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Target breach investigation needed, Sen. Schumer tells CFPB

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WASHINGTON (1/30/14)--Sen. Charles Schumer (D-N.Y.) has called on the Consumer Financial Protection Bureau to investigate the recent Target data breach. And U.S. Attorney General Eric Holder said the Department of Justice is committed to finding the perpetrators of these sorts of data breaches.

"Despite issuing statements promising the problem has been fixed, Target has yet to reveal exactly what system was breached, how it happened, and what steps they are taking to prevent another breach in the future," Schumer said in a release.

The breach resulted in the theft of 40 million debit and credit cards, and encrypted PIN data, and the names, mail and email addresses, and phone numbers of up to 70 million individuals. Credit unions have already incurred costs estimated to be in the range of $25 million to $30 million as a result of the Target stores data security breach, a Credit Union National Association survey has shown.

Schumer called for a transparent federal probe that reveals the full details of the Target breach to the public, and results in recommendations for how all stores can keep consumer credit card information safe. "Without a full investigation into what happened--and a subsequent issuing of clear guidelines for stores moving forward--there is no reason why such a large-scale breach of payment information will not happen again," Schumer said.

The senator also said the CFPB should play an active role in ensuring that retailers have adequate systems in place to protect consumers' data and identities. He asked the bureau to take a closer look at whether retailers systems should be required to transfer credit and debit card information as encrypted data.

The Federal Bureau of Investigation in recent weeks has warned retailers these breaches will become more common, and arts and crafts store Michaels this week launched its own investigation into a potential data breach at its stores.

U.S. Attorney General Holder also spoke on data security issues on Wednesday, telling members of the Senate Judiciary Committee that the U.S. Department of Justice is investigating the Target data breach, and is "committed to working to find not only the perpetrators of these sorts of data breaches--but also any individuals and groups who exploit that data via credit card fraud."

CUNA was among the first trade groups to communicate with members of Congress following the breach, seeking hearings on the issue. The Senate Banking Committee and Senate Judiciary Committee have set separate data security hearings for next week, and other members of the U.S. Congress are considering holding hearings of their own.

CUNA CompBlog clears up small issuer QM questions

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WASHINGTON (1/30/14)--New Consumer Financial Protection Bureau mortgage rules define "small creditor" in several ways, and how the definition impacts your credit union's practices depends on which provision you are working with, the Credit Union National Association's CompBlog notes.

"There is a definition for small creditor in the CFPB's qualified mortgage rule, and a variation of that definition for balloon payments. The CFPB has also referred to the escrow account exemption as a small creditor exemption. And at times the small servicer definition gets mixed up in the confusion," CUNA Senior Compliance Counsel Mike McLain notes in a CompBlog post.

In his post, McLain attempts to clear up some of the confusion surrounding these definitions.

The QM rule, and portions of the QM rule addressing balloon payments, defines small creditor this way:
  • During the preceding calendar year, the credit union and its affiliates together originated 500 or fewer first-lien, closed-end mortgage loans; and
  • As of the end of the preceding calendar year, the credit union had total assets of less than $2.028 billion. This threshold will adjust automatically every year by the CFPB.
Creditors must generally hold loans in their portfolios for three years to maintain their QM status.

These rules will be tweaked after Jan. 10, 2016, and those changes are outlined in the blog.

For more small issuer definitions, including definitions related to small creditor escrow accounts and small servicer mortgage servicing, use the resource link.

Metsger discusses card security changes in first NCUA Report article

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ALEXANDRIA, Va. (1/30/14)--"The United States is the leader in point-of-sale vulnerability and a veritable playground for enterprising hackologists," but the recent Target data breach can be the catalyst for changes that improve data security, National Credit Union Administration Board Member Richard Metsger wrote in his first NCUA Report piece.

The Target data breach resulted in the theft of 40 million debit and credit cards, and encrypted PIN data, and the names, mail and email addresses, and phone numbers of up to 70 million individuals. Some financial institutions are buying consumer information back from the hackers that stole it to prevent further fraud from occurring, Metsger noted.

The impact on credit unions and others continues to grow, Metsger said, and credit unions across the country are assessing damage, reissuing cards and intensifying member outreach efforts.

While the Target breach is the most publicized breach in some time, it is not the only one to occur recently, the NCUA official said. One analysis has found as many as 600 reported breaches in 2013.

However, Metsger wrote, the national attention given to the Target breach can serve as a reminder of "how critical it is that all data systems, both internal and external, must be constantly evaluated and modernized to address evolving risks."

One improvement that could be made is conversion to a chip-and-PIN system. Many have resisted such a move, citing regulatory uncertainty. Metsger added that the U.S. has a plethora of financial stakeholders that struggle over when and how to convert. And, what's more, "the business case has been, at least up to now, not compelling enough for most retailers, processors and financial institutions to collectively invest the billions of dollars needed to make the switch."

The Credit Union National Association has noted that switching to chip-and-PIN cards would help address data security issues, but has also said that such a switch would not be a panacea.

For more of this month's NCUA Report, use the resource link.

Alleging insurance kickbacks, CFPB takes action against PHH Corp.

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WASHINGTON (1/30/14)--The Consumer Financial Protection Bureau has filed an administrative proceeding against New Jersey-based PHH Corp. and certain subsidiaries, alleging that the firm has participated in a mortgage insurance kickback scheme.

The filing is against PHH Corp. and residential mortgage origination subsidiaries PHH Mortgage Corp. and PHH Home Loans LLC, and PHH's wholly owned subsidiaries, Atrium Insurance Corp. and Atrium Reinsurance Corp.

The CFPB has charged that once mortgages were originated, PHH referred consumers to mortgage insurers with which it partnered. These insurers would then purchase "reinsurance" from PHH's subsidiaries. While reinsurance is meant to protect mortgage insurers from losses, the CFPB said PHH took the reinsurance fees as kickbacks. This is a violation of the Real Estate Settlement and Procedures Act.

The CFPB said this PHH scheme resulted in consumers paying more in mortgage insurance premiums. PHH received as much as 40% of these premiums, resulting in millions of dollars in kickbacks, according to the CFPB. PHH also allegedly overcharged borrowers that did not buy mortgage insurance from one of its kickback partners.

The bureau in the administrative proceeding is seeking:
  • A civil fine;
  • A permanent injunction to prevent future violations; and
  • Victim restitution.
The CFPB in 2013 settled with five mortgage insurers that took part in similar schemes. The bureau noted that the PHH proceeding is not a finding, or a ruling that the defendants have actually violated the law.

For the full CFPB release, use the resource link.

Atlanta Fed address changes for paper items

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WASHINGTON (1/30/14)--Starting Feb. 4--next Tuesday--all  paper items currently sent to the Federal Reserve Bank of Atlanta should be sent to a new address.

The Fed Bank of Atlanta is closing the Defoor Hills mail processing facility.  The new address is:

Federal Reserve Bank of Atlanta
Attention: Check Operations
1000 Peachtree Street, NE
Atlanta, GA 30309-4470

This change affects items sent via mail, courier, or overnight delivery, and includes forward and return items, savings bonds, U.S. Treasury Department items, postal money orders, foreign items, over-the-counter on-us processing work, and paper adjustments.

Net worth, loan portfolio up at conserved Texans CU

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ALEXANDRIA, Va. (1/29/14)--Texans CU, Richardson, Texas, continues to improve under National Credit Union Administration conservatorship, reporting an increased net worth ratio, expanding loans and the shedding of distressed assets in 2013.

The NCUA placed Texans into conservatorship in April of 2011, citing service and operational issues. In its 2013 financials, the recovering credit union reported:
  • Year-end 2013 net income of $23 million;
  • Consumer loan portfolio growth of more than $19 million;
  • Total assets of more than $1.4 billion; and
  • A net worth ratio of 3.64%.
More than $200 million in distressed assets have been divested since early 2012, the NCUA added.

NCUA Region IV Director C. Keith Morton said the agency is "pleased with Texans' progress through the rebuilding process."

The credit union is on the right path," and will continue to focus on members, introduce new services and operate efficiently in 2014, he added.

The credit union was chartered in 1953 and operates 13 branches in the metropolitan Dallas area. Individuals and their family members who live, work or attend school in Collin, Dallas, Grayson, Rockwall, Travis, Williamson counties and parts of Denton County, and employees of Texas Instruments, Raytheon, Ericsson and other select groups may join the credit union.

CUNA: CUs, not USPS, best to serve communities' financial services needs

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WASHINGTON (1/29/14)--The Credit Union National Association has strong reservations about the U.S. Postal Service's potential move to provide financial services to underserved communities, and questions why the postal service would step into such a role.
 
The CUNA comments follow this week's release of a USPS Inspector General white paper which noted that "postal financial services may appeal to many customers who feel abandoned by major financial institutions." The USPS paper noted that many international postal service providers are already garnering significant new revenue through providing financial services. Providing such services could bring in $8.9 billion per year in new revenues, according to the white paper.
 
CUNA General Counsel Eric Richard said some credit unions would be happy to explore possible creative partnerships with USPS or anyone else who can help bring financial services to more people at less cost. "But, to the extent that the goal here is more profit for USPS, there could be some problems," he said.
 
"The field of financial services is already extremely crowded and competitive, and credit unions already provide a cooperative, not-for-profit alternative that benefits consumers, including many who would otherwise be unbanked. This is not an area in which there is a lot of low-hanging fruit that others have not picked," Richard noted.
 
For the full USPS white paper, use the resource link.

Data protection, QM concerns lead CFPB hearing

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WASHINGTON (1/29/14)--Consumer data protection and qualified mortgage regulations were two main themes of Tuesday's House Financial Services Committee hearing on the progress of the Consumer Financial Protection Bureau.

CFPB Director Richard Cordray also delivered his semi-annual report on agency activities during the hearing. He also fielded questions on some of the major rules coming down the pike, including:
  • Rules addressing credit ratings for small business owners;
  • Prepaid card regulations; and
  • Overdraft protection rules.
Committee members during the hearing raised concerns regarding the security of consumer data that is collected by the CFPB, the agency's collection of that data, and the ability of the bureau to reverse-engineer that data to tie it to a particular consumer. Cordray was adamant that the CFPB aggregates the data and has no reason to reverse engineer the information.

The Credit Union National Association has supported the Consumer Right to Financial Privacy Act (H.R. 2571), which would prohibit the CFPB from requesting, accessing, collecting, using, retaining or disclosing nonpublic personal information about a consumer unless proper disclosures are provided to the consumer, and H.R. 3183, which would require the CFPB to provide at a consumer's request one free annual report disclosing all of the information about the consumer held by the CFPB.

Rep. Ed Perlmutter (D-Colo.) during Tuesday's hearing asked what actions the CFPB has taken to address recent merchant data breaches. Cordray said the CFPB issued an alert to consumers on what they should do if their credit or debit card has been compromised, and acknowledged that there are broader issues regarding how retailers keep data secure.

Regarding QM rules, several legislators said they are concerned by the rigid nature of the regulations. Rep. Bill Huzienga (R-Mich.) spoke on points-and-fees issues created by the regulation, noting that nearly 60% of loans under $60,000 would not qualify as QMs if an affiliate's title policy was included on the CFPB's points-and-fees calculation. Current CFPB regulations dictate that for a mortgage to be considered a "qualified mortgage," total points and fees generally may not exceed 3% on a loan of $100,000 or greater. These fees include affiliate and non-affiliate charges such as title insurance, surveys, appraisal fees, underwriting, processing and application fees. Rep. Huizenga has introduced legislation to change the overly restrictive definition of points and fees, which CUNA supports.

Cordray reiterated that the CFPB gives lenders three QM options, and noted that thousands of credit unions and community banks are allowed to take advantage of provided small issuer adjustments. CUNA has suggested to the Committee that credit unions should be exempt from the ability-to-repay/qualified mortgage rule.

For CUNA comment letters on consumer data security and QM issues, use the resource links.

President touches on CU-interest issues in annual address

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WASHINGTON (1/29/14)--Job creation and  tax reform were topics of President Obama's State of the Union address last night, and the Credit Union National Association is urging the president to consider the credit union perspective in these and all important financial policy discussions.
 
Of key interest to credit unions, Obama made broad remarks about possible changes to the country's tax code.
 
CUNA President/CEO Bill Cheney assured credit unions that nothing in the SOTU remarks indicated that the credit union tax status is under any more scrutiny right now than any other tax expenditure.
 
"In fact," Cheney said, "through our conversations with the administration and on Capitol Hill, it is apparent that not all tax provisions are created equal, and the strong public policy reasons behind the  credit union tax status remain as compelling today as they were when first adopted."
 
Cheney added, however, that  tax policy discussions are still very much in play, and it is imperative that credit unions continue their strong advocacy efforts on behalf of their federal income tax exemption throughout those discussions, through CUNA's "Don't Tax My Credit Union" initiative and through in-person meetings with policymakers of all levels of government.  
 
Related to the president's remarks on job creation, Cheney reminded that credit unions stand ready to create 140,000 new jobs through increased member business lending authority.
 
That is the estimated number of new jobs that would be added to the economy if credit unions were given the statutory authority to write more member business loans (MBLs).
 
CUNA and credit unions support the Credit Union Small Business Jobs Creation Act (H.R. 688), which would increase the MBL cap to 27.5% of assets, up from the current cap of 12.25%.  In addition to increasing available jobs, CUNA has estimated that lifting the MBL cap would inject $13 billion in new funds into the economy, at no cost to taxpayers.
 
Obama also spoke in favor of patent reforms. CUNA backs legislation that would curb abusive patent litigation by removing some of the financial incentives sought by firms that assert low-quality patents.  So-called "patent trolls" continue to use low-quality patents to try to extract settlements from credit unions and others. Credit unions have been sued for the use of certain ATM technologies, check imaging applications and check cashing applications, and providing members with mobile transactions through their smartphones.
 
Obama also took the occasion of his annual address, his fifth, to encourage the U.S. Congress to move forward on restructuring the country's housing finance system. CUNA urges the U.S. Congress as it considers comprehensive housing finance reform, to ensure that credit unions and other community financial institutions continue to have access to the secondary mortgage market.
 
Other themes of the president's speech included rebuilding American's trust in the political process, economic growth, eliminating pay inequality, creating a new savings instrument to help Americans save for retirement--to be called MyRA--and the Affordable Care Act.

NEW: State of the Union speaks of tax changes, jobs, and patent and housing finance reforms

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WASHINGTON (1/28/14, UPDATED 9:52 p.m. ET)--Job creation and  tax reform were topics of President Obama's State of the Union address tonight, and the Credit Union National Association is urging the president to consider the credit union perspective in these and all important financial policy discussions.
 
Of key interest to credit unions, Obama made broad remarks about possible changes to the country's tax code.
 
CUNA President/CEO Bill Cheney assured credit unions that nothing in the SOTU remarks indicated that the credit union tax status is under any more scrutiny right now than any other tax expenditure.
 
"In fact," Cheney said, "through our conversations with the administration and on Capitol Hill, it is apparent that not all tax provisions are created equal, and the strong public policy reasons behind the  credit union tax status remain as compelling today as they were when first adopted."
 
Cheney added, however, that  tax policy discussions are still very much in play, and it is imperative that credit unions continue their strong advocacy efforts on behalf of their federal income tax exemption throughout those discussions, thro8ugh CUNA's "Don't Tax My Credit Union" initiative and through in-person meetings with policymakers of all levels of government.  
 
Related to the president's remarks on job creation, Cheney reminded that credit unions stand ready to create 140,000 new jobs through increased member business lending authority.
 
That is the estimate number of new jobs that would be added to the economy if credit unions were given the statutory authority to write more member business loans (MBLs).
 
CUNA and credit unions support the Credit Union Small Business Jobs Creation Act (H.R. 688), which would increase the MBL cap to 27.5% of assets, up from the current cap of 12.25%.  In addition to increasing available jobs, CUNA has estimated that lifting the MBL cap would inject $13 billion in new funds into the economy, at no cost to taxpayers.
 
Obama also spoke in favor of patent reforms. CUNA backs legislation that would curb abusive patent litigation by removing some of the financial incentives sought by firms that assert low-quality patents.  So-called "patent trolls" continue to use low-quality patents to try to extract settlements from credit unions and others. Credit unions have been sued for the use of certain ATM technologies, check imaging applications and check cashing applications, and providing members with mobile transactions through their smartphones.
 
Obama also took the occasion of his annual address to encourage the U.S. Congress to move forward on restructuring the country's housing finance system. CUNA urges the U.S. Congress as it considers comprehensive housing finance reform, to ensure that credit unions and other community financial institutions continue to have access to the secondary mortgage market.
 
Other themes of the president's speech included rebuilding American's trust in the political process, economic growth, eliminating pay inequality, creating a new savings instrument to help Americans save for retirement--to be called MyRA, and the Affordable Care Act.

CUNA warns Congress of 'dangerous moral hazard' amid breach responses

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WASHINGTON (1/28/14)--"The idea that retailers have no responsibility for protecting consumer data presents a dangerous moral hazard," Credit Union National Association President/CEO Bill Cheney said in a letter sent Monday to all members of the U.S. Congress.

That danger, Cheney warned lawmakers, is reflected in the current effort by retail organizations to try to shift both the cost and liability during breaches away from the retailers involved and on to financial institutions, their customers and members, and taxpayers. 

The CUNA letter comes as many in Congress and across the country debate how best to respond to recent data breaches at Target and Neiman Marcus that have compromised the financial and personal information of tens of millions of Americans. Arts and crafts store Michaels has also launched its own investigation into a potential data breach at its stores, and the Federal Bureau of Investigation in recent weeks has warned retailers these breaches will become more common. (See Jan. 27 News Now: FBI warns hacking attacks are on the rise.)

CUNA was the first trade group to communicate with members of Congress following the breach, seeking hearings on the issue, and House and Senate members in at least three committees are considering holding hearings on the topic, perhaps as early as next week. (See related story: Senate Banking to conduct Feb. 3 data security hearing.)

"The recent data breach at Target and other retailers has launched an important conversation about what happens during data breaches, why they happen, who is impacted, who is liable and who should be held responsible," Cheney wrote.

Immediately following the Target breach, credit unions responded and did not wait to determine how the breach occurred or who was at fault, he said. "Rather, credit unions took action immediately to ensure the safety and security of their members. These efforts often represent substantial and sometimes crippling costs for credit unions, but these protections are a few of the reasons why consumers, including credit union members, value electronic payments," Cheney emphasized.

"Our primary interest is to protect consumers and work with our partners across industry to develop solutions and prevent future breaches," Cheney told legislators.

The CUNA CEO warned that retailers are using the data breaches to push policies that they claim would "solve" the problem, like the "chip and PIN" technology.  "I would urge caution when evaluating solutions that appear too good to be true. In reality, cyber security is a complicated issue that has no silver bullets," Cheney said.

Retailers have pushed many times and made great strides over the past decade to try and slash their financial responsibility for funding the electronic payments system that protects customers and benefits retailers, in part by attacking the debt interchange fee system.

"I have to question some retailers' motives when they claim to be concerned about consumers, while actively trying to eliminate a key revenue stream that is used to protect consumers and strengthen the electronic payments system," Cheney wrote.

For the full CUNA letter, use the resource link.

Senate Banking to conduct Feb. 3 data security hearing

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WASINGTON (1/28/14)--The Senate Banking Committee will be first up with a 2014 hearing to investigate better ways to safeguard consumers' personal financial data.

Sen. Tim Johnson (D-S.D.), the committee's leader, announced Monday that his panel has scheduled six witnesses to testify on data security issues Monday, Feb. 3, from 3 p.m. to 5 p.m. (ET).

The hearing will be held in room 538 of the Dirksen Senate Office Building and will be webcast live via the committee's website (see resource link).

Soon after the recent data breach at Target, the Credit Union National Association was the first trade group to communicate with members of Congress, seeking hearings on the issue.  (See related story: CUNA warns Congress of 'dangerous moral hazard' amid breach responses.)

Use the second resource link to read the hearing witness list.

Student loans, GSE reforms could be SOTU topics tonight

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WASHINGTON (1/28/14)--Student loan issues and housing finance reforms could be on the agenda when President Barack Obama delivers his State of the Union address tonight, and the Credit Union National Association will be watching to gauge what Obama's policy objectives could mean for credit unions going forward.

Opportunity, action, and optimism will be the three pillars of the speech, White House Senior Advisor Dan Pfeiffer said in an email to supporters. The speech "will lay out a set of real, concrete, practical proposals to grow the economy, strengthen the middle class, and empower all who hope to join it," he added.

And, Pfeiffer wrote, while Obama plans to work with the U.S. Congress to achieve these goals, he does not plan to always wait for the U.S. Congress to act.

The president plans to take his message on the road in the days following his speech. According to a Jan. 27 Politico report, student debt refinancing, manufacturing, college affordability and women's issues will by Obama administration priorities in the near future.

NFIP delay bill one of CUs' interest items this week

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WASHINGTON (1/28/14)--A vote on legislation that would delay National Flood Insurance Program (NFIP) fee increases by four years is one of many Capitol Hill happenings credit unions will want to watch out for this week.

The new U.S. Senate NFIP bill (S. 1926) would also correct some issues in the 2012 Biggert-Waters Flood Insurance Reform Act, which extends the NFIP until Sept. 30, 2017.

Senators were scheduled to vote on a motion to proceed with debate on S. 1926 last night. A vote on the full bill could happen this week.

The Credit Union National Association is closely watching the progress of an amendment that may be offered by Sen. Jeff Merkley (D-Ore.) related to force-placed insurance. The amendment, in its current form, would prohibit lenders from receiving any kind of fee or reimbursement in connection with insurance they purchase on behalf of a borrower who lets the insurance lapse.

"We have significant concerns with this amendment, and we have expressed these concerns to the sponsor and other members of the Senate Banking Committee," CUNA Vice President of Legislative Affairs Ryan Donovan said.

Other items of interest this week include:
  • A Tuesday House Financial Services Committee hearing on the Consumer Financial Protection Bureau's semi-annual report, during which CFPB Director Cordray will testify;
  • A Wednesday Senate Banking economic policy subcommittee hearing on the annual report and oversight of the Office of Financial Research; and
  • A Thursday Senate Finance Committee hearing on the nomination of Karen Dynan to be assistant U.S. Treasury secretary.
CUNA will also monitor a Tuesday Senate Foreign Relations Committee hearing on the nomination of Sen. Max Baucus (D-Mont.) to be ambassador to China. Baucus is chairman of the tax-writing Senate Finance Committee and has been central to recent tax reform efforts, and his nomination adds an element of uncertainty to the future of tax reform efforts. However, Donovan notes, "tax reform isn't about one person.

"The circumstances which have made tax reform necessary continue to exist, and we expect Congress to continue to try to make progress on tax reform this year," Donovan said.

House Financial Services seeks public comments on CFPB rule impact

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WASHINGTON (1/28/14)--How are Consumer Financial Protection Bureau actions impacting credit unions, individuals, businesses and customers? The House Financial Services Committee is asking all interested parties to tell their own story on the agency's impact through a new page on its website.

Commenters can suggest that the committee use their story in a public forum. However, the committee web page stressed that it will not share any story or personal information without permission. 

The committee has also provided a phone number to let the public tell their stories. That number is (240) 490-CFPB (2372).

For the full committee release, use the resource link.

NCUA Reg Alerts remind of APR, CFPB compliance

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WASHINGTON (1/27/14)--Compliance tips to help credit unions cope with new Consumer Financial Protection Bureau regulations are provided in a trio of recent National Credit Union Administration regulatory alerts.

The agency also confirmed the 18% interest rate cap for federal credit unions would be in effect for another year in a separate letter to federal credit unions (14-FCU-02).

The first alert, 14-RA-04, reminds credit unions that service mortgage loans that as of Jan. 10, they are required to comply with CFPB's new Real Estate Settlement Procedures Act (REPSA) Mortgage Servicing rule for certain mortgage loans.

The RESPA Mortgage Servicing rule addresses:
  • Force-placed insurance;
  • Error resolution and information requests;
  • General servicing policies, procedures, and requirements;
  • Early intervention with delinquent members;
  • Continuity of contact with delinquent members; and
  • Loss mitigation.
The NCUA alert also discusses exemptions from portions of the rule.

Regulatory alert 14-RA-05 addresses rules governing mortgage loan originator compensation. CFPB rules that became effective earlier this month regulate how compensation is paid to a loan originator in most closed-end mortgage transactions. The rules also address mandatory arbitration, the waiving of certain federal claims, and financing credit insurance premiums in closed-end mortgage transactions and open-end credit, including home equity lines of credit secured by a member's principal dwelling.

The most recently released regulatory alert, 14-RA-06, outlines which credit unions will need to collect and submit Home Mortgage Disclosure Act data associated with mortgage loan applications processed during 2014.

Credit unions that are required to submit HMDA data must:
  • Have held total assets in excess of $43 million as of Dec. 31, 2013;
  • Have had a home or branch office in a Metropolitan Statistical Area on Dec. 31, 2013; and
  • Have originated at least one home purchase loan or refinanced a home purchase loan secured by a first lien on a one-to-four-family dwelling in 2013.
Credit unions that meet these three criteria must collect HMDA data during calendar year 2014 and submit the data to the Federal Reserve Board no later than March 2, 2015, the NCUA said.

For all three NCUA alerts and the letter to federal credit unions, use the resource links.

FBI warns hacking attacks are on the rise

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WASHINGTON (1/27/14)--Hacking attacks similar to the one that caused the Target data breach are on the rise, the Federal Bureau of Investigation warned in a report that was sent to retailers on Feb. 17. In the report, the FBI said as many as 20 similar attacks have been attempted within the past year, and more are surely on the way, several outlets reported.
 
The report, entitled "Recent Cyber Intrusion Events Directed Toward Retail Firms," warned that the software used in the Target attack, known as memory-parsing malware, is easily accessible and affordable to many would-be thieves. According to an August Visa document released to retailers, this software can be installed after hackers have broken into a merchant's network. The software is installed on point-of-service payment systems or a back-room server, and records account transaction data as purchases are made.

Many of the reported malware attacks cited in the FBI report occurred at small- and mid-sized businesses that lack robust security infrastructure. These cases reportedly resulted in losses ranging from thousands to millions of dollars.
 
The Target breach resulted in the theft of 40 million debit and credit cards, and encrypted PIN data, and the names, mail and email addresses, and phone numbers of up to 70 million individuals. Credit unions have already incurred costs estimated to be in the range of $25 million to $30 million as a result, according to the results of a Credit Union National Association survey. This projected total could be exceeded in the coming weeks if greater fraud losses are incurred or those that have responded to the CUNA survey already add additional costs to their reported totals.

CUNA continues to ask credit unions affected by the Target data breach to outline the costs and burdens they have seen as a result. The data will help inform CUNA conversations with lawmakers, regulators, the media and others. There is no deadline for credit unions to respond to the survey, and credit unions that have not yet responded are encouraged to do so. Credit unions that have responded can also update their totals if new costs are incurred.
 
For the survey, use the resource link.

Republican forum formalizes FATCA opposition

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WASHINGTON (1/27/14)--The Foreign Account Tax Compliance Act (FATCA) could become a high-priority issue in this year's elections after Republican National Committee members added FATCA opposition to the party's policy platform last Friday.

A draft version of an anti-FATCA resolution stated that the act has "inadvertently ensnared every United States citizen living overseas due to its overzealous invasion of privacy and punitive taxation and enforcement."
FATCA is designed to create a tax information reporting and withholding system for certain payments that are made to foreign financial institutions (FFIs) and other entities. Some provisions would apply to U.S. credit unions that make international payments. U.S. credit unions would also be required to identify and withhold on so-called "pass-thru payments" to FFIs involving transfers of U.S.-sourced investment or interest income an FFI that has not yet been subject to taxation.

U.S. Internal Revenue Service regulations to implement FATCA also make it harder for U.S. taxpayers to avoid U.S. income taxation by placing funds in overseas accounts.

"IRS finalized regulations in early 2013, but the regulations don't start to apply to U.S. credit unions in most respects until Dec. 31, 2015 and the real operational impact doesn't start until Jan. 1, 2017, when some credit unions might act as FATCA 'withholding agents.' If they provide international electronic payments services, they would be required to withhold 30% on certain transactions members make with foreign financial institutions without certain agreements with the U.S. and to use customer due diligence analyses," said Kathy Thompson, senior vice president for compliance at the Credit Union National Association.

Opposition to FATCA continues to grow in the U.S., and Rep. Bill Posey (R-Fla.) last year introduced H.R. 2299, which would repeal the Internal Revenue Service's recent expansion of United States credit union and bank reporting rules with respect to interest on deposits paid to nonresident aliens.

CUNA and the World Council of Credit Unions have supported the bill, saying in a joint letter that it "would be instrumental in eliminating an unnecessary and unduly burdensome rule for credit union.

aSmarterChoice changes detailed on 'Inside Exchange'

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WASHINGTON (1/27/14)--aSmarterChoice.org is now even smarter, and Amaia Kirtland, Credit Union National Association social and digital media manager, outlines the changes to CUNA's consumer website in a new edition of  "Inside Exchange."

CUNA has also improved the site with a blog and more articles on financial literacy.

The aSmarterChoice site will also undergo a structural redesign to build a more responsive application on mobile phones and tablets.

The website was launched in 2011 by CUNA and state credit union associations to provide information on credit unions to potential members and to press professionals.

Parsons Pittsburg CU, Kansas, conserved

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ALEXANDRIA, Va. (1/27/14)--The Kansas Department of Credit Unions said it recently uncovered "unsafe and unsound" practices at Parsons Pittsburg CU that have moved the state regulator Friday to place the $13.5 million-asset credit union into conservatorship and name the National Credit Union Administration as agent to handle its daily operations. 
 
Parsons Pittsburg CU is a Kansas-chartered, federally insured credit union headquartered in Parsons, Kan. It is a community-chartered credit union serving those who reside or are employed within a 45-mile radius of Labette, Bourbon, Cherokee or Crawford counties . The credit union also operates a branch in Pittsburg, Kan.
 
While continuing normal member services, the department and NCUA will work to resolve issues affecting the credit union's safety and soundness. Members can continue to conduct normal financial transactions, deposit and access funds, make loan payments and use shares.
 
The credit union's Sept. 30, 2013, call report shows it has 1,470 members.
 
The regulators have prepared a Frequently-Asked-Questions document for members with questions about the conservatorship. Top among the items addresses is that the National Credit Union Share Insurance Fund continues to insure individual accounts at Parsons Pittsburg  up to $250,000 and that the NCUSIF has the backing of the full faith and credit of the U.S. government.
 
Use the resource link to access the FAQ.

Tailored approach better to address any home-based CU issues, CUNA says

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WASHINGTON (1/27/14)--A proposal that would modify the operations of home-based federal credit unions is not justified on safety and soundness grounds, the Credit Union national Association said in a comment letter to the National Credit Union Administration. Equally troubling, CUNA said, is that this proposal reflects an increasing trend where the agency is developing regulations to address issues that should more appropriately, more effectively, and more efficiently be dealt with on an individual credit union-problem basis.

The CUNA letter follows the December release of a proposed rule that would prohibit federal credit unions from operating out of homes. All federal credit unions would have to maintain a business office not located in a home within two years of the final rule's effective date. Storage of credit union records at residential locations would also be prohibited.

Small home-based federal credit unions would also need to have either a dedicated phone number or email address for contact with the NCUA and members.

The NCUA proposed the changes to address concerns about member privacy, public access and the safety and working conditions of NCUA's examination staff. Operating credit unions out of private residences raises regulatory and supervisory concerns, including operational risks, privacy risks and potential conflicts of interest, the NCUA said.

"While CUNA does strongly support appropriate member and examiner access as well as safety and soundness for credit unions of all asset sizes, CUNA disagrees with the agency's assumption that problems among home-based credit unions are characteristic of all members of that group. We also disagree that problems among home-based credit unions are so threatening to the National Credit Union Share Insurance Fund that they can only be satisfactorily handled through the issuance of a new rule," CUNA Deputy General Counsel Mary Dunn wrote.

"Small, home based credit unions feel that the proposal, particularly the requirement that all federal credit unions maintain an office that is not within a personal residence beginning two years after the rule is implemented, is unjustified and punitive," Dunn added.

Issues with home-based credit unions would better be addressed on an individual basis, not through a broad rule, the CUNA letter said.

The CUNA letter suggested some changes in case the NCUA does move forward with a final rule. Suggested changes include:
  • Grandfathering existing home-based credit unions;
  • Allowing for exceptions to the rule's requirements to be granted under a fair and expeditious process;
  • Allowing member access to be through U.S. mail as well as the telephone or email; and
  • Allowing affected credit unions the option to correct legitimate problems identified by the examiner on a timely basis or move to retail space.
For the full CUNA comment letter, use the resource link.

No credible case for capital requirement increase, says CUNA

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ALEXANDRIA, Va. (1/24/14)--"Given how well credit unions in general survived the recent great recession, we do not think there is a credible case for increasing credit union capital requirements," Credit Union National Association President/CEO Bill Cheney said following Thursday's National Credit Union Administration open board meeting.

The 198-page risk-based capital framework for credit unions, which was released at the meeting, would impose new requirements on credit unions with assets of $50 million and above. The current 7% leverage capital standard, which is required by the Federal Credit Union Act, would remain the floor.



The proposal would require calculation of Basel-style risk-based capital ratio, but the risk weights would be different from those applied to community banks. It would require higher minimum levels of risk-based capital for credit unions with concentrations of assets in real estate loans, member business loans, or high levels of delinquent loans. However, some other weights, such as current consumer loans, would have lower weights than under the community bank requirement.

The agency has said the risk-based net worth proposal would protect credit unions and consumers from losses, and replace the "outdated and insufficient" one-size-fits-all capital requirement. The NCUA plan could result in higher capital levels for credit unions with high concentrations of risky assets. According to NCUA, 199 credit unions would have their capital classifications reduced if the proposal were adopted without modifications.

The proposed standard recognizes where credit unions are today, and looks forward, NCUA Chairman Debbie Matz said. "Under the proposed formula, 94% of credit unions would still be considered well-capitalized. The proposed rule is designed to ensure that credit unions taking excessively high risks will either reduce their risks or hold more capital to offset those risks," she added.

"CUNA supports capital modernization--including risk-based net worth--but as part of a broader plan that considers appropriate leverage ratios and also access to supplemental capital," Cheney said.

CUNA's Examination and Supervision Subcommittee has been meeting on this issue since May and will meet with NCUA Director of Examination and Insurance Larry Fazio soon. In addition to the 199 affected credit unions identified by NCUA, CUNA will also examine how all other credit unions would be impacted if the proposal is adopted.

"The bottom line for us is: If our members agree that this proposal is needed, our primary objective in developing our position will be to ensure a final rule is narrowly tailored to minimize any negative effects on credit unions. We are particularly troubled by the section of the proposal that would allow NCUA to raise the risk-based capital requirement of an individual credit union above the normal threshold levels based on subjective factors," Cheney said.

Credit unions will have 90 days to comment on the proposal after it is published in the Federal Register. After the comment period closes, it would likely take several months for a rule to be finalized. Once a final rule is adopted, the changes to capital requirements would not go into effect until approximately 18 months later. Therefore, credit unions will likely operate under current capital requirements until some time in 2016.

The agency on Thursday unveiled an online tool to help credit unions determine how they would be impacted by the proposal and released a YouTube video outlining the proposal. For more on the meeting, and the NCUA resources, use the resource links.

NCUA approves final derivatives investment rule

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ALEXANDRIA, Va. (1/24/14)--A final rule that will allow well-run federal credit unions to use simple derivatives to hedge against interest rate risks was approved at Thursday's National Credit Union Administration board meeting.

The NCUA plan will allow only well-managed credit unions with $250 million or more in assets to invest in derivatives.

The final rule includes key changes sought by the Credit Union National Association, such as removing the fees for supervision of the use of these products. CUNA in general has supported derivatives investments for credit unions.

Credit unions that wish to have derivatives investment authority will go through a two-stage application process. In the first stage, the credit union must provide NCUA with an IRR mitigation plan to demonstrate how derivatives would contribute to that plan and how it will acquire the appropriate resources, controls and systems to implement a sound derivatives program. In the second stage, NCUA will evaluate the credit union based on its actual readiness to engage in derivatives transactions.

Credit unions can get interim approval within 60 days, and final approval within another 60 days after it submits the notice of readiness to NCUA that states the credit union has acquired and implemented all the necessary elements to comply with the final rule. A credit union may not begin using derivatives until it receives the final approval.

The rule will not apply to federally insured state credit unions.

Approved credit unions will be permitted to invest in:
  • Interest rate swaps, caps, and floors;
  • Basis swaps; and
  • Treasury futures.
Credit unions must have CAMEL ratings of 1, 2, or 3, and a management rating of 1 or 2, to be eligible.

The supervisory costs will be covered by the National Credit Union Share Insurance Fund, the agency said. The NCUA has also budgeted $750,000 for 2014 and 2015 to cover related consulting costs.

Nearly 400 credit unions would be eligible to apply for derivatives investment authority, and the agency estimated that 30 to 60 credit unions would likely apply for the authority within the first two years of the program.

CUNA's Donovan gives CU breach perspective in American Banker

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WASHINGTON (1/24/14)-- The issue of data security, as the result of data breaches such as at Target, ebbs and flows--but it keeps coming back because safeguards are not taken to stop the breaches from happening, a top Credit Union National Association advocate says in American Banker, a trade publication.
 
CUNA Senior Vice President of Legislative Affairs Ryan Donovan said in a Jan. 23 article in the Banker that "in the six to 10 weeks after a breach, there's a lot of attention given to this issue, but as the headlines fade so does the attention."
 
 "What doesn't change is that this issue keeps coming back, and it keeps coming back because safeguards aren't taken to keep these breaches from happening," he said.
 
The article noted: "The theft of personal data on as many as 110 million Target customers over the holidays--followed by reports of a similar attack at Neiman Marcus--has spurred calls for new congressional hearings on the issue, proposed legislation to protect consumer information and competing letters to Congress from Washington trade groups representing the financial services and retail industries."
 
In fact, CUNA--back on Jan. 3--sent a letter to House Financial Services Committee Chairman Jeb Hensarling (R-Texas) and Rep. Maxine Waters (D-Calif.) , the committee's ranking Democrat, encouraging the U.S. Congress to conduct hearings regarding the Target breach, to "fully examine the chronic issue of merchant data breaches, their impact on consumers and financial institutions."
 
CUNA President/CEO Bill Cheney wrote in that letter, "Failure to hold merchants fully accountable for data breaches when they occur ultimately harms consumers, undermines their confidence in our payments system, and adds to their growing frustrations that government is not protecting their interests."
 
The American Banker article noted that Sens. Tom Carper (D-Del.) and Roy Blunt (R-Mo.) recently reintroduced a bill to require all entities involved in card payments to do a better job in protection consumer's information and to set national consumer notifications standards in the event of a breach.
 
In the article, CUNA's Donovan called the Carper legislation a "good start," but said CUNA is pushing that any data security bill include additional provisions, including language to require that the breached entity, such as Target, to be responsible for the ensuing costs.

"When there's a breach like this, the cost of making sure the consumers are protected is covered by the financial institution that issues the card," he said. "We're the ones making the decision to reissue the card and monitor the accounts, and we also have the obligation to notify the consumer."

Among others quoted in the article were Edward Mills, a policy analyst at FBR Capital Markets, and Mark Calabria, a former Senate Banking Committee staffer and now director of financial regulation studies at the Cato Institute.

CFPB proposes first oversight of larger nonbank int'l money transfer providers

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WASHINGTON (1/24/14)--Larger nonbank international money transfer providers would be subject to the Consumer Financial Protection Bureau's existing remittance regulations under the terms of a new proposal released Thursday.

"The CFPB's remittance rule provides strong consumer protections like better disclosures and the correction of errors," CFPB Director Richard Cordray said in a release. "Today's proposed rule would help us provide oversight across the entire market so consumers get the protections they deserve," he added.

The proposal defines a larger nonbank international money transfer provider as an entity that provides more than 1 million international money transfers annually.

Nonbank providers transfer approximately $50 billion annually through about 150 million individual international money transfers, according to CFPB estimates. The proposed rule would bring new oversight to the 25 largest nonbank money transfer firms.

The proposed rule will be open for public comment for 60 days after it is published in the Federal Register.

The CFPB's remittance rule requires transfer firms to provide prepayment and receipt disclosures to the consumer sender that include the exchange rate, certain fees and taxes associated with a transfer, and the amount of money that will be received on the other end of the transfer. Remittance transfer providers are also required to investigate disputes and correct errors.

Strategic plans, loan rate cap approved at NCUA meeting

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ALEXANDRIA, Va. (1/24/14)--A packed January board meeting agenda led off with approval of three relatively routine items: The National Credit Union Administration's 2014-2017 Strategic Plan, 2014-2015 Annual Performance Plan, and federal credit union interest rate ceiling determination.

The NCUA Strategic Plan highlights the agency's four strategic goals, and supporting strategic objectives which reflect the outcome or greater impact of the broader strategic goals. The four strategic goals for 2014 through 2017 are:
  • Ensuring a safe, sound, and sustainable credit union system;
  • Promoting consumer protection and financial literacy;
  • Further developing a regulatory environment that is transparent and effective, with clearly articulated and easily understood regulations; and
  • Cultivating an environment that fosters a diverse, well trained and motivated staff.
The Credit Union National Association in a recent letter urged the agency to use its strategic plan to detail:
  • How the agency plans to provide regulatory relief to credit unions;
  • What efforts it will make to improve the examination process;
  • How NCUA will address cost containment and how the agency's budget correlates to its Strategic Plan; and
  • How will NCUA improve its overall communications plan.
CUNA also suggested the NCUA could improve its strategic plan review process to better allow sufficient time for stakeholder input.

The 2014-2015 Annual Performance Plan provides specific direction to implement the strategic objectives and highlights specific goals, indicators and targets to measure agency progress towards each objective for the coming year, the NCUA said.

The agency also approved language that will extend the current 18% interest rate ceiling for federal credit union loans through September 10, 2015. CUNA supports continuation of the 18% ceiling at least for an additional 18 months.

NEW: NCUA approves final derivatives investment rule

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ALEXANDRIA, Va. (1/23/14, UPDATED: 11:20 A.M. ET)--A proposal that will allow well-run federal credit unions to use simple derivatives to hedge against interest rate risks has just been approved at today's National Credit Union Administration board meeting.

The NCUA plan would allow only well-managed credit unions with $250 million or more in assets to invest in derivatives.

The final rule includes key changes sought by the Credit Union National Association, such as removing the fees for supervision of the use of these products. CUNA in general has supported derivatives investments for credit unions.

There will not be an application fee for credit unions wishing to be approved for derivatives authority, and the rule will not apply to federally insured state credit unions.

The final rule addresses permissible derivatives and characteristics, limits on derivatives, operational requirements, counterpart and margining requirements, and the procedures a federal credit union must follow to apply for derivatives authority.

The supervisory costs will be covered by the National Credit Union Share Insurance Fund, the agency said. The NCUA has also budgeted $750,000 for 2014 and 2015 to cover related consulting costs.

Nearly 400 credit unions would be eligible to apply for derivatives investment authority, and the agency estimated that 30 to 60 credit unions would likely apply for the authority within the first two years of the program.

Watch News Now for more on today's open board meeting.

NEW: NCUA unveils risk-based capital plan

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ALEXANDRIA, Va. (1/23/14, UPDATED: 11:44 a.m. ET)--A new risk-based capital framework for credit unions has just been released at today's National Credit Union Administration board meeting.
 
The proposed standard recognizes where credit unions are today, and looks forward, NCUA Chairman Debbie Matz said. The rule protects the vast majority of credit unions, she added, saying that 94% of credit unions are well-capitalized.

Under the 198-page NCUA proposal, the current 7% leverage capital standard, which is required by the Federal Credit Union Act, would remain the floor. However, the agency has said credit unions with assets of $50 million and above would be subject to revised risk-based capital requirements to better correlate required capital levels to risks the agency deems relevant.
 
The proposal would require calculation of of Basel-style risk-based capital ratio, but the risk weights would be different from those applied to community banks.  It would require higher minimum levels of risk-based capital for credit unions with concentrations of assets in real estate loans, member business loans, or high levels of delinquent loans. However, some other weights--current consumer loans--would have lower weights than under the community bank requirement.    
 
The Credit Union National Association's Exam and Super Subcommittee has been meeting on this since May and will be meeting with NCUA Director of Examination and Insurance Larry Fazio soon.
 
The agency has said the risk-based net worth proposal would protect credit unions and consumers from losses, and replace the "outdated and insufficient" one-size-fits-all capital requirement. The NCUA plan could result in higher capital levels for credit unions with high concentrations of risky assets.  Approximately 200 credit unions would have their capital classifications reduced if the proposal were adopted without modifications.
 
Credit unions will have 90 days to comment on the proposal after it is published in the Federal Register. Matz said the final rule will have a phase-in period of one year.

National, D.C. media turn spotlight on CUNA breach survey

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WASHINGTON (1/23/14)--National media attention is being generated by the Credit Union National Association release of estimated credit union costs created by the Target data breach, and it's getting CUNA recognized for being in the forefront of organizations providing info on costs.
 
Survey coverage in the Wall Street Journal's MoneyBeat blog noted CUNA was one of the first groups to "identify the hit to financial institutions from the breach." The survey also received coverage in Washington political paper The Hill, with CUNA President/CEO Bill Cheney being quoted in that story.

AP also did a piece on the survey, picked up by CNBC.com, which zeroed in on Cheney's comments  that retailers such are Target Corp. are "rarely held responsible for reimbursing financial institutions for the costs that the data breach has incurred on them and, in the case of the credit unions, their members."

That article noted the CUNA estimate that Target breach has cost credit unions about $5.10 per card affected by the security lapse--and said that is just the beginning because the preliminary estimate doesn't include fraud losses that are expected to rise in coming weeks.

The breach resulted in the theft of 40 million debit and credit cards, and encrypted PIN data, and the names, mail and email addresses, and phone numbers of up to 70 million individuals.
 
The CUNA survey drew results from 936 credit unions.
 
According to CUNA's survey results, credit unions have incurred costs in the range of $25 million to $30 million as a result of the breach. The Target breach has cost credit unions about $5.10 per card affected by the security lapse, on average. These costs most likely do not include any fraud losses, which are likely to occur later.
 
These estimated costs could be exceeded if greater fraud losses are incurred or those that have reported already add additional costs to their reported totals.

Cheney has noted that these expenses will not be reimbursed to credit unions and their members by Target or other retailers. "Rather, credit unions must solely cover these costs of card program administration, including in these circumstances of reacting to a merchant data breach. And, because of credit unions' cooperative structure, the costs of such breaches are ultimately borne entirely by credit union members," he said.

Exam modernization efforts outlined in NCUA webinar

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ALEXANDRIA, Va. (1/23/14)--"Examination Report Modernization" was the topic of a free National Credit Union Administration webinar offered Wednesday, and it outlined changes the agency made in 2013 to streamline and improve the consistency of the examination report process.

The webinar was intended to give participants a better understanding of new procedures related to Documents of Resolution (DOR) and examination reports.   The changes were effective Jan. 1 and were meant to set clearer expectations for credit unions and examiners. They were first introduced in October 2013 in the agency's Letter to Credit Unions (13-CU-09).
 
Presenters at the NCUA's 2 p.m. (ET) webinar included Dominic Carullo, an economic development specialist with the Office of Small Credit Union Initiatives; Amanda Parkhill, a loss and risk analyst with the Office of Examination and Insurance; and Clarence Jones, an NCUA national training specialist.
 
In addition to improved consistency, the experts noted that the goals of NCUA's exam modernization include:

They said key changes adopted in 2013 included:

  • Less redundancy;
  • Clear prioritization; and,
  • Input from credit union management.
  • DORs now have a required 120-day follow up from the examiner;
  • DORs are to be solely used for material unsafe and unsound practices;
  • Problems should be discussed with management throughout the examination and a corrective plan for problems should be developed by management. NCUA will develop a plan if management fails to do so; and,
  • Clarifying that DORs may be appealed and how.

Participants were also told that there is now a clear distinction between examiner findings and the DOR, and the webinar detailed the process, consequences and follow-up requirements for both. It was also noted that DORs and examiner findings should be discussed with management before being presented to a credit union board.

Unlike the DORs, examiner findings cannot be appealed, and the Credit Union National Association is pressing this issue with NCUA. An unresolved finding can impact management scores and CAMEL ratings.
 
The NCUA also said it is working on a new exam process for small credit unions, which it defines as $50 million or less in assets; although the agency also has indicated the new procedures may not apply to credit unions with assets above $30 million.  CUNA is seeking clarification from the NCUA, since it is not clear why all credit unions under $50 million would not be subject to the new procedures.

The agency also underscored in the webinar that examiners should set aside time to discuss issues with credit union staff and that credit unions can contact supervisory examiners with issues.

The NCUA's webinar will be posted on its website in about three weeks.

CUNA notes risk-based rule concerns ahead of today's NCUA meeting

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ALEXANDRIA, Va. (1/23/14)--The Credit Union National Association remains concerned about a proposed rule on risk-based capital that is on the agenda for today's National Credit Union Administration open board meeting. "This is not the time for gratuitous regulations," CUNA Deputy General Counsel Mary Dunn said ahead of today's meeting.

The current 7% leverage capital standard was set by statute in 1998, and it would take an act of the U.S. Congress to change the statute. However, NCUA Chairman Debbie Matz said in July that the recent financial crisis and industry changes has sparked an agency interest in implementing the law with a newer, more flexible, forward-looking approach.

NCUA board member Rick Metsger earlier this month said the pending risk-based capital proposal would impact fewer than 200 credit unions, but CUNA warns this low number does not alleviate concerns with the approach.

CUNA supports net worth-standard changes that reflect risk better than the present approach, but ones that will not simply add net worth requirements to the current system.

CUNA has also been urging the agency to adopt a more productive approach to rulemaking that focuses on problem areas rather than issuing rules with blanket applicability, regardless of the credit unions level of risk. CUNA's Examination and Supervision Subcommittee has met with NCUA officials on the capital ratio issue.

Dunn said CUNA is hopeful that the NCUA will make major changes to its final derivatives proposal, which is also on today's agenda. The NCUA proposal, released in May, would allow well-run federal credit unions to use simple derivatives to hedge against interest rate risks. The plan would allow only well-managed credit unions with $250 million or more in assets, and which have appropriate expertise, to apply for an agency derivatives investment program. Swaps and caps will be the only approved investments, and fees will be charged to cover costs related to application processing and supervision of the program.

"The costs to credit unions for complying with the provisions in the proposed derivatives rule are excessive and will place derivatives authority out of reach for many, if not most, credit unions seeking derivatives authority," Dunn emphasized in a July comment letter.

CUNA also did not support a number of the key provisions of the proposal.

Also on today's open meeting agenda:
  • NCUA's Strategic Plan for 2014 through 2017, and Annual Plan for 2014 and 2015; and
  • The Federal Credit Union Loan Interest Rate Ceiling.
Watch CUNA's News Now and Twitter feed, @NewsNowLiveWire, for full coverage of this morning's meeting.

Issa joins CUNA GAC speaker slate

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WASHINGTON (1/23/14)--More congressional leaders and credit union supporters are joining the speaker list for the Credit Union National Association Governmental Affairs Conference (GAC) in Washington, D.C.--including Rep. Darrell Issa (R-Calif.) who heads the House Oversight and Government Reform Committee.
 
Issa, now in his seventh term, is widely known as an advocate of more efficient government and a proponent of less regulatory burden in general--including for credit unions.
 
Also recently signing on to speak at the nation's biggest gathering of credit union leaders from Feb. 23 to 27 are:
  • Sen. Mark Udall (D-Colo.), a strong supporter of increased credit union business lending authority;
  • Rep. Ed Royce (R-Calif.), a longtime credit union supporter, and sponsor of credit union business lending legislation and measures to relieve the credit union regulatory burden; and
  • Rep. Denny Heck (D-Wash.), a former credit union official and current member of the House Financial Services Committee.
The CUNA GAC is being held at the Walter E. Washington Convention Center; it annually draws up to 4,000 credit union leaders and supporters. Use the resource link for more details and to register.

2013 4Q call reports due Friday, NCUA reminds CEOs

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ALEXANDRIA, Va. (1/23/14)--Fourth quarter 2013 Call Report and Profile information must be submitted by Friday, the National Credit Union Administration reminded on Wednesday.

Credit unions failing to meet future filing deadlines will be subject to potential civil money penalties, the agency said. Penalties will be assessed starting with the second quarter of 2014.

The potential late filing penalties were announced in a Letter to Credit Unions (14-CU-03) released Jan. 15.

Those that file late in the 2014 first quarter will receive warning letters with an estimate of what the assessed penalty would have been.

Other Call Report filing deadlines for 2014 are:
  • April 25 for 2014 first quarter filings;
  • July 25 for 2014 second quarter filings; and
  • Oct. 24 for 2014 third quarter filings.
For the full NCUA letter, use the resource link.

NCUA reminds technical assistance grant application round opens Feb. 3

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WASHINGTON (1/23/14)--Credit unions will be able to apply for a share of $481,000 in technical assistance grants starting on Feb. 3, the National Credit Union Administration noted Wednesday.

Low-income designated credit unions can apply for up to $16,500 in funds to help cover certain costs. Credit unions can receive $10,000 for setting up an online banking system or their first ATM, $7,500 for establishing a mobile banking or online loan and membership application system, $5,000 for setting up an electronic bill pay system, $2,500 to help with Community Development Financial Institution (CDFI) certification, and $2,000 for establishing their first website, among other items.

Applications will be accepted until Feb. 14. NCUA Chairman Debbie Matz encouraged all eligible credit unions to apply.

The NCUA is also offering up to $4,000 to each eligible credit union to hire student interns for the summer of 2014. These internships must be completed by Aug. 31, 2014. Eligible credit unions will be selected by asset size, smallest credit unions first. Credit unions that received student internship funding in 2013 are not eligible for student internship grants in 2014.

Funding for NCUA's grant initiatives is provided by the Community Development Revolving Loan Fund, a fund created by Congress to support credit unions that serve low-income communities. NCUA's Office of Small Credit Union Initiatives administers the program.

For more, use the resource link.

Periodic statement questions tackled in CUNA CompBlog

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WASHINGTON (1/23/14)--In a new CompBlog post, Credit Union National Association Senior Compliance Counsel Mike McLain outlines what documents credit unions must provide to borrowers that make conventional payments as well as those that make automatic payments for a closed-end mortgage loan.

New mortgage servicing regulations require credit unions to provide periodic statements for fixed-rate and adjustable-rate mortgage loans. An exception permits credit unions to provide coupon books containing certain required information for fixed-rate mortgage loans. However, credit unions would still be required to send periodic statements for the remaining adjustable-rate mortgage loans. This is true even if a borrower has automatic payments for a closed-end mortgage loan, McLain said.

The Consumer Financial Protection Bureau's final mortgage servicing rule requires mortgage servicers to meet new periodic statement requirements, provide additional notices of rate changes on adjustable-rate mortgage loans to borrowers and help ensure that consumers know their options to prevent foreclosures. The servicing rule contains a number of exemptions for credit unions and other financial institutions that meet the bureau's "small servicer" definition.

"Only small servicers are exempt from the periodic statement requirements," McLain said. A credit union would be considered a small servicer if the credit union, together with any affiliates, service 5,000 or fewer mortgage loans, and the credit union (or an affiliate) are the creditor or assignee for all of them, he clarified.

Only closed-end "mortgage loans" should be counted to determine if a credit union is a small servicer. "Do not include loans the credit union voluntarily services for a creditor or an assignee that is not an affiliate and for which the credit union does not receive any compensation or fees. Also do not count any reverse mortgages, or timeshare plans," McLain wrote.

The small servicer exemption is determined each calendar year based on the loans a credit union and its affiliates service as of Jan. 1 for the remainder of the year. A credit union may lose the small servicer exemption if it:
  • Services more than 5,000 loans; or
  • Takes on the servicing of a loan it does not own or did not originate.
Credit unions that lose their exemption will have six months from the date it stopped being a small servicer or until the next Jan. 1, whichever is later, to comply with the periodic statement requirements, McLain said.

For the full CUNA CompBlog post, use the resource link.

Jan. 27 is BSAAG nomination deadline

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WASHINGTON (1/22/14)--Nominations for membership on the Financial Crimes Enforcement Network's (FinCEN) Bank Secrecy Act Advisory Group (BSAAG) must be received by FinCEN by Jan. 27, the Credit Union National Association reminds interested credit unions.
 
BSAAG membership is open to credit unions, and all financial institutions, and trade groups. New members will be selected for three-year terms.

CUNA is currently a member with a term that extends into early 2015. Houston FCU, Sugar Land, Texas, was selected last year as a BSAAG member.

"We encourage credit unions with extensive BSA and anti-money laundering experience to apply if they have the resources to be able to participate in meetings, calls, and working groups," said Deputy General Counsel Mary Dunn in CUNA's reminder.
 
BSAAG, which ultimately makes BSA policy recommendations to the U.S. Treasury Secretary, is chaired by the FinCEN director. It was created by the 1992 Annunzio-Wylie Anti-Money Laundering Act.
 
Applications may be mailed to Liaison Division, Financial Crimes Enforcement Network, P.O. Box 39, Vienna, VA 22183 or e-mailed to BSAAG@fincen.gov.

Cheney goes live on radio to emphasize data breach costs to CUs

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WASHINGTON (1/22/14)--Credit unions and their members--not the retailers--will end up paying the costs for data security breaches such as those recently at Target and Neiman Marcus, Credit Union National Association President/CEO Bill Cheney emphasized Tuesday during a live appearance on a nationally broadcast Bloomberg Radio program.

Appearing on "The Hays Advantage" with host Kathleen Hays, the credit union leader told the national radio audience that, contrary to popular understanding, the expenses for reissuing cards are not and will not be reimbursed by Target. Rather, he noted, merchants are rarely held accountable for reimbursing financial institutions for the cost that the data breach has burdened them with and, in the case of credit unions, burdened their members. 

Cheney noted that last week in Target's own admission of the breach, no commitment was made to avoid leaving card issuers, such as credit unions, responsible for costs of dealing with the breach. He added that merchants must be held accountable for these security breakdowns. 

Cheney added that CUNA and credit unions are asking the U.S. Congress to address the lack of retailer accountability, and are supportive of legislation to replace various state-based data protection laws with one single, federal standard.

Target breach to cost CUs estimated $25M-$30M, CUNA study shows

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WASHINGTON (1/22/14)--Credit unions have already incurred costs estimated to be in the range of $25 million to $30 million in costs as a result of the Target stores data security breach, a Credit Union National Association survey has shown.

And, CUNA President/CEO Bill Cheney said, the actual costs could exceed this estimate of $25 million to $30 million in the coming weeks if greater fraud losses are incurred or those that have reported already add additional costs to their reported totals.

The results of the CUNA survey show that, on average, the Target breach has cost credit unions about $5.10 per card affected by the security lapse. These costs most likely do not include any fraud losses, which are likely to occur later. Additionally, the cost/card figure is an average across all affected cards, not just cards that have been reissued.

"Contrary to what some may think, these expenses will not be reimbursed to credit unions and their members by Target or other retailers," Cheney said. "Rather, credit unions must solely cover these costs of card program administration, including in these circumstances of reacting to a merchant data breach. And, because of credit unions' cooperative structure, the costs of such breaches are ultimately borne entirely by credit union members," he added. (See related story: "CUs 'left holding the bag' in breaches, Adams writes Stabenow.")

"Credit unions responding to the survey report having almost 18 million debit cards outstanding, and just less than 1.5 million credit cards outstanding. These totals represent roughly a third of the estimated number of debit cards outstanding at all credit unions, and somewhat more than that of estimated outstanding credit cards," CUNA Chief Economist Bill Hampel noted.

The CUNA survey asked credit unions afffected by the Target data breach to outline the costs and burdens they have seen as a result. The breach resulted in the theft of 40 million debit and credit cards, and encrypted PIN data, and the names, mail and email addresses, and phone numbers of up to 70 million individuals.

The data will help inform CUNA conversations with lawmakers, regulators, the media and others. There is no deadline for credit unions to respond to the survey, and credit unions that have not yet responded are encouraged to do so. Credit unions that have responded can also update their totals if new costs are incurred.

Registration opens for two upcoming FLEC events

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WASHINGTON (1/22/14)--Registration has opened for two upcoming Financial Literacy and Education Commission (FLEC) events, both scheduled for February.

As part of America Saves Week, the FLEC is holding a field hearing on improving employee financial capability through workplace financial education in Atlanta from 1 to 3:30 p.m. (ET) Feb. 25.
 
The hearing will share the commission's work with the public on promising practices for delivering financial education in the workplace; existing opportunities, challenges and barriers to delivery of financial education in the workplace; and strategies for engaging employees around financial education in the workplace.
 
The session will be webcast through a link to be made public at a later date, or interested parties can use the first resource link below to register to attend in person.
 
On Feb. 12, the FLEC will hold its next public meeting, which will focus the commission's study on ways the federal government can work with the private sector and state, local and tribal governments to promote savings and build the financial capability of young Americans.

The meeting is scheduled for 9-11:30 a.m. (ET) and registration is open until Feb. 5 or until capacity has been met (use resource link).

The FLEC is comprised of representatives from the National Credit Union Administration, the U.S. Treasury Department, the U.S. Department of Education, the White House, and 18 other governmental groups. It's currently chaired by U.S. Secretary of Treasury Jacob Lew, and Consumer Financial Protection Bureau Director Richard Cordray is the vice chairman.

Last year, a FLEC field hearing on youth and post-secondary financial education, organized by the CFPB, featured Lois Kitsch, national REAL Solutions program director at the National Credit Union Foundation, and Jennifer Block, who represented Royal CU, based in Eau Claire, Wis.

The credit union duo helped provide insight on opportunities and best practices for using experiential learning to help youth increase financial capability and to augment financial education lessons taught in the classroom. 

Kitsch spoke primarily on NCUF's work with Reality Fairs, which are interactive financial literacy tools for high school students that have proven successful for many credit unions and state leagues. Twenty-six states offer students Reality Fair programs--14 of which can be tied directly to REAL Solutions.

The FLEC  was established under the Fair and Accurate Credit Transactions Act of 2003 and is charged with creating a national strategy on financial education.

What could come next in interchange case: CUNA

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WASHINGTON (1/22/14)--As Credit Union National Association General Counsel Eric Richard noted last week, the discussion by a trio of judges Friday in the ongoing debit interchange fee cap case presented many positives for credit unions. However, Richard reminds credit unions there are a range of possibilities for how the court could proceed.

The U.S. Court of Appeals for the District of Columbia Circuit heard oral arguments from CUNA, the Federal Reserve and a merchants coalition in the case known as NACS, et al. v. Board of Governors of the Federal Reserve System.

Comments by the judges at that time raised real questions about whether they will fall in line with a lower court ruling that sought to overturn the Federal Reserve's debit interchange fee cap regulations. However, their possible action options include:
  • Reversing the case and sending it back to U.S. District Court Judge Richard Leon for further consideration;
  • Forcing the Federal Reserve to revisit the interchange cap rule; or
  • Affirming Leon's July decision that struck down the rule.
Judges David Tatel, Harry Edwards and Stephen Williams last week seemed to indicate they would take a close look at Leon's decision to strike down the Fed's interchange rules. (That ruling was stayed pending appeal.)

This closer look could potentially result in more costs being taken into account in the setting of interchange fees than Judge Leon's decision would allow, Richard said.

The case was brought by a merchants coalition in 2012, seeking to overturn the Fed's debit interchange fee cap regulations. The judges last week heard oral arguments from the Fed, a coalition of financial services groups, including CUNA, and merchants. (See Tuesday NewsNow story: Appeals court to closely examine lower court interchange ruling.)

The appeals court will rule on the case before its term ends in August, and a decision could come as soon as this spring.

NCUA posts 2014 regulation review list

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ALEXANDRIA, Va. (1/22/14)--In its annual announcement identifying the list of regulations it will review during the year, the National Credit Union Administration (NCUA) said among those to be studied this year are rules governing records preservation, loans in areas having special flood hazards, Bank Secrecy Act compliance, and tort claims against the government.

Use the resource link for the complete list of rules.

Credit Union National Association Deputy General Counsel Mary Dunn said Tuesday that there aren't any major rules on the NCUA's 2014 list--none that would likely be on anyone's list of key regulatory relief items.

"However, we will be reviewing them with an eye toward improvements and will be encouraging credit unions to let us know what they think. We also will be looking at related rules that create burdens for credit unions to urge improvements there as well," Dunn added.

Each year, the NCUA reviews one-third of its regulations and the agency chairman, Debbie Matz, says the effort is a key part of her Regulatory Modernization Initiative.  She said that initiative is committed to "modifying, streamlining, refining or repealing rules that are not required by statute" and such changes that would not jeopardize safety and soundness of the industry.

Credit unions and other public stakeholders may now submit comments about the rules under review. The NCUA must receive comments by Aug. 4 through email, at OGCMail@NCUA.gov, or standard mail at: Regulatory Review 2014, Office of General Counsel, NCUA, 1775 Duke St., Alexandria, VA 22314-3428.

'Vishing' scam uses NCUA name to con targets

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ALEXANDRIA, Va. (1/22/14)--The National Credit Union Administration released a warning  to consumers Tuesday telling them to beware of a "vishing" scheme that uses the agency's name in phone calls that attempt to get personal financial information from the targeted person.

The warning states that several credit union members have been contacted by an automated phone call claiming to be from the NCUA and notifying consumers their debit cards have been compromised. The call then asks the receiver to follow prompts, which request personal information, including sensitive financial data and personal identification information.

In the NCUA's own "vishing" alert issued in 2008, the agency explained the scam like this: As with phishing which uses electronic contacts, in vishing attacks crooks claim to be with legitimate financial institutions or other entities. They ask consumers to verify or re-submit personal information such as bank account and credit card numbers, Social Security numbers, passwords and personal identification numbers.

That NCUA fraud alert explained that vishing scam's use of social engineering and Voice over Internet Protocol (VoIP) technology exploits the public's trust in landline telephone services. The victim is often unaware that VoIP allows for caller ID spoofing thus providing anonymity for the criminal caller, the alert noted.

The NCUA said vishing is attractive to criminals because VoIP service is fairly inexpensive, especially for long distance, making it cheap to make fake calls. Also, because its Web-based, criminals can use software programs to create phony automated customer call center service lines. The NCUA advised that, for their protections, consumers should be highly suspicious when receiving messages via telephone, email, or otherwise--directing them to call and provide personal, confidential, and/or account-related information.

In its Wednesday notice, the agency asked that anyone contacted by this recent scheme immediately contact the NCUA's Consumer Assistance Center Hotline at 800-755-1030 or by email at phishing@ncua.gov to report the scam. Operators answer calls Monday through Friday between 8 a.m. and 5 p.m. (ET).

The agency stated: "NCUA neither seeks personal information from consumers over the telephone nor handles day-to-day maintenance of member account information. NCUA works with law enforcement agencies, including the FBI, to protect consumers from frauds of this nature.  NCUA urges consumers to never verify or release personal financial information to unknown callers."

Bagumbayan CU closes: Great Lake CU assumes shares

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ALEXANDRIA, Va. (1/22/14) --The National Credit Union Administration Tuesday, in its role as conservator, announced the liquidation of Bagumbayan CU of Chicago. It is the first federally insured credit union liquidated in 2014.
 
Last December, the NCUA and the Illinois Department of Financial and Professional Regulation assumed control of service and operations at Bagumbayan CU, and that action followed an October order that the credit union cease-and-desist allowing unapproved officials to attend board meetings or perform managerial and operational functions, and that it resolve recordkeeping issues and Bank Secrecy Act violations, and correct other issues.

Great Lakes CU of North Chicago, Ill., immediately assumed Bagumbayan's members and deposits Tuesday. Great Lakes is a federally insured, state-chartered credit union that serves more than 54,000 members and has assets of more than $626 million, according to the NCUA.

Great Lakes has been operating Bagumbayan under a management agreement with NCUA since Bagumbayan was placed into conservatorship.

NCUA, with approval from the Illinois Department of Financial and Professional Regulation, made the decision to liquidate Bagumbayan CU and discontinue its operations to protect the credit union from continued financial deterioration.

At the time of liquidation and subsequent purchase and assumption by Great Lakes, Bagumbayan CU served 44 members and had assets of $55,140, according to the NCUA. It was chartered in 1964, and provided limited financial services to members of the Bagumbayan community in Chicago.

2014 CUNA campaign schools kick off election year

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WASHINGTON (1/22/14)--As another election year begins, the Credit Union National Association is again teaming with state credit union leagues to prepare local legislators-to-be through its campaign schools.

Six campaign schools are currently on the schedule for the year.

The first of these was held Tuesday in Missoula, Mont., and sessions have also been scheduled for today in Helena and Thursday in Billings. This is the seventh time that campaign schools have been held in that state. The Montana campaign schools will be co-hosted by CUNA, the Montana Credit Union Network, the National Rural Electric Cooperative Association, the Montana Electric Cooperatives' Association, Montana Chamber of Commerce and the Montana Association of Realtors.

Montana State House member Jesse O'Hara (R) and Lewis and Clark County Sheriff Leo Dutton (D) both praised the help that the schools gave to their respective campaigns in a Jan. 8 Helena Independent Record piece. "I learned what I could do and what I couldn't do--and what I needed to do. I came away with an education, and I felt confident in my ability to run an effective campaign after I intended," Dutton told the Independent Record.

Three campaign schools are being co-hosted by CUNA, the Carolinas Credit Union League and the NRECA. The North Carolina-based schools will be held in Rocky Mount on Jan. 28, Fayetteville on Jan. 29 and Hickory on Jan. 30.

This is the third time a series of campaign school events has been held in the state. The first campaign schools, held in 2010, bore significant fruit for the credit union movement when a campaign school attendee, current U.S. Rep. Renee Elmers (R), went on to defeat incumbent Bob Ethridge (D) to win that state's second district.

Topics covered during CUNA's campaign schools include campaign management, fundraising, message development, and get-out-the-vote planning. Past campaign schools have created many other success stories, as dozens of graduates have run for a broad swath of positions, from justice of the peace, to state representative, to mayor. Potential state House members, school board officials and county commissioners are among those taking part in this week's class sessions.

CUNA's Vice President of Political Affairs Trey Hawkins said the main goal of the campaign schools "is to give first-time candidates the know-how to run for office, raise money and develop campaign plans." Hawkins said the schools also show the candidates that credit unions are sophisticated when it comes to politics and elections. "The campaign schools create terrific relationships with lawmakers who may one day run for higher office," he said.

NEW: CUNA: Target breach to cost CUs an estimated $25M-$30M

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WASHINGTON (1/21/14, UPDATED: 4 P.M. ET)--Credit unions have already incurred costs estimated to be in the range of $25 million to $30 million in costs as a result of the Target stores data security breach, a Credit Union National Association survey has shown.

And, CUNA President/CEO Bill Cheney said, the actual costs could exceed this estimate of $25 million to $30 million in the coming weeks if greater fraud losses are incurred or those that have reported already add additional costs to their reported totals.

The results of the CUNA survey show that, on average, the Target breach has cost credit unions about $5.10 per card affected by the security lapse. These costs most likely do not include any fraud losses, which are likely to occur later. Additionally, the cost/card figure is an average across all affected cards, not just cards that have been reissued.

"Contrary to what some may think, these expenses will not be reimbursed to credit unions and their members by Target or other retailers," Cheney said. "Rather, credit unions must solely cover these costs of card program administration, including in these circumstances of reacting to a merchant data breach. And, because of credit unions' cooperative structure, the costs of such breaches are ultimately borne entirely by credit union members," he added.

"Credit unions responding to the survey report having almost 18 million debit cards outstanding, and just less than 1.5 million credit cards outstanding. These totals represent roughly a third of the estimated number of debit cards outstanding at all credit unions, and somewhat more than that of estimated outstanding credit cards," CUNA Chief Economist Bill Hampel noted.

The CUNA survey asked credit unions impacted by the Target data breach to outline the costs and burdens they have seen as a result. The breach resulted in the theft of 40 million debit and credit cards, and encrypted PIN data, and the names, mail and email addresses, and phone numbers of up to 70 million individuals.

The data will help inform CUNA conversations with lawmakers, regulators, the media and others. There is no deadline for credit unions to respond to the survey, and credit unions that have not yet responded are encouraged to do so. Credit unions that have responded can also update their totals if new costs are incurred.

Omnibus spending bill signed into law

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WASHINGTON (1/16/14)--The U.S. government is funded into October after President Barack Obama late last week signed a $1 trillion omnibus spending bill.

As well as providing overall funding for the government, the bill increases funding for the Community Development Revolving Loan Fund at an annualized rate of $1,144,746 and the Community Development Financial Institutions Fund at $210 million. The maximum loan limitation of the National Credit Union Administration's Central Liquidity Facility will also be maintained at its current statutory ceiling of 12 times its paid-in capital.

The Credit Union National Association in a Jan. 7 letter urged lawmakers to restore funding to these two vital programs at levels proscribed in a 2012 law. (See Jan. 15 News Now story: CUNA-requested CDRLF, CDFI Fund funding levels restored under House bill.)

Appeals court to closely examine lower court interchange ruling

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WASHINGTON (1/20/14)--U.S. Court of Appeals for the District of Columbia Circuit Judges David Tatel, Harry Edwards, and Stephen Williams asked questions at oral arguments Friday that raised questions about whether they will fall in line with a lower court ruling that sought to overturn the Federal Reserve's debit interchange fee cap regulations.

From left, CUNA General Counsel Eric Richard, Deputy General Counsel Mary Dunn and Assistant General Counsel for Special Projects Robin Cook discuss Friday's interchange arguments outside the U.S. Court of Appeals. (CUNA Photo)


The case is known as NACS, et al. v. Board of Governors of the Federal Reserve System.

"We are very encouraged by today's hearing, as it shows that the court will be taking a hard look at U.S. District Court Judge Richard Leon's decision striking down the Federal Reserve's interchange rules. We are optimistic that this will result in more costs being taken into account in the setting of interchange fees than Judge Leon's decision would allow," Credit Union National Association General Counsel Eric Richard said.

Leon last year put a stay on his decision, pending the outcome of the case.

They heard from the Federal Reserve, a coalition of financial services groups, including CUNA, and merchants.

The merchants have argued that the Fed overstepped its bounds, allowed too many costs to be considered, and set too high of a cap. The three judges seemed to dismiss out of hand the position that merchants took in district court earlier this year. "They seemed to recognize that additional costs can be properly considered under the statute," CUNA General Counsel Eric Richard said.

Merchants brought the case against the Fed in 2012, alleging that the Fed made errors in implementing a final rule that caps 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.

CUNA and the coalition in the past have argued that the Fed cap is too low and does not allow debit card issuers to cover their costs and a reasonable rate of return on their investments. The coalition has underscored that consumers have not seen any pricing benefits for products and services promised by the merchants when they were fighting for a government-set cap on what card issuers may charge for their services.

Lawyers that spoke on behalf of financial services coalition articulately presented credit union concerns, Richard said. However, he added, nothing is certain until the court actually issues its opinion. "Even after that, depending on exactly what the court says, there may still be much work to be done," he added.

The appeals court will rule on the case before its term ends in August, and a decision could come as soon as this spring.

"The stakes are very high, particularly at a time when many are relying on interchange revenues to cover the costs associated with data breaches at big box retailers."

Cheney in HuffPo: Hold merchants accountable for data breaches

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WASHINGTON (1/21/14)--"The cost of a merchant data breach--whether it is at a large national merchant or a local merchant--can be significant for credit unions of all sizes," and merchants that are involved in data breaches "should by law be financially liable for the impact of the breach on affected consumers, as well as their financial institutions," Credit Union National Association President/CEO Bill Cheney wrote in a Huffington Post column published Friday.

Cheney in his column commented on the recent Target and Neiman Marcus data breaches, which are not the first breaches of their kind and "are not likely to be the last." Much attention has been paid to the Target breach because of its size and scope, but these occurrences happen more frequently than we would like to admit, and even at smaller vendors, he wrote.

Credit unions provide exceptional service to their members in responding to these events, but many members wonder why their credit unions must bear the cost of the merchants' negligence, and why Congress has not done more to make merchants responsible for breaches of their data systems, he said. CUNA is working to assess the costs the Target breach has created for credit unions, and is releasing preliminary results from a survey on the issue this week. (See News Now story: Initial results expected this week from Target breach survey.)

Credit unions are working with members that have been impacted by data security breaches, notifying those that have been impacted, helping them to monitor their accounts and urging them to review their account statements and reversing fraudulent transactions and reissuing cards at no cost. However, these actions will not be reimbursed by Target. Target and other merchants are rarely held responsible for reimbursing financial institutions for the cost that the data breach has incurred on them and, in the case of credit unions, their members, Cheney emphasized.

When all is said and done, credit unions and banks will have spent millions on what appears to be a major security failure caused by Target and other retailers' inability to protect consumer data. "It's time for Congress to act to stop the cycle," Cheney said.

For the full Huffington Post column, use the resource link.

Initial results expected this week from Target breach survey

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WASHINGTON (1/21/14)--Preliminary results from the Credit Union National Association's survey on the impact of the massive Target data breach on credit unions are expected to be released this week.

CUNA has asked credit unions to outline the costs and burdens created by the Target data breach, which resulted in the theft of 40 million debit and credit cards, and encrypted PIN data, and the names, mail and email addresses, and phone numbers of up to 70 million individuals.

Target has admitted responsibility in the breach. Neimann-Marcus has also had data security issues lately, and six other merchants have reportedly been affected by the same hackers that caused the Target breach. (See News Now story: Target-like attack hitting 6 more retailers.)

CUNA has been collecting data from credit unions to inform communications with lawmakers, regulators, the media and others. There is no deadline for credit unions to respond to the survey, and credit unions that have not yet responded are encouraged to do so.  CUNA will update the survey results in a few weeks.

Members of the U.S. Congress are looking into the data breach issue and considering holding hearings. Bills that would establish consumer data security standards for companies and require them to notify consumers when a data breach has occurred have also been released. (See Jan. 16 News Now story: Carper, Blunt bills would address data security concerns)

CUNA pushing back on late fines, says 'Cheney Report'

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WASHINGTON (1/21/14)--The National Credit Union Administration's plan to fine late call report filers, revealed this week, is a clear case of "regulatory overreach," Credit Union National Association President/CEO Bill Cheney said in this week's Cheney Report.

In a Letter to Credit Unions (14-CU-03) released last week, the NCUA said it plans to charge late filers a minimum of $2,000 per day and a maximum of $1 million per day for various late filing offenses. (See Jan. 16 News Now story: Late call report filers will be fined by NCUA--starting soon.)

Cheney notes that the agency justified the assessment of the civil money penalties by noting more than 1,000 federally insured credit unions of all asset sizes filed their call reports after the 2013 third quarter deadline had passed, with a large percentage of these late filers being chronically late.

"We understand the need for the agency to obtain information in a timely manner--but these penalties are just not necessary," Cheney says. "Education for credit unions, including being sure they are aware of their reporting requirements, should be the keys to addressing problems--not punitive charges," he added.

"We're pushing back with NCUA about the imposition of this program," Cheney says..

Separately, The Report also notes Southeastern FCU's work to develop a student advisory board. The Valdosta, Ga. credit union selected 16 high school seniors to serve on its third high school student advisory board. Students were chosen based on several areas of criteria and will receive a $500 college scholarship upon completing their nine-month term on the board. "Activating a student advisory board is an excellent way to get young members involved in molding new and more effective ways of educating their peers on financial issues," Cheney wrote.

Creating awareness is one of the key elements of CUNA's Unite for Good effort, CUNA's shared, strategic vision in which Americans choose credit unions as their best financial partner.

Other issues addressed in this week's Report include:
  • The start of a new round of "Don't Tax My Credit Union" advocacy;
  • CUNA regulatory relief outreach results; and
  • Items on the NCUA board agenda.
For the full Cheney Report, use the resource link.

Operating fee invoices will come out in March

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ALEXANDRIA, Va. (1/21/14)--The 2014 natural person federal credit union operating fee rate reduction of 18.4%, and 5.1% increase in the asset dividing point for the 2014 operating fee scale, are detailed in a new National Credit Union Administration letter to federal credit unions (14-FCU-01).

Invoices for these fees will be sent out by the agency in March. Federal credit unions with assets less than $1 million will not be assessed an operating fee for 2014.

The operating fees for federal credit unions were assessed based on assets as of December 31, 2013. Included with the letter is an NCUA chart intended to help a federal credit union calculate the exact dollar amount of its operating fee. The chart also includes the NCUA web link to the online calculator. The letter also provides insight into the calculation method.

The NCUA will combine the operating fee and National Credit Union Share Insurance Fund capitalization deposit of 1% of insured shares into a single payment. Payment is due to NCUA no later than April 15.

The agency adds that for federal credit unions signed up to pay via Pay.Gov, no further action is required; payment will occur by April 15.

All others must send payment according to the instructions included with the invoice.

Questions regarding details for the letter should be directed to the NCUA's Office of the Chief Financial Officer at ocfomail@ncua.gov.

Obama names nominee to head SBA

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WASHINGTON (1/21/14)--President Obama nominated Maria Contreras-Sweet to head the U.S. Small Business Administration (SBA), noted an entry in The White House Blog posted Friday.

"America's small businesses are on the front lines when it comes to creating jobs and new opportunities. They are the cornerstones of our communities, and can help lead the way as we continue to grow the economy and add jobs in the coming year," the post says.

"They're part of the pact that America makes--the idea that if you work hard, if you take responsibility, then you can build something new," President Obama said in his announcement.

The Credit Union National Association supports a goal of increasing small business access to capital through the reduction of statutory and regulatory impediments, such as enabling full credit union participation in the SBA's Section 504 programs.

Contreras-Sweet is the founder of a Latino-owned community bank in Los Angeles and she is a former state cabinet secretary in California having served as secretary of the Business, Transportation and Housing Agency from 1999 to 2003.

Her reported private sector experience includes her founding of ProAmerica Bank, which primarily serves small- and mid-sized businesses, and as president and co-founder of Fortius Holdings, a private equity firm formed to provide capital to small California businesses.

The top post at the SBA has been empty since August, when Karen Mills left to accept a joint post at the Harvard Business School and Harvard's Kennedy School of Government.
 

CUNA: NCUA 2014 strategic plan improvements needed before its adoption

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WASHINGTON (1/20/14)--The National Credit Union Administration should incorporate a number of improvements before it adopts its 2014-2017 Strategic Plan, the Credit Union National Association said in its most recent comment letter to NCUA filed Friday.
 
The letter focused on the NCUA's proposed strategic plan, but used the opportunity to raise a host of concerns CUNA has about the agency's operations and dealings with credit unions and credit union issues. 
 
Cheif among these issues, CUNA urged the agency to address how it plans to provide regulatory relief to credit unions.  Citing the Office of Comptroller of the Currency's recently released strategic plan that claims to want to support bank competitiveness, CUNA's Deputy General Counsel Mary Dunn said the agency should include its overall plans for regulatory relief within its three-year strategy notice.
 
"Steps such as allowing more flexibility for well-managed credit unions and additional latitude to avoid non-statutory requirements such as under the member business loan rule are but two examples that should be addressed," Dunn wrote. 
 
CUNA provided a number of recommendations in a Nov. 13, 2013 letter (see resource link) to NCUA that should be encompassed under regulatory relief in the Strategic Plan, the CUNA letter noted.
 
Other points raised by CUNA included:
  • NCUA efforts to improve the examination process should be addressed;
  • The strategic plan should address cost containment and how the agency's budget correlates with the strategic plan;
  • The NCUA's overall communications plan should be improved; and,
  • The agency should better address the use of technology, data security and efforts to stay current on new developments, such as in the area of payments.
CUNA also criticized the agency's process for review of its strategic plan, which did not provide sufficient time for stakeholder input, since the agency is considering the plan at the Jan. 23 open board meeting. CUNA also said that directives from the Office of Management and Budget, which sets standards for the operation of federal agencies, have not been met.

NEW: Appeals court to closely examine lower court interchange ruling

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WASHINGTON (1/17/14, UPDATED: 12:10 P.M. ET)--U.S. Court of Appeals for the District of Columbia Circuit Judges David Tatel, Harry Edwards, and Stephen Williams asked questions at oral arguments today that cast doubt that they will fall in line with a lower court ruling that sought to overturn the Federal Reserve's debit interchange fee cap regulations.

From left, CUNA General Counsel Eric Richard, Deputy General Counsel Mary Dunn and Assistant General Counsel for Special Projects Robin Cook discuss today's interchange arguments outside the U.S. Court of Appeals. (CUNA Photo)
The case is known as NACS, et al. v. Board of Governors of the Federal Reserve System. Based on questions asked of counsel arguing at the hearing, the judges seemed inclined to take a much harder look at U.S. District Court for the District of Columbia Judge Richard Leon's July decision to strike down the Fed's interchange fee cap, Credit Union National Association regulatory staff said. Leon last year put a stay on his decision, pending the outcome of the case.

They heard from the Federal Reserve, a coalition of financial services groups, including CUNA, and merchants.

The merchants have argued that the Fed overstepped its bounds, allowed too many costs to be considered, and set too high of a cap. The three judges seemed to dismiss out of hand the position that merchants took in district court earlier this year. "They seemed to recognize that additional costs can be properly considered under the statute," CUNA General Counsel Eric Richard said.

Lawyers that spoke on behalf of financial services coalition articulately presented credit union concerns, he added.

Merchants brought the case against the Fed in 2012, alleging that the Fed made errors in implementing a final rule that caps 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.

CUNA and the coalition in the past have argued that the Fed cap is too low and does not allow debit card issuers to cover their costs and a reasonable rate of return on their investments. The coalition has underscored that consumers have not seen any pricing benefits for products and services promised by the merchants when they were fighting for a government-set cap on what card issuers may charge for their services.

NEW: CUNA, merchants, Fed offer oral interchange arguments

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WASHINGTON (1/17/14, UPDATED: 9:30 A.M. ET)--Oral arguments have just begun as the Credit Union National Association and financial services partners, the Federal Reserve, and merchants today present their views before U.S. Court of Appeals for the District of Columbia Circuit Judges David Tatel, Harry Edwards and Stephen Williams.
 
The merchant group is speaking first, and will have 25 minutes to make their presentation. The CUNA coalition will speak for 10 minutes, and the Fed representatives will speak for 15 minutes.
 
CUNA's partners are the American Bankers Association, Clearinghouse Association, Consumer Bankers Association, Electronic Payments Coalition, Financial Services Roundtable, Independent Community Bankers of America, Midsize Bank Coalition of America, National Association of Federal Credit Unions, and National Bankers Association. The case is known as NACS, et al. v. Board of Governors of the Federal Reserve System.
 
Merchants brought the case against the Fed in 2012, alleging that the Fed made errors in implementing a Dodd-Frank-imposed debit interchange fee cap. The Fed's final rule caps debit interchange fees for issuers with assets of $10 billion or more at 21 cents. The regulation also allows card issuers to charge an additional five basis points of the value of the transaction to cover fraud losses. An extra penny may also be charged by financial institutions that are in compliance with the Fed's fraud-prevention standards.
 
Judge Richard Leon of the U.S. District Court for the District of Columbia in July moved to strike down the Fed's interchange fee caps, but later issued a stay to keep the Fed rules in place during the court proceedings.
 
CUNA and the coalition in the past have argued that the Fed cap is too low and does not allow debit card issuers to cover their costs and a reasonable rate of return on their investments. The coalition has underscored that consumers have not seen any pricing benefits for products and services promised by the merchants when they were fighting for a government-set cap on what card issuers may charge for their services.
 
Watch News Now for more on this morning's arguments.

Risk-based capital, derivatives to be discussed at Jan. 23 NCUA meeting

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ALEXANDRIA, Va. (1/17/14)--A proposed rule on risk-based capital is on the agenda for next week's National Credit Union Administration's open board meeting. Also on the list of considerations: a proposal to authorize derivatives to manage interest rate risk (IRR).
 
The current 7% leverage capital standard was set by statute in 1998. While only the U.S. Congress can change the statute, NCUA Chairman Debbie Matz said in July that the recent financial crisis and changes in the ways the industry operates means the agency must make changes to how it implements the law by adopting a more flexible and forward-looking approach.
 
The Credit Union National Association has supported net worth standard changes that better reflect risk than the present approach does, but which will not simply add net worth requirements to the current system. CUNA has also been urging the agency to adopt a more productive approach to rulemaking that focuses on problem areas rather than issuing rules with blanket applicability, regardless of the credit unions level of risk. CUNA's Examination and Supervision Subcommittee has met with NCUA officials on the capital ratio issue.
 
Earlier this week, CUNA's News Now reported that NCUA board member Rick Metsger said fewer than 200 credit unions would be required to make adjustments under the risk-based capital proposal that will be discussed next Thursday.
 
Regarding the derivatives proposal, CUNA supported the NCUA's efforts to solicit comments on authorizing the instruments to manage IRR, but did not support a number of the key provisions of the proposal.
 
For instance, one aspect under consideration that is of deep concern: Whether application and supervision fees should be imposed in order for credit unions to gain derivatives authority.

CUNA adamantly opposes this approach. "If derivatives reduce IRR, then NCUA should be encouraging credit unions to make appropriate use of permissible derivative options instead of retiring barriers to their use, such as fees to apply or for supervision," CUNA Deputy General Counsel Mary Dunn said in a comment letter.

Also on the Jan. 23 open meeting agenda:
  • NCUA's Strategic Plan for 2014 through 2017, and Annual Plan for 2014 and 2015; and,
  • The Federal Credit Union Loan Interest Rate Ceiling.
Watch CUNA's News Now and NewsNowLiveWire for full coverage of the meeting. CUNA's Regulatory Advocacy Report will also provide important details.

CompBlog Wrap Up: CU questions on new mortgage rules

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WASHINGTON (1/17/14)--In this month's CompBlog Wrap-Up, the Credit Union National Association answers key credit union questions regarding the Consumer Financial Protection Bureau's new mortgage regulations, addressing mortgage servicing policies, homeownership counseling list requirements, late fees, and other issues.

The Wrap-Up also notes that compliance perfection is not expected immediately, and outlines the CFPB's plans for 2014, higher-priced mortgage loan appraisal rule changes, and guidance on student loans, regulations Z and X, deposit advance products and social media.

And, as it does every month, the CompBlog Wrap-Up lists the upcoming effective dates of new regulations, important compliance articles and reports to read, as well as CUNA training programs.

For more of the CUNA CompBlog Wrap-Up, and other compliance gems, use the resource link.

CUNA, Fed, merchants on for interchange oral arguments this morning

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WASHINGTON (1/17/14)--A trio of U.S. Court of Appeals for the District of Columbia Circuit Judges today will hear interchange oral arguments from the Credit Union National Association and coalition partners, the Federal Reserve, and merchant representatives.

Circuit Judges David Tatel, Harry Edwards and Stephen Williams will hear the arguments in the ongoing debit interchange case known as NACS, et al. v. Board of Governors of the Federal Reserve System.

The hearing is scheduled to start at 9:30 A.M. (ET) and will feature 25 minutes of arguments from merchants, 10 minutes from financial services representatives and 15 minutes from the Fed.

The case centers on a merchant coalition challenge to the Fed's implementation of a Dodd-Frank Act-imposed debit interchange cap. The merchants allege the cap is too high. CUNA and its partners maintain that the cap, in fact, is too restrictive.

Watch News Now for coverage of the hearing.

Omnibus spending bill approved in House

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WASHINGTON (1/16/14)--A $1 trillion, nearly 1,600-page omnibus spending bill was approved by the U.S. House on Wednesday by a 359 to 67 vote.

The Senate will reportedly vote on the bill by Friday, allowing President Barack Obama to sign the bill by the Saturday deadline. If approved, the bill would fund the government until October.

The bill would increase funding for the Community Development Revolving Loan Fund at an annualized rate of $1,144,746 and the Community Development Financial Institutions Fund at $210 million. The maximum loan limitation of the National Credit Union Administration's Central Liquidity Facility would also be maintained at its current statutory ceiling of 12 times its paid-in capital.

The Credit Union National Association in a Jan. 7 letter urged lawmakers to restore funding to these two vital programs at levels proscribed in a 2012 law. (See Jan. 15 News Now story: CUNA-requested CDRLF, CDFI Fund funding levels restored under House bill.)

NEW: Risk-based capital will be discussed at Jan. 23 NCUA

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ALEXANDRIA, Va. (1/16/14, UPDATED 3:20 p.m. ET)--A proposed rule on risk-based capital is on the just-released agenda for next week's National Credit Union Administration's open board meeting.
 
The current 7% leverage capital standard was set by statute in 1998. While only the U.S. Congress can change the statute, NCUA Chairman Debbie Matz said in July that the recent financial crisis and changes in the ways the industry operates means the agency must make changes to how it implements the law by adopting a more flexible and forward-looking approach.
 
The Credit Union National Association has supported net worth standard changes that better reflect risk than the present approach does, but which will not simply add net worth requirements to the current system. CUNA has also been urging the agency to adopt a more productive approach to rulemaking that focuses on problem areas rather than issuing rules with blanket applicability, regardless of the credit unions level of risk. CUNA's Examination and Supervision Subcommittee has met with NCUA officials on the capital ratio issue.
 
Earlier this week, CUNA's News Now reported that NCUA board member Rick Metsger said fewer than 200 credit unions would be required to make adjustments under the risk-based capital proposal that will be discussed next Thursday.
 
Also on the Jan. 23 open meeting agenda:
 
* NCUA's Strategic Plan for 2014 through 2017, and Annual Plan for 2014 and 2015;
* The Federal Credit Union Loan Interest Rate Ceiling; and,
* Final Rule, Parts 703, 715 and 741, Financial Derivative Transactions to Mitigate Interest Rate Risk.

CUNA calls for targeted, cheaper ways to address ODFI exceptions

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WASHINGTON (1/16/14)--NACHA--The Electronic Payments Association should examine more targeted, less costly ways to help reduce exceptions by Originating Depository Financial Institutions (ODFIs), the Credit Union National Association said in a comment letter.

The comment letter follows the release of a proposed Automated Clearing House (ACH) rule that would reduce exceptions by establishing a system of economic incentives for ODFIs. An ODFI would pay fees based on exceptions to partially offset the Receiving Depository Financial Institution's (RDFI) costs for exception processing and customer service.

The proposal would require ODFIs to pay the following fees to RDFIs:
  • $.10 to $.40 per return based on incorrect account data;
  • $.25 to $.75 per change, when an RDFI corrects information and sends a Notification of Change; and
  • $1.50 to $2.50 per return related to an issue with the receiver's authorization.
CUNA Assistant General Counsel Dennis Tsang noted that credit unions generally originate higher quality transactions and are not likely to be significantly impacted by the proposal. Also, they would receive fees to offset costs incurred for exception processing and customer service.

However, Tsang said, some credit unions oppose the concept of fees paid by ODFIs based on returns, because ODFIs may not be able to fully control the transactions originated by the Originators. Credit unions feel this approach is not targeted to reduce risk, he said.

The CUNA letter asked NACHA to minimize costs on credit unions that may be affected and minimize unintended consequences. NACHA should conduct a robust, comprehensive study that includes financial institutions of all types and sizes to measure better the costs incurred by all RDFIs for handing exceptions before it moves forward with finalizing the proposal, the CUNA letter added.

The CUNA letter also urged NACHA to:
  • Fully assess and minimize the potential unintended consequences from the proposed changes, including with consumer access to payments;
  • Account for effects from the concurrent proposed rule on ACH network risk and enforcement topics that would reduce return rate thresholds;
  • Provide additional risk management tools and resources to assist ODFIs; and
  • Form a representative panel to oversee the fee-setting process, with a dedicated slot for a credit union representative.
NACHA should also delay the compliance date by at least three months after the proposed March 20, 2015 effective date, CUNA said.

For the full comment letter, use the resource link.

NCUA unveils 2013 reg review results, including MBL recommendations

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ALEXANDRIA, Va. (1/16/14)--Amendments to member business lending (MBL) regulations could be proposed by a National Credit Union Administration committee early this year, the National Credit Union Administration's Office of General Counsel said in its review of agency regulations.

The OGC recommended that MBL regulations "should be revisited and updated to reflect the current business climate and to address certain other pressing issues facing credit unions." The Credit Union National Association has been urging the agency to provide more flexibility to credit unions under its MBL rule.

The OGC said the agency could consider:
  • Whether 'soft costs' should be included in calculating the market value of a construction and development project;
  • Clarifying the meaning of 'associated borrower';
  • Changing collateral valuation;
  • Determining appropriate financial analysis practices as part of the underwriting process;
  • Exempting well-capitalized credit unions with sufficient CAMEL ratings from the MBL rule's personal guarantee requirement;
  • Replacing the two-year direct experience requirement with a more flexible, user friendly method of ensuring a credit union is utilizing qualified individuals in its business lending program; and
  • Updating the rule to clarify the legal relationship between NCUA and state supervisors.
Appraisals and the Central Liquidity Facility are also addressed in the document. The general counsel recommended that the agency eliminate any redundant requirements on credit unions to provide copies of appraisals upon request. Technical changes to CLF language were also suggested.

Other items on the list include:
  • 711 Management Official Interlocks;
  • 712 Credit Union Service Organizations;
  • 713 Fidelity Bond and Insurance Coverage for Federal Credit Unions;
  • 714 Leasing;
  • 715 Supervisory Committee Audits and Verifications;
  • 716 Privacy of Consumer Financial Information;
  • 717 Fair Credit Reporting;
  • 721 Incidental Powers;
  • 724 Trustees and Custodians of Certain Tax-Advantaged Savings Plans;
  • 740 Accuracy of Advertising and Notice of Insured Status;
  • 741 Requirements for Insurance;
  • 745 Share Insurance and Appendix; and 
  • 747 Administrative Actions, Adjudicative Hearings, Rules of Practice and Procedure, and Investigations.
The NCUA reviews all of its rules every three years, scheduling a look at about one-third of its rules each year on a rotating basis. The 2014 list of regulations up for review has not been released.

The agency says its goal is to ensure that all regulations are clearly articulated and easily understood, a goal that the Credit Union National Association endorses.

The CUNA Councils last year reviewed the listed rules and filed comments with the agency. CUNA continues to advocate for a reduction in regulatory burden and other changes that would increase regulatory relief for credit unions.

Rep. Pittenger cites CUs in intro of Reg D study bill

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WASHINGTON (1/16/14)--Rep. Robert Pittenger (R-N.C.) took to the House floor this week calling for his colleagues' support of a bill to study reforms to Regulation D, and citing credit union concerns that members blow through the rule's six-transfer limit "in a matter of moments as they work online."

"Hats off to Rep. Pittenger for speaking up for credit union concerns on this important issue. It's time to study this requirement to determine how it really affects consumers and financial institutions, and to understand how or if modifying it would affect monetary policy," Credit Union National Association President/CEO Bill Cheney said in response.

Pittenger spoke on behalf of the H.R. 3240, which would require the Government Accountability Office to study Regulation D and recommend ways to modernize it. The rule affects transfers made via phone, online and ATMs.

CUNA supports the bill and improvements to Reg D and has testified before the U.S. Congress in support of such changes as increasing the number of automatic transfers allowed from a member's savings to share accounts.

Pittenger called Reg D "truly obsolete" in this age of online and mobile banking, and said it harkens back to a time when most banking transactions "ended with giving a free lollipop."

Late call report filers will be fined by NCUA--starting soon

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ALEXANDRIA, Va. (1/16/14)--Procrastinators beware: The National Credit Union Administration will begin to impose civil money penalties against federally insured credit unions (FICUs) that do not meet their quarterly call report filing deadlines.

In a Letter to Credit Unions (14-CU-03) released last night, the NCUA called tardy filing is "a serious problem" and financial penalties will be assessed starting in the second quarter of this year.

The agency first informed credit unions of its plan to charge such fees in a letter to credit unions in October.

The agency reported that  more than 1,000 FICUs of all asset sizes filed their call reports after the 2013 third quarter deadline had passed, with a large percentage of these late filers being chronically late. "Such late filing impacts NCUA's ability to conduct effective off-site supervision and delays the release of quarterly industry data to the general public," and is a drain on NCUA resources.

The agency said it plans to charge:
  • Up to a maximum of $2,000 per day for each day a required report is "minimally" late or contains uncorrected false/misleading information if the late or false/misleading filing is unintentional and the credit union has reasonable procedures in place to avoid such errors;
  • Up to a maximum of $20,000 per day for each day a required report is late or contains false/misleading information if the late or false/misleading filing is not covered by the "unintentional" safe harbor outlined above;
  • Up to a maximum of $1 million, or 1% of total assets, whichever is less, per day if a federally insured credit union knowingly or with reckless disregard for accuracy submits a false or misleading report and fails to correct it.
To determine the size of the fine, the NCUA said it will consider:
  • The size of financial resources and good faith of the credit union;
  • The gravity of the violation;
  • The history of previous violations; and
  • Other matters as justice may require regarding the circumstances of late or false/misleading submissions, such as natural disasters and incapacitation of key employees.
Proceeds from the fines will go to the U.S. Treasury, the NCUA said.

Those that file late in the 2014 first quarter will receive warning letters with an estimate of what the assessed penalty would have been.

The Call Report filing deadlines for 2014 are:
  • Jan. 24 for 2013 fourth quarter filings;
  • April 25 for 2014 first quarter filings;
  • July 25 for 2014 second quarter filings; and
  • Oct. 24 for 2014 third quarter filings.
For the full NCUA letter, use the resource link.

Carper, Blunt bills would address data security concerns

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WASHINGTON (1/16/14)--The Data Security Act of 2014 (S. 1927), introduced by Sens. Tom Carper (D-Del.) and Roy Blunt (R-Mo.) Wednesday, is the latest in a series of data security bills released in the wake of the recent Target data breach.

The Carper/Blunt bill would require credit unions and other financial institutions, retailers, and federal agencies to protect sensitive information, notify consumers if a breach occurs, and conduct their own investigations in that  event.  If a breach impacted more than 5,000 consumers, the federal authorities, law enforcement officials, and various consumer reporting agencies would have to be notified.  Overall, the bill aims to replace various state-based data protection laws with one single, federal standard.

"New technologies pose new opportunities--as well as new security challenges," Blunt said. "As the recent incidents involving Target and Neiman Marcus remind us, major data breaches that compromise consumers' identities and financial security are becoming more routine. These recent breaches, and others before them, underscore the need for Congress to act to protect Americans against fraud and identity theft," Carper added.

The Credit Union National Association supports the Carper/Blunt legislation, which is similar to bills the legislators have introduced over the last five years.

On the House side, another cybersecurity bill, the National Cybersecurity and Critical Infrastructure Protection Act (H.R. 3696), was amended by the House Homeland Security subcommittee on cybersecurity, infrastructure protection, and security technologies on Wednesday. The bill will move on to the full committee for consideration. (For more on H.R. 3696, see Dec. 14 News Now: CUNA: Bill would back CU cybersecurity efforts.)

Sen. Patrick Leahy (D-Vt.) has also introduced the Personal Data Privacy and Security Act, which would establish consumer data security standards for companies, and require them to notify consumers when a data breach has occurred.

House Financial Services Committee leaders have said their panel will conduct their own data security hearings, and Senate Banking Committee Chairman Tim Johnson (D-S.D.) is also reportedly considering similar action.

CUNA President/CEO Bill Cheney this week called 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. Target has admitted responsibility for the breach that compromised the data of as many as 70 million customers, but Cheney said more is needed. "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," Cheney emphasized.

Nominees sought for CFPB CU council

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WASHINGTON (1/16/14)--The Consumer Financial Protection Bureau is accepting nominations for Credit Union Advisory Council (CUAC), Consumer Advisory Board (CAB) and Community Bank Advisory Council (CBAC) seats that will come open this fall.

There will be eight CUAC seats, seven CAB seats and eight CBAC seats open.

The CAB is comprised of 25 members with expertise in consumer protection, financial services, community development, fair lending, civil rights, and consumer financial products or services. Bill Bynum, CEO of Hope Enterprise Corp. and Hope Community CU, Jackson, Miss., is CAB vice president. Laura Castro de Cortes, vice president of alternative financial services for Centris FCU, Omaha, Neb., is also a CAB member.

The 15 current members of the CUAC are:
  • Bernard Balsis, IEG FCU, Hawaii;
  • Rose Bartolomucci, Towpath CU, Ohio;
  • Gary Bell, Cooperative FCU, California;
  • John Buckley, Gerber FCU, Michigan;
  • Carla Decker, District Government Employees FCU, Washington, D.C.;
  • Ron Ehrenreich, Syracuse Cooperative FCU, New York;
  • Kevin Foster-Keddie, Washington State Employees CU, Washington;
  • Mitchell Klein, Police and Firemen FCU, Pennsylvania;
  • Lily Lo, Northeast Community FCU, California;
  • Maria Martinez, Border FCU, Texas;
  • Marcus Schaefer, Truliant FCU, North Carolina;
  • Camille Shillenn, Unified People's CU, Wyoming;
  • Helen Godfrey Smith, Shreveport FCU, Louisiana;
  • Gregg Stockdale, 1st Valley CU, California; and
  • David Wright, Services Center FCU, South Dakota.

NCUA's Metsger added to NeighborWorks board

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ALEXANDRIA, Va. (1/16/14)--National Credit Union Administration Board Member Richard Metsger will represent the agency on the NeighborWorks America board of directors.

Metsger was appointed by NCUA Chairman Debbie Matz, who is vice chair of the NeighborWorks board of directors.

Metsger said he looks forward to working with NeighborWorks board members "in their efforts to create affordable housing opportunities for low-income Americans and their families in safe, sustainable neighborhoods."

Federal Reserve Board Governor Sarah Bloom Raskin is the current NeighborWorks America board chairman, and Comptroller of the Currency Thomas Curry, Federal Housing Administration Commissioner Carol Galante, and Federal Deposit Insurance Corp. Board Member Jeremiah Norton also serve on the NeighborWorks board.

NeighborWorks America works to provide access to homeownership and to safe and affordable rental housing. In the past five years, NeighborWorks' affiliated organizations have generated more than $19.5 billion in reinvestment in their communities, according to a release, which also stated that NeighborWorks America is the nation's leading trainer of community development and affordable housing professionals.

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.

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.

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.

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.

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.

CUNA: Bill would back CU cybersecurity efforts

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WASHINGTON (1/14/14)--Noting that the financial services sector continues to collaborate and invest in the infrastructure needed to combat cyber threats, the Credit Union National Association and others on Monday thanked House Committee on Homeland Security leaders for introducing the National Cybersecurity and Critical Infrastructure Protection Act (H.R. 3696).

"We welcome your leadership in this crucial fight against cyber threats and your work in forging this commonsense, bipartisan legislation," the cosignors said. The letter was sent to committee Chairman Michael McCaul (R-Texas), Ranking Democrat Bennie Thompson (D-Miss.) and other committee members.

According to the joint trade letter, H.R. 3696 would:
  • Strengthen existing mechanisms such as the Financial Services Sector Coordinating Council and the Financial Services Information Sharing and Analysis Center that help identify threats, respond to cyber incidents and coordinate with government partners;
  • Improve the provisioning of security clearances for those involved in cybersecurity information sharing; and
  • Expand the existing Support Anti-Terrorism by Fostering Effective Technologies (SAFETY) Act to provide important legal liability protections for providers and users of certified cybersecurity technology in the event of a qualified cybersecurity incident.
The expanded SAFETY Act provisions, if approved, must be implemented "in a manner that does not duplicate or conflict with existing regulatory requirements, mandatory standards, or the evolving voluntary National Institute for Standards and Technology Cybersecurity Framework," the letter said. Further, an expansion of the program must be coupled with additional funding to enable the Dept. of Homeland Security to handle the increased scope of program and subsequent increase in applicants, the letter added.

The letter was cosigned by the American Bankers Association, The Clearing House, Consumer Bankers Association, Electronic Funds Transfer Association, Financial Services - Information Sharing and Analysis Center, Financial Services Roundtable, Independent Community Bankers Association, Investment Company Institute, NACHA-The Electronic Payments Association, National Association of Federal Credit Unions and Securities Industry and Financial Markets Association.

Obama to nominate two, renew one for Fed board

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WASHINGTON (1/14/14)--President Barack Obama last week announced his intent to nominate two new Federal Reserve Board members and one current Fed member.

The expected nominees are:
  • Former Governor of the Bank of Israel Stanley Fischer to serve as Fed Vice Chairman and Governor. Fischer holds a B.Sc. and an M.Sc. from the London School of Economics and a Ph.D. from MIT. He has served as Citigroup Vice Chairman, International Monetary Fund Deputy Managing Director and Vice President, Development Economics and Chief Economist at the World Bank. Fischer would serve the New York, N.Y. Fed region, and serve until Jan. 31, 2020;
  • Former U.S. Department of the Treasury Under Secretary for International Affairs Lael Brainard to serve as Fed Governor. Brainard holds a B.A. from Wesleyan University and an M.A. and Ph.D. from Harvard University. She has also served as Vice President and the Founding Director of the Global Economy and Development Program at the Brookings Institution and Deputy National Economic Adviser and Deputy Assistant for International Economics for President Bill Clinton. Brainard would serve the Richmond, Va., region until Jan. 31, 2026; and
  • Current Fed Governor Jerome Powell to serve a second term as governor. Powell holds an A.B. from Princeton University and J.D. from the Georgetown University Law Center. He has also served as Assistant Secretary and an Under Secretary of the Treasury for President George H.W. Bush. Powell would serve the Philadelphia, Pa. region until Jan. 31, 2028. 
Obama said the three potential Fed nominees "have the proven experience, judgment and deep knowledge of the financial system to serve at the Federal Reserve during this important time for our economy."

The seven-member Fed board currently is down to six members, and Chairman Ben Bernanke and board member Sarah Bloom Raskin are scheduled to depart soon.

Current Fed member Janet Yellen will succeed Bernanke as chairman when his term ends on Jan. 31. Her term as chairman will end Jan. 30, 2018.

Registration still open for NCUA webinar on underserved markets

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ALEXANDRIA, Va. (1/14/14)--Credit union still have time to register for the National Credit Union Administration's Jan. 15, free webinar on "Profiling Products and Services for Underserved Members."  It's at 2 p.m. (ET).
 
In a reminder sent out by the agency Monday, the NCUA said this session is good for credit unions seeking to improve service to low-income members and those who are underserved. It is a follow-up to a webinar offered a year ago entitled, "Strategic Uses of the Low-Income Designation."
 
Participants of Wednesday's session will hear from three credit unions at different stages of developing products and services to better reach underserved markets, who will share how they developed unique offerings.
 
Use the resource link to register.
 

 
 
 
 

Risk-based capital rule would affect fewer than 200 CUs, Metsger says

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WASHINGTON (1/14/14)--As the National Credit Union Administration works to modernize the 15-year-old credit union capital regime, board member Rick Metsger said Monday night that fewer than 200 credit unions would be required to make adjustments under a new risk-based capital proposal now being developed.
 
Speaking before the Metropolitan Credit Union Management Association (MACUMA), an organization of credit unions in the Washington, D.C. area, Metsger said the agency is working "very, very hard" on the proposal, though he gave no timetable for when the proposal would be released by the agency. The NCUA will post an agenda Thursday for its January open board meeting.
 
The current 7% leverage capital standard was set by statute in 1998. While only the U.S. Congress could change the statute, NCUA Chairman Debbie Matz said in July that the recent financial crisis and industry changes mean the agency must implement the law with a newer, more flexible, forward-looking approach.
 
The Credit Union National Association has supported net worth standard changes that reflect risk better than the present approach but that will not simply add net worth requirements to the current system. CUNA has also been urging the agency to adopt a more productive approach to rulemaking that focuses on problem areas rather than issuing rules with blanket applicability, regardless of the credit unions level of risk. CUNA's Examination and Supervision Subcommittee has met with NCUA officials on the capital ratio issue.
 
In other comments last night, with regard to cybersecurity, Metsger said that in the wake of the massive Target breach, "it is time to move to a safer system" for securing data, including to EMV, or chip-based, systems.

"You can see a changeover to EMV is going to be an expedited process," he said, with serious consideration by all participants in the payment system in the next 24 months.

House Financial Services with have data security hearings, chairman says

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WASHINGTON (1/14/14)--Rep. Jeb Hensarling (R-Texas), who heads the House Financial Services Committee, said his panel will conduct hearings to study how government agencies and financial institutions secure data they collect, reported Politic Pro yesterday. He did not tie the hearings, however, specifically to the recent data breach at Target.

The article noted that Democrats on Hensarling's committee have asked the chairman to schedule a hearing to study the breach at Target.

The Credit Union National Association has reached out to House Financial Services and Senate Banking Committee leaders, encouraging them to "fully examine the chronic issue of merchant data breaches, their impact on consumers and financial institutions."
 
The Target data breach compromised at least 70 million debit and credit cards and included stolen encrypted PIN data. "The cost of a merchant data breach--whether it is at a large national merchant or a local merchant--can be significant for credit unions of all sizes," CUNA President/CEO Bill Cheney wrote to key lawmakers.

CUNA is urging credit unions whose members' accounts were compromised to collect data about the costs they incur in replacing cards and assisting members and to submit the information via a CUNA survey (see resource link).

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

According to a Politico Pro "whiteboard"--or quick news burst--last week, Senate Banking Committee Chairman Tim Johnson (D-S.D.) said that he is considering conducting a hearing to study the recent data breach at Target,

CUs can comment on Fed plan to define emergency lending program

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WASHINGTON (1/14/14)--Credit unions can pass along their views on the Federal Reserve Board's proposed emergency lending rule through a Credit Union National Association regulatory call to action.

The Fed's proposed Regulation A changes are designed to ensure that any emergency lending program or facility is for the purpose of providing liquidity to the financial system, and not to aid an individual failing financial company.

CUNA has clarified that this proposed rule is not intended to affect the Fed's discount window lending to depository institutions.

CUNA is accepting comments until Feb. 24. The Fed has also released its own notice is accepting comments until March 7.

The CUNA call to action is one of many items featured in this week's CUNA Regulatory Advocacy Report. For the CUNA call to action and the Report, use the resource link.

New CUNA tool spotlights 2014 legislative outlook

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WASHINGTON (1/14/14)--Credit unions are watching as the U.S. House and Senate begin their work for 2014, and the latest edition of the Credit Union National Association's Legislative Update Webinar breaks down vital information on these congressional concerns into an easy to access and understand format.

Topics tackled in this month's edition include:
  • Data security;
  • Patent reform;
  • Housing finance reform;
  • Regulatory relief; and
  • Tax reform.
CUNA Senior Vice President of Legislative Affairs Ryan Donovan, in the webinar, updates participants on last year's top happenings regarding these topics, and the 2014 prospects for possible legislation to address these issues.

"The legislative process is a marathon, not a sprint," Donovan emphasizes in the webinar.

The monthly webinars are 15 to 20 minutes in length, and focus on current Capitol Hill events and how CUNA is working on the biggest issues for credit unions.

CUNA staff is also preparing a special edition of the update to prepare credit unions for the upcoming CUNA Governmental Affairs Conference. The GAC edition will include an overview of the issues that CUNA will be discussing during the conference, and key message points to deliver to members of Congress during Capitol Hill meetings.

The special edition pre-GAC webinar is scheduled to be posted in early February.

Donovan has also provided a brief preview of this week's legislative outlook in the CUNA Legislative Update.

For the Legislative Update Webinar and the CUNA Legislative Update, use the resource links.

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.

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.

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.
 

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.

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.

NCUA reiterates TILA guidance in Reg Alert

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ALEXANDRIA, Va. (1/10/14)--Small servicers, those defined as servicing 5,000 or fewer mortgages, are exempt only from portions of the Consumer Financial Protection Bureau's new Truth In Lending Act (TILA) mortgage servicing rule that requires issuance of periodic statements for closed-end mortgage loans, the National Credit Union Administration reminded in a regulatory alert (14-RA-03).

The NCUA noted that the TILA mortgage servicing rule, which becomes effective today, also requires:
  • New and revised disclosures for certain adjustable-rate mortgages; and
  • Prompt crediting of mortgage payments and responding to requests for payoff amounts.
The alert addresses timing requirements for standard and adjustable-rate mortgage statements, and what information must be included in the statements.

The agency also reminded that additional mortgage servicing requirements may apply under the new Real Estate Settlement Procedures Act (RESPA) mortgage servicing rule issued by the CFPB. Those requirements will be addressed in an upcoming NCUA Regulatory Alert (14-RA-04) expected soon.

Credit unions that act as creditors, assignees, or mortgage servicers should be familiar with both of these mortgage servicing rules to determine whether these rules regulate the loans that they service, and if so, what their compliance obligations are under the rules, the NCUA added.

For the full alert, use the resource link.

CUs are good options in USDA rural lending program: CUNA

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WASHINGTON (1/10/14)--The Credit Union National Association strongly supports the U.S. Department of Agriculture's (USDA) efforts to establish a program directed at increasing lending in rural areas, and urged USDA to consider credit unions as a lending option as it revisits existing lending programs and develops new ones.

The CUNA statement came in the form of a comment letter on an interim rule that would establish the Single Family Housing Guaranteed Loan Program (SFHGP). CUNA Senior Assistant General Counsel Luke Martone wrote that the loan program "aims to provide low- and moderate-income persons who will live in rural areas with an opportunity to own decent, safe, and sanitary dwellings and related facilities."

"Numerous credit unions operate in rural areas and we believe this program will benefit not only credit union members in these areas but also the broader communities," the CUNA letter said.

CUNA encouraged the USDA to extend the permissible loan term to 40 years when in the best interest of the member-borrower.

The interim final rule goes into effect Sept. 14. CUNA thanked USDA for providing this lengthy compliance deadline, and for recognizing "the general need to make the program more 'user-friendly' and more compatible with existing mortgage lending practices."

CUNA encouraged the USDA to examine similar programs with an eye toward increasing usability by both lenders and borrowers. CUNA also urged USDA to provide credit unions and other lenders with much-needed information to assess whether and how to participate in the SFHGLP by making its administrative instruction handbook available as early as practical.

The USDA could also provide additional resources such as webinars and audio conferences to inform stakeholders, and CUNA and state credit union leagues would welcome the opportunity to promote and/or partner with USDA on such outreach efforts.

For the full comment letter, use the resource link.

CUNA highlights QM resources as rules go into effect today

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WASHINGTON (1/10/14)--Today may not look a lot different than yesterday to many people, but for mortgage lending credit unions and thousands of other lenders today is the day that the Ability-to-Repay(ATR)/ Qualified Mortgage (QM) lending rules go into effect.

The rule covers consumer closed-end mortgage loans including home-purchase loans, refinances, and home equity loans secured by the borrower's dwelling. The Credit Union National Association is reminding credit unions of the many compliance resource materials that have been provided over the past year.

For borrowers, the new Consumer Financial Protection Bureau rules were written as protections and in response to abusive lending practices that helped undermine the country's housing market and economy. Credit unions largely did not engage in such lending practices and have been recognized throughout the housing crisis as being a model for responsible lending.

The rule requires credit unions and others to assess a member's ability to repay based on specific criteria such as current or reasonably expected income or assets, credit history, employment status, current debt and other related factors that credit unions routinely consider when originating a loan.

Lenders that write mortgages that meet QM criteria, such as requiring a borrower to have a DTI of no more than 43%, are intended to be able to avoid legal liability if their compliance with the ATR provisions is challenged in court. However, there is no requirement that all mortgages have to meet the QM provisions.

In fact, CFPB Director Richard Cordray and the National Credit Union Administration have made it very clear that credit unions and other lending institutions are not required to originate QMs only and may originate non-QM loans. CUNA urged the regulators to clarify that credit unions and other lenders can decide whether a mortgage they originate should confirm to the QM standards or not, as long as the ATR requirements are met.  

CUNA reminds CUs of the following support offered by CUNA or issued by federal regulators. (Use resource links to access the documents.):
  • A comprehensive CUNA.org page of CFPB mortgage rule compliance resources that provides a one-stop shop to assist credit unions;
  • A National Credit Union Administration supervisory letter to credit unions (14-CU-01) that notes agency field staff "will take into account a credit union's good-faith efforts to comply" with new QM regulations as they conduct their early-stage examinations; and
  • A CFPB page of regulatory guidance that provides quick reference charts, videos, compliance guides, supervision and examination materials and other resources.

GAO: Data breach policies challenge even government agencies

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WASHINGTON (1/10/14)--Merchants and financial institutions aren't the only ones with data breach headaches.  A recent U.S. Government Accountability Office study reviewed eight federal agencies and found that while they "generally" developed data security breach policies and procedures, they inconsistently implemented them.

The National Credit Union Administration was not part of the study.  However, the Federal Reserve, Federal Deposit Insurance Corp., Securities and Exchange Commission and the U.S. Treasury Department were.

The GAO summary explains that the term "data breach" generally refers to the unauthorized or unintentional exposure, disclosure, or loss of sensitive information and that such a breach can leave individuals vulnerable to identity theft or other fraudulent activity.

"Although federal agencies have taken steps to protect (personally identifiable information), breaches continue to occur on a regular basis. In fiscal year 2012, agencies reported 22,156 data breaches--an increase of 111% from incidents reported in 2009," the GAO noted.

The report was posted to the GAO website Dec. 9, 2013, coincidentally about nine days before news of the massive data breach at Target first broke.

Use the resource link to read more of GAO's findings and recommendations.

Cordray Comments on CUs Ahead of Mortgage Rule Release

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WASHINGTON (1/9/14)--Consumer Financial protection Bureau Director Richard Cordray again confirmed that credit unions will be permitted to make non-qualified mortgage (QM) loans, and reiterated that the bureau will reexamine its regulations to determine their impact on financial institutions, in comments made ahead of this week's new mortgage rule effective date.

In remarks reported in The Daily Caller, Cordray noted that QMs cover the vast majority of mortgage loans, but do not represent all of the mortgage market. Credit union mortgages have seen strong results over time, he added.

Cordray also sought to allay fears about burdens created by the impending regulations in a USA Today editorial. The bureau, he said, will not require loads of red tape: "Lenders will likely ask a potential home buyer for proof of things such as income or assets--the kinds of things responsible lenders like our good community banks and credit unions have been asking for all along," Cordray wrote.

And, as reported in American Banker, Cordray told attendees at a National Association of Realtors discussion that the CFPB will listen to the concerns of credit unions, financial institutions, realtors and others after the new mortgage rules become effective. The CFPB will react to changes in the market, he said.

Housing Reform Still a Concern in 2014, CUNA Notes

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WASHINGTON (1/9/14)--Healthcare reform, regulatory issues, foreign policy and appropriations are among House Majority Leader Eric Cantor's (R-Va.) list of January priorities for Republican U.S. House members. While housing finance reform was not mentioned in a recent Cantor memo to Republican colleagues, Sam Whitfield, Credit Union National Association vice president of legislative affairs, said this does not mean that issue has been moved to the back burner.

The Senate Banking Committee held weekly hearings on the topic late last year, and is still working to craft plans for a future housing finance market. House Financial Services Committee Chairman Jeb Hensarling (R-Texas) also continued to press for Federal Housing Agency reforms as recently as last month, and he continues to promote his bill, the "Protecting American Taxpayers and Homeowner (PATH) Act of 2013" (H.R. 2767). The PATH Act would phase out government-sponsored enterprises Fannie Mae and Freddie Mac within five years, end the federal government guarantee and reduce government involvement in the housing finance system, and give consumers more choices in determining which mortgage product best suits their needs.

CUNA continues to advocate for credit unions as housing reform moves forward. CUNA has repeatedly said that credit unions appreciate the need to reform the current housing finance system, but any reforms must not hinder the ability of credit unions to meet their members' housing finance needs in a member-friendly cooperative way. CUNA has also said that the transition from the current system to any new housing finance system must be reasonable and orderly, and the transition deadline needs to be flexible.

Other CUNA suggestions for a future mortgage market include:
  • There must be a neutral third party in the secondary market, with its sole role as a conduit to the secondary market;
  • The secondary market must be open to lenders of all sizes on an equitable basis;
  • The new housing finance system should emphasize consumer education and counseling as a means to ensure that borrowers receive appropriate mortgage loans;
  • The new system must include consumer access to products that provide for predictable, affordable mortgage payments to qualified borrowers; and
  • The new housing finance system should apply a reasonable conforming loan limit that adequately takes into consideration local real estate costs in higher cost areas.
Credit unions must also remain vigilant as tax reform discussions resume this month.

CUNA is watching out for the release of more tax reform discussion drafts in the coming weeks, and continues to encourage credit unions and their members to use CUNA and state credit union league resources, social media sites including Facebook, and micro-video site Vine, to tell their legislators, "Don't Tax My Credit Union!"

Obama Sends McWatters NCUA Nom to Senate

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WASHINGTON (1/9/14)--Mark McWatters' nomination to serve on the National Credit Union Administration board has been sent to the U.S. Senate by President Obama.

"This is a pro forma step in the process that formally puts the nomination in the hands of the Senate. Now, the Banking Committee will begin their vetting process in advance of an eventual hearing," Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said.

Obama announced his intent to nominate McWatters in mid-December. McWatters' nomination is subject to a nomination hearing by the U.S. Senate Banking Committee and a confirmation vote by the Senate.

If confirmed, McWatters would replace board member Michael Fryzel, whose term ended Aug. 2 last year, but he is allowed to continue serving until another board member is confirmed.

Guarantee Fee Delay Backed by CUNA

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WASHINGTON (1/9/14)--Credit Union National Association President/CEO Bill Cheney on Wednesday lauded new Federal Housing Finance Agency Director Mel Watt's decision to delay planned guarantee fee increases.

CUNA in recent weeks urged the FHFA not to go forward with these fee increases.

Under former acting Director Ed DeMarco, the FHFA had planned to increase base guarantee fees for all mortgages by 10 basis points, update the up-front guarantee fee grid to better align pricing with the credit risk characteristics of the borrower, and eliminate the up-front 25 basis point adverse market fee, except in the four states whose foreclosure carrying costs are more than two standard deviations greater than the national average.

The FHFA said these fee structure changes would result in average guarantee fee increases of approximately 11 basis points based on loan purchases of Fannie Mae and Freddie Mac in the third quarter of 2013.

"Over the last several years the FHFA has continued to allow guarantee fees to steadily increase, making home lending unnecessarily expensive for lenders and borrows. For the benefit of many American homebuyers, we hope that moving forward the FHFA will help curtail these fee increases," Cheney said.

Watt in a Wednesday release said he will thoroughly evaluate the proposed fee changes as expeditiously as possible, and would give not less than 120 days' notice after completing the evaluation before implementing any changes. Watt said he wants to fully understand the impact fee changes could have on mortgage credit availability, and how these changes might interact with the new qualified mortgage standards, before deciding whether to move forward with any adjustments.

N.Y. Rep. McCarthy To Retire

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WASHINGTON (1/9/14)--New York Rep. Carolyn McCarthy (D), who has represented Long Island's 4th Congressional District since 1996, will reportedly not seek reelection this year. She plans to retire at the end of her current term.

McCarthy is a chief co-sponsor of Credit Union Small Business Jobs Creation Act (H.R. 688), which would increase the credit union member business lending cap to 27.5% of assets, from the current 12.25%-of-assets level. She was also a key player in the 2010 passage of the Dodd-Frank Wall Street Reform Act.

Speaking at the Credit Union National Association's 2012 Governmental Affairs Conference, McCarthy supported credit unions work to support their communities, help small businesses and "get the economy going."

The congresswoman is a Financial Services Committee member, is the ranking Democrat on the international monetary policy and trade subcommittee, and also serves on the financial institutions and consumer credit subcommittee.

CUNA, Partners Oppose G-Fees' Use As Revenue Makeweight

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WASHINGTON (1/9/14)--Credit risk guarantee fees charged by government-sponsored enterprises Fannie Mae and Freddie Mac must not be used to offset the cost of the Emergency Unemployment Compensation Extension Act (S. 1845), or any other longer-term solution that could emerge in either chamber, the Credit Union National Association said in a Wednesday letter to members of the U.S. Congress.

In the letter, CUNA and others noted that guarantee fees (g-fees) are a critical risk management tool used by Fannie Mae and Freddie Mac to protect against losses from faulty loans. Increasing guarantee fees for other purposes effectively taxes potential homebuyers and consumers wishing to refinance their mortgages, the letter added.

"Though we are seeing signs of improvement in the real estate sector, we must avoid taking any steps that could keep housing consumers on the sidelines and hinder that recovery," the letter said.

The letter was cosigned by the American Bankers Association, American Land Title Association, Community Mortgage Lenders of America, Housing Policy Council, Mortgage Bankers Association, National Association of Federal Credit Unions, National Association of Home Builders and the National Association of REALTORS®.

NCUA, CFPB to Hold Joint Town Hall Webinar

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ALEXANDRIA, Va. (1/9/14)--National Credit Union Administration Chairman Debbie Matz and Consumer Financial Protection Bureau Director Richard Cordray will join forces for a Feb. 12 town hall webinar.

The 3 p.m. (ET) webinar will feature a broad discussion of federal financial consumer protection regulation. "This webinar will be a great opportunity for credit union leaders and compliance officials to engage their regulators and get answers to important questions, especially on CFPB's new mortgage rules," Matz said. The CFPB's Qualified Mortgage and Ability-to-Repay rules go into effect this Friday.

Use the resource link below for registration information. During the webinar, participants will be able to type in questions about any topic relating to the credit union industry or the work of CFPB.

Participants may also submit questions to the agency in advance of the session at WebinarQuestions@ncua.gov. The subject line of the email should read "NCUA-CFPB Town Hall."

Just this week, the NCUA issued a Letter to Credit Unions (14-CU-01) that pledged the agency's field staff will take into account a credit union's good-faith efforts to comply with the new qualified mortgage regulations as they conduct their early-stage examinations. Use the second resource link to access the guidance.

NEW: Obama Sends McWatters NCUA Nom to Senate

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WASHINGTON (1/8/14, UPDATED: 9:45 A.M. ET)--Mark McWatters' nomination to serve on the National Credit Union Administration board has been sent to the U.S. Senate by President Barack Obama.

"This is a pro forma step in the process that formally puts the nomination in the hands of the Senate. Now, the Banking Committee will begin their vetting process in advance of an eventual hearing," Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said.

Obama announced his intent to nominate McWatters in mid-December. McWatters' nomination is subject to a nomination hearing by the U.S. Senate Banking Committee and a confirmation vote by the Senate.

If confirmed, McWatters would replace board member Michael Fryzel, whose term ended Aug. 2, 2013, but he is allowed to continue serving until another board member is confirmed.

BSA Invoked in JPMorgan Chase $1.7B to Madoff Ponzi Victims

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WASHINGTON (1/8/14)--JPMorgan Chase & Co. has entered into a deferred prosecution agreement with the U.S. Attorney's Office for the Southern District of New York and agreed to forfeit $1.7 billion to the U.S. government to resolve claims that it had a role in enabling Bernard Madoff's infamous and extensive Ponzi scheme, the Office of the Comptroller of the Currency noted in a release Tuesday.
 
The OCC said the $1.7 billion is concurrent with its own assessed $350 million civil money penalty against JPMorgan Chase, N.A., JPMorgan Bank and Trust Company, N.A., and Chase Bank USA, N.A., for Bank Secrecy Act (BSA) violations.
 
The agency added it also is concurrent with a Financial Crimes Enforcement Network assessed $461 million civil money penalty that is also "deemed satisfied" by the forfeiture to the U.S. government.

The OCC said its penalty follows a January 2013 cease and desist order in which the agency directed the three affiliated banks to correct deficiencies in their compliance programs.

The OCC said it found "critical and widespread deficiencies in the banks' BSA and anti-money laundering compliance programs with respect to suspicious activity reporting, monitoring of transactions for suspicious activity, the conduct of customer due diligence and risk assessments, and internal controls and independent testing."

Although the OCC release said the penalty is based in part on JPMorgan Chase's failure to report suspicions about Bernard L. Madoff Investment Securities, LLC, to U.S. law enforcement and regulators--despite having alerted United Kingdom authorities in the months prior to Madoff's arrest--the banks also "failed to detect and report other cases of suspicious activity."
 
The bank regulator said it continues to monitor JPMorgan Chase's efforts to correct weaknesses identified by the agency as well as the bank's ongoing work and commitment to remedy the remaining deficiencies. "We will continue our oversight efforts and take further action as warranted," it noted.

NCUA Offers Jan. 22 Exam Modernization Webinar

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ALEXANDRIA, Va. (1/8/14)--Credit unions of all asset sizes may participate in a free, Jan. 22 National Credit Union Administration webinar designed to give participants a better understanding of new procedures related to Documents of Resolution and examination reports. The NCUA recently made changes to streamline and improve the consistency of the examination report process.
 
The changes, effective Jan. 1, are intended to improve the overall exam process by setting clearer expectations for credit unions and examiners, and were introduced in October in the agency's Letter to Credit Unions (13-CU-09). The Credit Union National Association has long sought the kind of changes provided in the NCUA letter, Deputy General Counsel Mary Dunn said at the time.

The NCUA noted it considered feedback from credit union industry officials as it developed these changes. The agency also incorporated recommendations from the U.S. Government Accountability Office and the NCUA's Office of Inspector General.

One specific change adopted by the agency is separating the Document of Resolution and Examiner's Findings sections of the examination reports into stand-alone documents.

"Separating the DOR and Examiner's Findings documents--and providing descriptive definitions of each document's purpose--will help credit union officials clearly differentiate between major and minor problems in order to prioritize corrective actions," the agency wrote.
 
Presenters at the NCUA's 2 p.m. (ET) webinar include Dominic Carullo, an economic development specialist with the Office of Small Credit Union Initiatives; Amanda Parkhill, a loss and risk analyst with the Office of Examination and Insurance; and Clarence Jones, an NCUA national training specialist.
 
Use the resource link below for registration information. Participants may submit questions to the agency in advance of the session at WebinarQuestions@ncua.gov. The subject line of the email should read "Examination Modernization Webinar." Participants with technical questions about accessing the webinar may email audience.support@on24.com.
 

 
 

CU Priorities Need Funding in 2014: CUNA, World Council

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WASHINGTON (1/8/14)--Credit union priorities such as the Community Development Financial Institutions (CDFI) Fund, Community Development Revolving Loan Fund (CDRLF), and Cooperative Development Program (CDP), as well as microenterprise and microfinance development must be considered as appropriations bills are developed, the Credit Union National Association said in Tuesday letters to legislators.

In letters to U.S. House and Senate Appropriations financial services subcommittee leaders, CUNA asked Congress to restore funding to the CDFI Fund and the CDRLF Fund at levels set in 2012. The suggested funding levels were $221 million for the CDFI Fund and $1.25 million for the CDRLF.

The CDFI Fund helps locally based financial institutions--including credit unions--offer small business, consumer and home loans in communities and populations that lack access to affordable credit. The CDRLF provides loans and technical assistance to federal and state credit unions that are designated as low-income credit unions, as defined by NCUA regulations.

In another pair of separate letters, CUNA and the World Council of Credit Unions also advocated for funding the CDP and microenterprise and microfinance development, all of which "play a critical role in increasing access to safe and affordable financial services to people in developing countries." Such programs need adequate funding to "continue to help credit unions provide credit, investment capital, and financial services to distressed communities worldwide," CUNA President/CEO Bill Cheney and World Council President/CEO Brian Branch wrote.

CUNA and the World Council urged Congress to maintain the current funding levels of $10 million for the CDP and $265 million for microenterprise and microfinance development.

The CDP accelerates economic growth, enhances the understanding and use of democratic principles, and improves stability in some of the world's most impoverished countries, enabling individuals in those countries "to access high quality, reasonably priced financial services by building networks, creating enabling regulatory environments, and providing training to credit union leaders and staff," Cheney and Branch wrote.

Cheney and Branch also noted that the microenterprise and microfinance development program has allowed the World Council to expand financial access to nearly 100,000 farmers and other credit union members in Afghanistan who previously did not have access to financial services.

For the CUNA/World Council letters, use the resource links.

430 CUs Already Respond to Breach Survey: CUNA Wants More

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WASHINGTON (1/8/14)--The Credit Union National Association has already received 430 submissions to its recently released data breach impact survey, and CUNA continues to encourage credit unions to forward on their own information as it comes in.

Questions in the 14-item survey on the effects of the Target data breach include when credit unions were 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.

There is no deadline for responses, but CUNA encourages credit unions to respond as soon as the information is available. "CUNA recognizes that many credit unions have not yet incurred all of the costs. Those that have a handle on the costs should report right away. The rest should complete the survey as soon as the data is available," CUNA Chief Economist Bill Hampel added.

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

Senate Banking Committee Chairman Tim Johnson (D-S.D.) said Monday that he is considering conducting a hearing to study the recent data breach at Target, and CUNA has reached out 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."

Three Senate Banking panel member--Bob Menendez (D-N. J.), Chuck Schumer (D-N.Y.), and Mark Warner (D-Va.)--have also called on Johnson to hold such a hearing (News Now Jan. 3).

CFPB Readies Consumers, Servicers for New Mortgage Regs

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WASHINGTON (1/8/14)--As the Jan. 10 effective date for new mortgage regulations approaches, the Consumer Financial Protection Bureau continues to release resources to prepare consumers and servicers alike for the regulatory changes.

New resources include sample letters and a fact sheet that takes on some of the myths surrounding the new Ability-to-Repay and Qualified Mortgage regulations.

The sample letters can be used to help consumers find solutions to various problems with their mortgage servicers, the CFPB said. The CFPB has provided:
  • A letter template that details what information consumers should include as they attempt to correct a servicer error; and
  • A letter template consumers can use if they need information from their mortgage servicer.
Separately, a brief CFPB document has also been released to help dispel some of the most common misconceptions about what the new Ability-to-Repay and Qualified Mortgage rule means for consumers.

So-called "fictions" that are addressed in the document include:
  • The belief that the CFPB's Ability-to-Repay Rule will cut off consumers' access to credit by requiring all loans to be QMs;
  • The claim that the financial institutions aren't going to make any loans that are not QMs; and
  • The rumor that the new rule requires 20% or 30% down payments for new mortgages, which will price many borrowers out of the market.
Mortgage tips, a list of frequently asked questions and related answers, a tool to help consumers find local housing counseling agencies, and fact sheets on the new mortgage rules are also still available, the CFPB said.

For the CFPB resources, use the links.

Improved Share Insurance Estimator Tool Unveiled by NCUA

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ALEXANDRIA, Va. (1/8/14)--It should be easier now for credit union members to get answers to questions about their share insurance and to keep track of their coverage with a new, improved Share Insurance Estimator just unveiled on the National Credit Union Administration website.

Click to view larger image Click for larger view
The estimator "makes it easy for consumers to calculate share insurance coverage and receive immediate answers to questions about share insurance," NCUA Chairman Debbie Matz said. Users can choose from personal, business and government accounts, and enter the amounts held in those accounts and other related information to determine how much of their total credit union funds are insured by NCUA.

The agency said Tuesday that improvements to the tool will allow users to type in information while simultaneously using important reference materials and will provide users with additional guidance for using the Share Insurance Estimator.

The Share Insurance Estimator was formerly known as the E-Calculator. The tool will also tell members what they can do if their account is not 100% protected.

For more, use the resource link.

CUs Must Review 2014 HOEPA Requirements: NCUA Alert

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ALEXANDRIA, Va. (1/8/14)--Credit unions that have not made any high-cost mortgages in the past must still verify whether their new mortgages are exempt from the new "high-cost" thresholds in the Consumer Financial Protection Bureau's amended Home Ownership and Equity Protection Act (HOEPA) rule, the National Credit Union Administration said in a new Regulatory Alert (14-RA-02).

And, the agency added, even if a credit union does not make any high-cost mortgages under the new coverage thresholds, there are still homeownership counseling elements of the HOEPA rule with which it must comply.

The NCUA alert noted that:
  • Credit unions that make any federally related mortgage loan must provide a written list of homeownership counseling organizations to applicants within three days of the application;
  • Credit unions that make mortgage loans to first-time borrowers that permit negative amortization must confirm that the first-time borrowers have received homeownership counseling before consummation; and
  • Credit unions that make high-cost mortgages or open-end credit secured by a consumer's principal dwelling must comply with new HOEPA consumer protections and homeownership counseling requirements.
The alert also reminded credit unions of the upcoming Jan. 10 HOEPA rule compliance date, and credit union responsibilities under the new rule.

For the full NCUA alert, use the resource link.

Plenty on the Plate As Congress Returns to Session

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WASHINGTON (1/7/14)--Legislation to fund the government through the end of the fiscal year, an agricultural policy bill and a water conservation and development bill are some of the priorities on the agenda as the U.S. Congress begins its 2014 work this week.

The spending resolution will need to be approved by Jan. 15 to avoid another government shutdown. Democratic and Republican representatives have met on this issue over the winter recess.

The progress of the funding, farm and water bills will provide a good barometer of how much Congress is going to be able to get done this year, Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said. "If Congress is able to complete these bills sooner rather than later, it may show there is a window open for additional measures to move this spring. However, if these bills remain bogged down, it will likely mean we're in for more of the same gridlock in this session," he added.

Bills expected to be considered this week include the Unemployment Insurance Extension Act (S.1845), legislation that would delay flood insurance rate increases for homeowners residing in flood zones in revised maps (S. 1846), the Reducing Excessive Deadline Obligations Act of 2013 (H.R. 2279), the Exchange Information Disclosure Act (H.R. 3362) and the Health Exchange Security and Transparency Act of 2014.

Hearings scheduled this week include:
  • A Wednesday Senate Banking financial institutions subcommittee hearing on "Examining the [Governmental Accountability Office (GAO)] Report on Government Support for Bank Holding Companies."; and
  • A Thursday House Financial Services monetary policy and trade subcommittee hearing on the international impact of the Federal Reserve's quantitative easing program.

Extensive Updates Provided in First Reg Advo Report of 2014

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WASHINGTON (1/7/14)--In the first Regulatory Advocacy Report of 2014, Credit Union National Association staff provide a heavy dose of the latest in compliance and regulatory news, updating credit unions on what they may have missed over the holidays.

Items addressed in the Report include:
  • CUNA's work to determine the impact of the Target breach on credit unions;
  • CUNA's call for the National Credit Union Administration to issue guidance, not a new rule, on capital planning and stress tests for the largest credit unions;
  • An NCUA regulatory alert on new Ability-To-Repay and Qualified Mortgage rules;
  • CUNA and financial institutions' upcoming oral arguments in an ongoing interchange case;
  • The Consumer Financial Protection Bureau's request for information regarding the mortgage closing process;
  • The CFPB's release of the 2014 Home Mortgage Disclosure Act threshold;
  • U.S. Treasury Bank Secrecy Act Advisory Group nominations; and
  • CUNA's comments to the Federal Reserve Banks on payment system improvements.
A resource chart with information on current CUNA comment calls is also provided in the Report.

For this week's Regulatory Advocacy Report, CUNA members can use the resource link. News Now coverage of the regulatory issues listed above can also be found through the links.

Matz in HuffPost: CU Short-Term Loans Can Be a Lifeline

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ALEXANDRIA, Va. (1/7/14)--"With the right products and rules of the road, credit unions and other financial institutions can help millions of cash-strapped Americans break free of their reliance on expensive loans...and replace a cycle of debt and dependency with one that meets borrowers' short-term needs while promoting greater financial security in the long run," National Credit Union Administration Chairman Debbie Matz wrote in a Huffington Post editorial.

Matz in her column noted that while payday loans are sometimes touted as a lifeline for consumers dealing with unexpected expenses, the truth is that nearly 70% of first-time payday loan borrowers use the funds to pay for recurring expenses such as rent, utilities or food.

More than 12 million Americans take out payday loans each year, spending more than $7 billion on principal, interest, and fees, Matz wrote. The average payday borrower pays more than $500 in finance charges and spends five months in debt for the average $375 loan, she added.

"When you consider that most of these loans are taken out to cover monthly expenses--yet only one in seven borrowers can afford to repay that average payday loan from their monthly budgets--it's easy to see how loans that are billed as 'lifelines' more often function as anchors, sinking borrowers into debt from which they cannot escape," she wrote.

However, Matz said, "there is a workable solution to providing short-term credit in a way that protects consumers and is viable for financial institutions." The regulator noted that under NCUA guidelines, federally chartered credit unions are allowed to charge no more than 10 percentage points above the established usury ceiling--currently, the statutory maximum is 28%.

Most credit unions that offer alternatives to conventional payday loans also limit fees, encourage members to open savings accounts and provide financial counseling. For more on payday loans in this issue of News Now, see "Some Big Banks Allegedly Ignore Nov. Payday Loan Guidance."

For the full Huffington Post column, use the resource link.

CUNA Provides Clarification on Target Breach Notifications

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WASHINGTON (1/7/14)--Credit unions continue to ask what steps should be taken to alert members about the importance of monitoring their accounts as a result of the Target data breach.
 
"This is a business decision for the credit union to decide whether--and if so, how--to communicate with members," said Kathy Thompson, Credit Union National Association senior vice president for compliance Monday.  "Contrary to what we've reported earlier, there is no regulatory requirements about notifying members when a breach occurs in a merchant's information systems.  Section 748/Appendix B of NCUA's regulations on member notification only is triggered when there has been unauthorized access to member information directly from the credit union's system or its third-party service provider." (See resource link for past News Now story.
 
CUNA provided clarifying information about the requirements on a new CompBlog post on Jan. 6, explaining that it is up to the credit union to determine how it will communicate with its members. 
 
"Certainly all members need to be reminded of the importance of thoroughly reviewing their statements regularly," Thompson wrote.  CUNA has heard from credit unions that they are posting information on their websites, including information in their newsletters, or adding information to their call center response lines about what the credit union is doing to stay on top of the situation and what members need to do to monitor their accounts.  Some credit unions have already decided to re-issue cards on vulnerable accounts, while others continue to closely monitor account activity for suspicious transactions.
 
Thompson reminds credit unions that "your insurance company and VISA and MasterCard need to know about incidents of unauthorized access to specific members' accounts so they can continue to investigate the Target breach." 
 
Last week CUNA announced it's asking credit unions to complete a survey (see resource link) on costs they are incurring due to the Target data breach. 
 
"We know that this is early in the process of monitoring, potentially freezing, and perhaps re-opening accounts.  But we are asking credit unions to keep track of these costs and respond to our survey in coming weeks," Thompson said. 
 
She notes that for several years CUNA has been pushing for congressional action on legislation to require merchants to reimburse financial institutions for costs incurred when breaches occur in retailers' systems.  "Actual cost data will obviously be very useful in helping us to represent credit unions," Thompson noted. 
 

Senate Banking Leader is Considering Target Breach Hearing

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WASHINGTON (1/7/14)--Senate Banking Committee Chairman Tim Johnson (D-S.D.) said Monday that he is considering conducting a hearing to study the recent data breach at Target, according to a Politico Pro "whiteboard"--or quick news burst--last night.

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."
 
Three Senate Banking panel member--Bob Menendez (D-N. J.), Chuck Schumer (D-N.Y.), and Mark Warner (D-Va.) --have also called on Johnson to hold such a hearing (News Now Jan. 3).
 
The Target data security failure--which included stolen encrypted PIN data--impacted millions of credit and debit card customers during the holiday gift-buying season.

"The cost of a merchant data breach--whether it is at a large national merchant or a local merchant--can be significant for credit unions of all sizes," CUNA President/CEO Bill Cheney wrote in the CUNA letter to key lawmakers.
 
"Failure to hold merchants fully accountable for data breaches when they occur ultimately harms consumers, undermines their confidence in our payments system, and adds to their growing frustrations that government is not protecting their interests," Cheney added in the letter, which was sent to House Financial Services Committee Chairman Jeb Hensarling (R-Texas), ranking committee minority member Maxine Waters (D-Calif.), Senate Banking Committee Chairman Tim Johnson (D-S.D.) and ranking committee minority member Mike Crapo (R-Idaho).

Use the resource link to read CUNA's letter to lawmakers.

CUs Receive QM, non-QM Guidance from NCUA

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ALEXANDRIA, Va. (1/7/14)--National Credit Union Administration field staff "will take into account a credit union's good-faith efforts to comply" with new qualified mortgage regulations as they conduct their early-stage examinations, the agency said in a supervisory letter to credit unions (14-CU-01) released Monday.

"As CUNA has been advocating for some time, NCUA has now put into writing that it will take into account, during examinations, credit unions' good faith efforts to comply with the new mortgage rules," Credit Union National Association Deputy General Counsel Mary Dunn said.

"Coupled with the guidance issued last week CUNA also sought--in which NCUA made it clear that it would not expect credit unions to make only 'qualified mortgage' loans--credit unions can structure mortgage loans to meet members' needs and do not have to fear they will be written up for noncompliance with the new mortgage rules as they are working to meet their compliance responsibilities," she added.

The agency letter said NCUA field staff will place particular emphasis on the safety and soundness implications of mortgage lending. Whether a credit union originates Qualified or non-Qualified Mortgages, "examiners will be evaluating credit risk, liquidity risk, and concentration risk," the agency added.

NCUA Chairman Debbie Matz in the letter emphasized that non-QM lending "can be an effective member service if conducted safely and soundly." The agency, she said, "will not subject a mortgage to safety-and-soundness criticism solely because of the loan's status as a QM or non-QM.

However, "credit unions choosing to make non-QMs will need to take into account the potential new market and legal risks," Matz added.

The new QM rule becomes effective on Jan. 10, and will apply to all federally insured credit unions.

For the full letter, use the resource link.

Yellen Confirmed for Fed Post

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WASHINGTON (1/7/14)--The U.S. Senate has confirmed Janet Yellen to succeed Ben Bernanke as chairman of the Federal Reserve Board. Bernanke's term, his second as head of the central bank, ends Jan. 31.
 
Yellen, who has served as Fed vice chairman since Oct. 4, 2010, becomes the first woman to head the Fed board. Last Dec. 20, the Senate voted 59-34 to move Yellen's name forward for today's historic vote. Her term as chairman will end Jan. 30, 2018.
 
"Congratulations to Chairman Yellin," said Credit Union National Association President/CEO Bill Cheney in response to the final vote.  He added, "We stand ready to work with her on all facets of reducing the regulatory burden for smaller financial institutions, particularly credit unions."
 
In testimony to support her nomination before the Senate Banking Committee in November, Yellen said, "In writing new rules, however, the Fed should continue to limit the regulatory burden for community banks and smaller institutions, taking into account their distinct role and contributions."
 
She also said, "We have made progress in promoting a strong and stable financial system, but here, too, important work lies ahead. I am committed to using the Fed's supervisory and regulatory role to reduce the threat of another financial crisis. I believe that capital and liquidity rules and strong supervision are important tools for addressing the problem of financial institutions that are regarded as 'too big to fail.'"
 
During that nomination hearing, committee chairman Sen. Tim Johnson (D-S.D.) called Yellen "a model candidate for chair of the Fed."  He said she "understands the challenges facing our economy and the balance the Fed must strike as we navigate the path back to full employment," and has also demonstrated "that she understands the importance of completing ongoing Wall Street reform rulemaking and of the Fed's regulatory role in supervising the riskiest banks."

New aSmarterChoice Blog Is Now Live

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WASHINGTON (1/7/14)--A new blog has been added to the list of resources available at aSmarterChoice.org, the Credit Union National Association's consumer website.

The blog will be updated daily with new insightful and informative posts to increase awareness of credit unions, the credit union difference, and credit union financial education efforts. Credit unions will also have a chance to highlight their own community efforts by submitting stories to the blog.

Amaia Kirtland, CUNA social and digital media manager, encouraged credit unions to check the blog frequently and share their favorite blog posts on social media sites like Facebook and Twitter.

ASmarterChoice.org, CUNA's consumer website, was launched in 2011 by CUNA and state credit union associations to provide information on credit unions to potential members and to press professionals. More site improvements are on the way in the upcoming weeks as part of a multi-phase modernization effort which includes the responsive design and other updates.

The modernization effort will include enhanced tools for mobile phone and tablet users.

For more on the new aSmarterChoice.org, use the resource link.

New FHFA Head Watt Begins Five-Year Term

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WASHINGTON (1/7/14)--Mel Watt on Monday began a five-year term as Federal Housing Finance Agency director.

Click to view larger image New Federal Housing Finance Agency director Mel Watt is sworn in on Monday in Washington. (FHFA Photo)
The veteran North Carolina congressman was sworn in yesterday in Washington by former Charlotte mayor and current U.S. Secretary of Transportation Anthony Foxx. Credit Union National Association Deputy General Counsel Mary Dunn extended the association's good wishes for a successful tenure at FHFA, which oversees Fannie Mae, Freddie Mac and the Federal Home Loan Banks. CUNA has requested a meeting with the new director.

During remarks that followed his swearing in, Watt shared with dignitaries, including Members of Congress he served with in the U.S. House of Representatives, Treasury Secretary Jack Lew, agency staff and others, life experiences that helped prepare him for his current position, including his family's home ownership and early opposition to predatory lending and other mortgage-related practices that harm consumers.

CUNA President/CEO Bill Cheney in a late December letter to Watt encouraged the new regulator to ensure balanced oversight of Fannie Mae and Freddie Mac that fully considers the impact actions will have on credit unions. The CUNA CEO said credit unions are looking forward to working with Watt, and also urged him to do all he can to ensure that:
  • Fannie and Freddie are accountable for the policies they implement;
  • The process for developing policies is transparent;
  • Policies adopted and implemented will support small sellers and services; and
CUNA is looking forward to discussions with the FHFA on key policy issues that are significant for credit unions.

NEW: NCUA to CUs: Examiners Will Reward Good Faith QM Compliance Efforts

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ALEXANDRIA, Va. (1/6/14, UPDATED: 4:35 P.M. ET)--National Credit Union Administration field staff "will take into account a credit union's good-faith efforts to comply" with new qualified mortgage regulations as they conduct their early-stage examinations, the agency said in a just-released supervisory letter to credit unions (14-CU-01).

The Credit Union National Association has repeatedly urged the agency and the Consumer Financial Protection Bureau to provide flexibility to credit unions as they work to come into compliance with the new rules.

"NCUA field staff will be placing particular emphasis on the safety and soundness implications of mortgage lending under this new paradigm. Whether your credit union originates Qualified or non-Qualified Mortgages, examiners will be evaluating credit risk, liquidity risk, and concentration risk," the agency added.

NCUA Chairman Debbie Matz in the letter emphasized that non-QM lending "can be an effective member service if conducted safely and soundly." The agency, she said, "will not subject a mortgage to safety-and-soundness criticism solely because of the loan's status as a QM or non-QM.

However, "credit unions choosing to make non-QMs will need to take into account the potential new market and legal risks," Matz added.

CUNA also urged NCUA to clarify that non-QM loans that otherwise meet applicable regulatory requirements should not be discouraged by examiners.

The new QM rule becomes effective on Jan. 10, and will apply to all federally insured credit unions.

For the full letter, use the resource link.

Cordray Writes CUs Ahead of Jan. 10 Mortgage Rule Deadline

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WASHINGTON (1/6/14)--Thanking credit unions for their hard work in preparing to implement new Ability-to-Repay/Qualified Mortgage (ATR/QM) rules, Consumer Financial Protection Bureau Director Richard Cordray in a letter to credit union leagues outlined how the rules would impact small issuers and provided key compliance resources.

Cordray's letter comes as new mortgage rules are set to take effect Jan. 10. "We recognize that the challenges posed by these changes is not small, but the implementation of these rules is another critical step in the ongoing recovery of the housing market," he said.

The CFPB letter also covers the basics of the ATR/QM rules.

For the full letter, use the resource link. The letter in its entirety is included in the Jan. 6 issue of CUNA's Regulatory Advocacy Report.

NCUA's Tawana James Retires

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ALEXANDRIA, Va. (1/6/14)--Office of Minority and Women Inclusion Director and longtime National Credit Union Administration employee Tawana James has retired, effective Jan. 3.

James has worked at the agency since 1980 and led the OMWI since it was officially opened in January 2011. She also helped to establish OMWI.

NCUA Chairman Debbie Matz said James "took on the formidable task of creating a new office with broad responsibilities and succeeded," and also "provided valuable support for credit unions serving diverse communities."

James has more than 30 years of service with NCUA and has served as director of the agency's Office of Small Credit Union Initiatives, regional director, deputy executive director, deputy director of the Office of Examination and Insurance, and Associate Regional Director of Operations. She holds a bachelor's degree in accounting from Towson State University and attended the Harvard Kennedy School of Government's Program for Senior Managers.

NCUA Associate General Counsel for Administrative Law Linda Dent will serve as acting OMWI director until a permanent replacement is selected.

CUNA Survey Seeks Data Breach Cost Details

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WASHINGTON (1/6/14)--What was the cost of the Target breach on your credit union? The Credit Union National Association is asking credit unions for cost information, and details on how the breach has impacted members, through a new online survey.

"We want to know--because the scope of this breach is so big (the second largest, in terms of total persons affected), the costs to credit unions (and ultimately to their members) are so immense for replacing cards and reimbursing members who have lost funds due to fraudulent transactions, and because Congress is taking notice of this whole affair--particularly the costs of it all," CUNA President/CEO Bill Cheney wrote in the latest edition of The Cheney Report, where the survey was first unveiled.

Questions in the 14-item survey include when credit unions were 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.

Senate Banking Committee members and CUNA have asked for congressional hearings on data security issues. (See News Now story: CUNA Calls on Congress For Target Breach Hearings.)

"When hearings take place, the information we gather through our survey will be vital for expressing the impact of this event on credit unions and their members--and urging Congress to consider our ongoing concerns of the responsibility of merchants to protect data, and be accountable for the consequences of data breaches when they occur," Cheney said.

This week's Cheney Report also includes details on what actions credit unions are expected to take in the event of a data breach.

Other issues addressed in the first Cheney Report of 2014 include:
  • Details on National Credit Union Administration guidance on upcoming qualified mortgage rules;
  • CUNA's Jan. 17 interchange testimony;
  • Credit union and CUNA concerns regarding the NCUA's stress test proposal; and
  • State Employees CU, Raleigh, N.C.'s, positive work to Unite for Good and help NC GreenPower improve North Carolina's environmental quality through renewable energy alternatives and community awareness.
Use the resource link to read the latest in The Cheney Report.

Consumer Mortgage Closing Comments Sought By CFPB

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WASHINGTON (1/6/14)--Consumers can now forward their mortgage closing "pain points" to the Consumer Financial Protection Bureau, and suggest how their particular pain points might be addressed by market innovations and technology, through a link on the CFPB website, consumerfinance.gov.

The bureau said it wants to hear from consumers or the realtors, settlement closing agents, attorneys, financial counselors and others who work closely with consumers during the closing process.

Credit Union National Association Deputy General Counsel Mary Dunn said CUNA will be working with its consumer protection subcommittee and lending council to provide information to the CFPB that will demonstrate credit unions perform their role in the home mortgage loan closing process well.

The information provided will be used to research and test solutions that address some of the biggest pain points associated with closing on a mortgage, both for consumers and for professionals. Comments will also be used as the CFPB finds ways to improve the closing process.

Comments must be received by Feb. 7.

For more, use the resource link.

Target Breach Hearings Needed, CUNA Tells Congress

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WASHINGTON (1/6/14)--In the aftermath of the Target data breach, the Credit Union National Association has reached out to House Financial Services and Senate Banking Committee leaders, encouraging them to "fully examine the chronic issue of merchant data breaches, their impact on consumers and financial institutions."
 
The Target data breach compromised 40 million debit and credit cards and included stolen encrypted PIN data. "The cost of a merchant data breach--whether it is at a large national merchant or a local merchant--can be significant for credit unions of all sizes," CUNA President/CEO Bill Cheney wrote.
 
"Failure to hold merchants fully accountable for data breaches when they occur ultimately harms consumers, undermines their confidence in our payments system, and adds to their growing frustrations that government is not protecting their interests," Cheney added in the letter, which was sent to House Financial Services Committee Chairman Jeb Hensarling (R-Texas), ranking committee minority member Maxine Waters (D-Calif.), Senate Banking Committee Chairman Tim Johnson (D-S.D.) and ranking committee minority member Mike Crapo (R-Idaho).
 
"In the weeks following this breach, the first priority for credit unions has been to ensure that their members are protected from fraudulent transactions now and in the future...The steps credit unions have been taking include notifying members who have been affected, helping them to monitor their accounts and urging them to review their account statements, reversing fraudulent transactions and reissuing their cards, when appropriate," Cheney wrote. CUNA is also surveying credit unions about the effects and costs of the recent Target data breach. (See News Now item: CUNA Survey Seeks Data Breach Cost Details.)
 
"By contrast, Target's response to the breach has been in line with some other companies' responses to breaches since merchants are rarely held responsible for reimbursing financial institutions for the cost that the data breach has caused the financial institution or consumers to incur," he added. Cheney suggested that merchants that accept debit and credit cards should be subject to the same high data security standards as credit unions. Further, credit unions should have the ability in all instances to tell their members the name of the merchant where their accounts were compromised, and merchants that have data breaches should by law be financially liable for the impact of the breach on affected consumers and financial institutions, Cheney added.
 
Senate Banking Committee members Mark Warner (D-Va.) and Robert Menendez (D-N.J.) have also called for a hearing on consumer data security. (See Jan. 3 News Now: Senators Push for Consumer Data Security Hearing.)

Retail Group Appeals $5.7B N.Y. Interchange Settlement

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NEW YORK, N.Y. (1/6/14)--The National Retail Federation last week appealed a $5.7 billion class action interchange suit settlement, asking the 2nd U.S. Circuit Court of Appeals to overturn a ruling made by U.S. District Judge John Gleeson in the Eastern District of New York, Brooklyn.

The class action settlement, which would be the largest private antitrust damages recovery in U.S. history, was approved in December. The settlement follows a 2008 suit in which merchants alleged MasterCard and Visa set artificially high credit card interchange fees.

NRF Senior Vice President and General Counsel Mallory Duncan in a release said the settlement "is an abuse of the class action system and should never have been approved." She noted that most of the original plaintiffs in the case "repudiated the settlement as soon as they saw its terms."

Some merchants have indicated they will opt out of the approved settlement.

The settlement requires a reduced interchange rate fee of 10 basis points for an eight-month period, and also calls for Visa, MasterCard and the banks to create a fund to repay retailers for past fees charged. Retailers would also be permitted to assess "check out" fees or surcharges on credit card purchases, which has previously been prohibited by Visa and Mastercard rules, under the terms of the settlement.

In a separate ongoing interchange case, NACS, et al. v. Board of Governors of the Federal Reserve System, the Credit Union National Association and its partner members of The Clearing House coalition will be in court Jan. 17 to present 10 minutes of oral arguments. In this case, a merchants' coalition has challenged the Fed'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.

CUNA and it financial services partners have argued that the Fed cap does not factor in enough of the costs that card issuers face for providing their services. (See Dec. 30 News Now story: CUNA, Coalition Partners Added to Jan. 17 Interchange Oral Arguments.)

CUNA Will Attend Watt FHFA Swearing In

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WASHINGTON (1/6/14)--Credit Union National Association General Counsel Eric Richard and Deputy General Counsel Mary Dunn will be among those in attendance when Rep. Mel Watt (D-N.C.) is sworn in as Federal Housing Finance Agency director today.

Watt was confirmed by December vote in the U.S. Senate. The chamber voted a reported 57-49 to move Watt's nomination forward.

The 20-year U.S. House veteran was nominated by President Barack Obama in May.

Senators Push for Consumer Data Security Hearing

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WASHINGTON (1/3/14)--Senate Banking Committee members Mark Warner (D-Va.) and Robert Menendez (D-N.J.) are looking to add a hearing on consumer data security to the early-2014 committee agenda.

The senators this week wrote to committee chairman Tim Johnson (D-S.D.) and ranking member Mike Crapo (R-Idaho) requesting an examination of "whether market participants are taking all appropriate actions to safeguard consumer data and protect against fraud, identity theft, and other harmful consequences, and whether we need stronger industry-wide cybersecurity standards."

"We also believe it would be helpful for the Committee to hear from our financial regulators as to whether they have the necessary tools, information, and authority to ensure that financial companies and service providers are doing enough to protect consumer data, and, in the event that a breach does occur, to minimize the harm to affected parties and take appropriate enforcement actions...When it comes to data security, consumers' interests must come first," the senators wrote.

The letter noted the recent Target data breach, which compromised 40 million debit and credit cards and included stolen encrypted PIN data.

Credit unions and other financial institutions have had to reissue millions of debit and credit cards to consumers impacted by the breach. Security and payments industry experts are debating the implications of the breach on payment systems, discussing whether debit cards will suffer from a drop in consumer confidence, and whether having the EuroPay MasterCard Visa (EMV) chip-standard technology in place would have helped protect consumer data. (See Jan. 2 News Now story: Target Breach Effect on Payment Systems Under Debate.)

The Credit Union National Association is urging credit unions whose members' accounts were compromised to collect data about the costs they incur in replacing cards and assisting members. CUNA is also developing a website to assist in the efforts to track the costs imposed by the breach.

The House and Senate are scheduled to return to Washington on Jan. 6. For now, a Jan. 8 hearing on the U.S. Government Accountability Office's report on government support for bank holding companies is the lone item on the early Senate Banking Committee agenda. The House Financial Services Committee has also announced four early-2014 hearings. (See News Now: Fed, Dodd-Frank on Early House Financial Services Hearing Agenda.)

2014 NMLS Registration Period Ended: What If Your CU Missed It?

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WASHINGTON (1/3/14)--With the 2014 Nationwide Mortgage Licensing System & Registry (NMLS) renewal period ending on Dec. 31, credit unions that have not yet registered their mortgage loan originators (MLOs) must now reactivate their registration status.

If the renewal process for the upcoming year was not completed prior to Dec. 31, the MLO will have an "inactive" registration status both in NMLS and on NMLS Consumer Access. Inactive registrations must be reactivated in order to have an "Active" registration status.

For the NMLS reactivation page, use the resource link.

The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) requires credit union MLOs and their employing institutions to register with the NMLS and to renew those registrations on an annual basis. The NMLS registry is intended to increase consumer protection and to help financial regulators coordinate and share mortgage originator information.
 
Credit unions and other MLOs are required to ensure that their mortgage loan originators are properly registered and prohibit any employees who are not registered from performing any residential mortgage loan origination duties.
 
Registered MLOs are given a "unique identifier," which is the identification number associated with the MLO within the NMLS. The unique identifier remains the same, even when the MLO changes employment, moves, or changes his or her name, and the identifier tracks the MLO and facilitates public access to the employment history and any disciplinary or enforcement actions that have been initiated against the individual.
 
MLOs that are not registered on the NMLS are prohibited from originating residential mortgage loans. Further, institutions that fail to renew will be listed on NMLS as ineligible to originate mortgages.

First NCUA Supervisory Guidance of 2014 Centers on QM Rule

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ALEXANDRIA, Va. (1/3/14)--Credit unions that make closed-end consumer loans secured by a dwelling must comply with the Consumer Financial Protection Bureau's new Ability-to-Repay/Qualified Mortgage (ATR/QM) rule for loan applications received on or after Jan. 10, the National Credit Union Administration reminds in its first Regulatory Alert on 2014.

The rule requires credit unions to assess a member's ability to repay for virtually all closed-end residential mortgage loans secured by the member's dwelling and provides your credit union with certain protections from legal liability for compliance with the rule, the agency said in a release.

"The guidance makes it clear that credit unions are not expected to make QMs only," Credit Union National Association Deputy General Counsel Mary Dunn said.

According to the NCUA release, credit unions will be able to leverage existing policies and practices for determining a member's ability to repay a loan to comply with the ATR/QM rule. "While the ATR/QM rule mandates a broader set of underwriting criteria than those required under Part 701 of NCUA's regulations, the ATR/QM rule's requirements do not contradict Part 701's underwriting requirements. As such, compliance with the ATR requirements in Regulation Z will also meet the underwriting criteria in Part 701," the NCUA said.

"However, simply meeting the underwriting criteria in Part 701 is not sufficient for compliance with the ATR/QM rule requirements," the agency added.

The NCUA alert includes details on:
  • Which loans are covered by the rule;
  • Basic ability-to-repay requirements;
  • How QMs provide a safe harbor;
  • The different types of QMs;
  • Caps on QM points and fees;
  • How QMs protect against liability;
  • What makes a QM loan higher priced;
  • When prepayment penalties are allowed for QM loans; and
  • What other guidance has been made available.
A supervisory letter with compliance guidance for credit unions and instructions for agency examiners will be released soon, the agency added.

Gail Laster, director of the NCUA's Office of Consumer Protection, last month said the NCUA and other agencies are not expecting QM rule compliance perfection right away. Examiners will be looking for good-faith compliance efforts first, and then "substantial compliance" in due time, Laster said. CFPB Director Richard Cordray has made similar comments in recent weeks.

CUNA has encouraged the NCUA to emphasize this compliance leeway in its upcoming supervisory letter.

Fed, Dodd-Frank Hearings on Early House Financial Services Agenda

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WASHINGTON (1/3/13)--The Federal Reserve's current Quantitative Easing program, the Dodd-Frank Act's Qualified Mortgage (QM) rule and the Volckler rule are among the items on the early-year House Financial Services Committee agenda.
 
Quantitative easing's impact on international finance will be discussed at a Jan. 9 House Financial Services monetary policy and trade subcommittee hearing. Other hearings announced Thursday include:
  • A Jan. 14 House Financial Services subcommittee on financial institutions and consumer credit hearing on how new QM rules could impact homebuyers;
  • A Jan. 15 full Financial Services Committee hearing on the unintended consequences and impact of the Volcker Rule; and
  • A Jan. 28 Financial Services Committee update from Consumer Financial Protection Bureau Director Richard Cordray.
The hearing schedule is tentative. All hearings are scheduled to be held in Room 2128 of the Rayburn House Office Building.

The Senate Banking Committee has also set a Jan. 8 hearing, and committeee members are asking leadership to hold a hearing on data security issues. (See News Now story: Senators Push for Consumer Data Security Hearing.)

aSmarterchoice to Get Even 'Smarter' in 2014

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WASHINGTON (1/2/14)--aSmarterChoice.org, the Credit Union National Association's consumer website, is undergoing a structural redesign to build a more responsive application on mobile phones and tablets.
 
The website was launched in 2011 by CUNA and state credit union associations to provide information on credit unions to potential members and to press professionals.
 
CUNA also is working to augment the site in early 2014 with content in the form of a blog and more articles on financial literacy. 
 
"The goal is to encourage return visitors to the site, folks who will do more than just search for a credit union through the finder.  They will actually complete the process of becoming a credit union member because they understand and appreciate our value proposition as compared to other financial institutions," said Pat Keefe, vice president of CUNA communications.
 
Keefe said CUNA will execute a test phase of the changes early in January, to closely be followed by a Jan. 6 official unveiling of the improvements.

CompBlog: Federal Register Publishes Integrated Mortgage Disclosure

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WASHINGTON (1/2/14)--The Consumer Financial Protection Bureau's much-anticipated and very dense integrated Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) disclosure final rule has been published in the Federal Register.

The 1,219-page rule is divided between two books of the Federal Register.

Other final rules issued just ahead of the end of the year included:
  • Home Mortgage Disclosure (Regulation C): Adjustment to Asset-Size Exemption Threshold;
  • Truth in Lending (Regulation Z): Adjustment to Asset-Size Exemption Threshold; and
  • Fair Credit Reporting Act Disclosures.
For more on these releases in the Credit Union National Association's CompBlog, use the resource link.

NEW: NCUA Reg Alert Covers QM Rule

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ALEXANDRIA, Va. (1/2/14, UPDATED: 3:20 P.M. ET)--Credit unions that make closed-end consumer loans secured by a dwelling must comply with the Consumer Financial Protection Bureau's new Ability-to-Repay/Qualified Mortgage (ATR/QM) rule for loan applications received on or after Jan. 10, the National Credit Union Administration reminds in its first Regulatory Alert on 2014.

The rule requires credit unions to assess a member's ability to repay for virtually all closed-end residential mortgage loans secured by the member's dwelling and provides your credit union with certain protections from legal liability for compliance with the rule, the agency said in a release.

The NCUA alert includes details on:
  • Which loans are covered by the rule;
  • Basic ability-to-repay requirements;
  • How QMs provide a safe harbor;
  • The different types of QMs;
  • Caps on QM points and fees;
  • How QMs protect against liability;
  • What makes a QM loan higher priced;
  • When prepayment penalties are allowed for QM loans; and
  • What other guidance has been made available.
A supervisory letter with compliance guidance for credit unions and instructions for agency examiners will be released soon, the agency added.

NewsNow will feature more on this release in tomorrow's issue.

Call for FATCA Repeal Could Gain Momentum

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WASHINGTON (1/2/14)--Congressional opposition to the Foreign Account Tax Compliance Act (FATCA) continues to grow in the U.S., and the Republican National Committee (RNC) this month is scheduled to vote on a draft resolution supporting FATCA repeal at its upcoming winter meetings.
 
Eight members of the RNC's Resolution Committee have agreed to be co-sponsors of the RNC "Resolution to Repeal FATCA." The draft resolution states that FATCA has "inadvertently ensnared every United States citizen living overseas due to its overzealous invasion of privacy and punitive taxation and enforcement."
 
The World Council of Credit Unions supports the adoption of the draft RNC resolution. "We share the concern that FATCA, if left in place, will impose billions of dollars of compliance costs on credit unions and other financial institutions annually," said World Council President/CEO Brian Branch.
 
FATCA is designed to create a tax information reporting and withholding system for certain payments that are made to foreign financial institutions (FFIs) and other entities. Some provisions would apply to U.S. credit unions that make international payments. U.S. credit unions would also be required to identify and withhold on so-called "pass-thru payments" to FFIs involving transfers of U.S.-sourced investment or interest income an FFI that has not yet been subject to taxation.
 
U.S. Internal Revenue Service regulations to implement FATCA also make it harder for U.S. taxpayers to avoid U.S. income taxation by placing funds in overseas accounts. "IRS finalized regulations in early 2013, but the regulations don't start to apply to U.S. credit unions until December 31, 2015 and the real operational impact doesn't start until Jan. 1, 2017, when some credit unions might act as FATCA 'withholding agents' if they provide international electronic payments services--they would be required to withhold 30% on certain transactions members make with foreign financial institutions without certain agreements with the U.S. and to use customer due diligence analyses," said Kathy Thompson, senior vice president for compliance at the Credit Union National Association.
 
If adopted by the Resolution Committee in January, repeal of FATCA would become part of the Republican Party's policy platform and would be poised to become a major issue for Republican congressional candidates in the 2014 election.

Fed Emergency Lending Changes Open For Comment

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WASHINGTON (1/2/14)--The Federal Reserve Board has proposed amendments to rules addressing the emergency lending authority of Federal Reserve Banks, and is accepting comment on these proposed changes.

The Regulation A changes, as detailed in a notice of proposed rulemaking released late last month, are designed to ensure that any emergency lending program or facility is for the purpose of providing liquidity to the financial system, and not to aid an individual failing financial company.

The Fed is accepting comments until March 7.

NCUA Issues Slim December Prohibition Orders

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ALEXANDRIA, Va. (1/2/14)--Former District 62 Highway FCU, Hammond, La., employee Lori Bush has been banned from participating in the affairs of any federally insured financial institution under a National Credit Union Administration prohibition made public this week.

Bush entered into a pretrial intervention program after theft charges were brought against her. She will remain in the program until its completion at the end of 2014, at which time the charges will be dismissed, the NCUA said.

Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.

Use the resource link to access all NCUA enforcement orders.