had things gone that far, the funds would have to be blocked and reported to OFAC within 10 days. But for a inquiry, a credit union simply can say “no” to the request or direct the individual to OFAC to apply for a license to conduct the otherwise prohibited transaction. For more on this topic and additional Compliance Challenge questions, use the resource link below.

Inside Washington (01/03/2008)

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* WASHINGTON (1/4/08)--The Credit Union National Association (CUNA) issued its analysis of the final rule on the Home Mortgage Disclosure Act (HMDA) Asset-Size Exemption Threshold. The Federal Reserve Board has increased the asset size to $37 million from $36 million. According to the rule, financial institutions with assets of $37 million or less as of Dec. 31, 2007, will be exempt from data collection requirements. CUNA member credit unions may access the analysis … * WASHINGTON (1/4/08)--The Federal Deposit Insurance Corp. (FDIC) is moving to eliminate the bank examiners’ Merit Program after an examiner survey indicated the program is not working. About 54% of survey respondents said they were not satisfied with the way examiner issues were handled and about half stated that the program negatively impacted their job satisfaction. The survey also indicated that the program doesn’t give agency employees enough time to conduct “proper” reviews of financial institutions. The banking industry’s reaction to Merit’s removal likely will be mixed, according to Nicholas Ketcha Jr., former FDIC director of supervision. Merit applies to reviews of financial institutions with assets of $1 billion or less (American Banker Jan. 3). The program was designed to help examiners spend less time reviewing individual loan transactions with Camel ratings of 1 or 2 … * WASHINGTON (1/4/08)--The number of complaints regarding credit card issuers imposing maximum default rates of 30% or more on customers with credit scores of 700 or higher are growing. Lawmakers fear that in the coming months, issuers will participate in “hair-trigger repricing” and increase rates more (Dow Jones Jan. 3). Rep. Carolyn Maloney (D-N.Y.), House Subcommittee on Financial Institutions and Consumer Credit chairman, said Congress’ hands-off approach has spurred the practice. The New York State Banking Department reported that it receives more than 50 complaints a day about high interest rates, according to Jacqueline McCormack, agency spokesman. Some industry representatives said the high rates are the issuers’ way of protecting themselves, although JP Morgan Chase and Co. and Citigroup Inc. said they would no longer practice universal default. The Federal Reserve suggested that issuers provide a 45-day notice to cardholders if the rates will change …
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