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NCUA, CUNA, CUs Prepared For Government Interruption

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WASHINGTON (10/1/13)--Federal workers walked away from their desks last night not knowing whether the U.S. government would be open for business this morning or not. But either way, the National Credit Union Administration on Monday said it would be open for business, and it encouraged credit unions to "maintain a state of readiness to help their members who may be affected by a potential government shutdown."

There was a midnight Sept. 30 deadline for the U.S. Congress to approve continued funding for the government and its programs. After long debate, Congress was unable to agree on bill, which means some agencies will be closed until action is taken.

The NCUA in a release Monday said it would remain open and unaffected in the event of a shutdown, and reminded credit union members that their member shares would still be insured to $250,000 per account, no matter what.

"Credit unions that serve federal workers and the military have responded before to members' financial needs resulting from furloughs, reimbursement delays, suspension of government programs or the closing of federal buildings housing branches. They need to prepare to do that once again," NCUA Chairman Debbie Matz said.

The Credit Union National Association also readied its own resources to help credit unions inform their members of available help in the event of a government shutdown. (Use the resource link.) CUNA President/CEO Bill Cheney said protecting and informing credit union members is CUNA's top concern when these events occur.

And credit unions, as they have done in the past, readied themselves to help members and consumers who could be impacted by a potential shutdown. (Use resource link for Sept. 27 News Now article: CUs In Place To Assist Federal Employees.) In these situations, many credit unions are prepared to offer short-term loans, work with members to restructure loans, and offer free financial counseling, among other services.

The NCUA has also cited its 2011 letter,which recommended credit unions:
  • Ensure policies provide flexibility to respond to members' financial needs;
  • Prepare for service interruptions if a shutdown affects access to credit union offices located in federal buildings;
  • Prudently work with affected members, including providing advances to individuals receiving direct deposits from the federal government;
  • Develop contingency plans with respect to participation in government programs that may be affected by a federal government shutdown;
  • Communicate response plans to members, staff and volunteers in a timely manner; and
  • Consider offering special programs to assist members who need short-term loans, create loans with special terms and rates, or offer payment flexibility.
As Congress debates spending measures, there are also some hearings of interest on the agenda this week that are expected to go on. Those hearings include:
  • A Tuesday House Financial Services Committee financial institutions and consumer credit subcommittee hearing entitled "Examining Legislative Proposals to Reform the Consumer Financial Protection Bureau." CUNA will submit a statement for the record of this hearing;
  • A Tuesday Senate Banking Committee hearing entitled "Housing Finance Reform: Fundamentals of a Functioning Private Label Mortgage Backed Securities Market.";
  • A Wednesday Joint Economic Committee hearing entitled "The Economic Outlook.";
  • A House Judiciary regulatory reform, commercial and antitrust law subcommittee hearing on the Dodd-Frank Act's impact on financial industry competition; and
  • A Senate Banking Committee hearing entitled "Rebuilding American Manufacturing."

NCUA Bans Two From Future CU Work

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ALEXANDRIA, Va. (10/1/13)--The National Credit Union Administration has banned two former credit union employees from participating in the affairs of any federally insured financial institution following their alleged involvement in embezzlement.

The NCUA said the orders involve the following individuals:
  • Former Monterey County Employees CU, Salinas, Calif., employee Mary Jane Arroyo, who was sentenced to 90 days in prison and three years of probation, and ordered to pay restitution and court costs after pleading no contest to embezzlement charges; and
  • Former Hamlet  (N.C.) FCU  employee Cynthia Mercer, who was sentenced to one year in prison and five years supervised release, and ordered to pay restitution in the amount of $169,261.79 after pleading guilty to embezzlement charges.
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.

CUNA Reminds Important Comment Deadlines Approaching

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WASHINGTON (10/1/13)--Credit unions are faced with a short, but very important, list of looming comment deadlines, and the Credit Union National Association's Regulatory Advocacy Report this week urges credit unions to weigh in on each. The topics range from a new charitable accounts rule, to needed bylaw updates, to a proposed definition for "qualified residential mortgage" for purposes of creating an exemption from the risk retention requirements under the Dodd-Frank Act.
 
Comments are due to CUNA by Oct. 15 and to the National Credit Union Administration no later than Oct. 21 on the agency's plan to allow federal credit unions to invest in charitable donation accounts (CDA), while creating safeguards to ensure the donations are used for their intended charitable purposes.
 
CUNA generally supports the NCUA proposal and commended the agency for going outside the box to create a novel structure to facilitate the proposed rule. However, CUNA has concerns about a potentially burdensome registration requirement and seeks credit union comment. (Use the first resource link to read a related News Now story.)
 
The Sept. 30 Regulatory Advocacy Report also reminds credit unions that CUNA is reviewing federal credit union bylaws and welcomes input from credit unions, leagues and others who assist credit unions with these operational rules. The federal credit union bylaws were last updated in 2007 and CUNA anticipates that the NCUA will be updating the "dated" rules soon. (See second resource link for a related News Now story.)
 
CUNA also urges credit union comment on a proposed credit risk retention regulation, which includes the new QRM definition with modifications that had been urged by CUNA.

Comments on this proposal are due to the Consumer Financial Protection Bureau by Oct. 30 and to CUNA tomorrow.
 
Under the Dodd-Frank Act, most credit unions would not be directly covered by the QRM proposal. However, CUNA has been weighing in with the various regulators on the QRM issues because there is a concern that the secondary market will conform to QRM standards and that examiners will expect federally insured institutions to meet QRM requirements. (Use the third resource link to read a related News Now story.)
 
For more on these and other key credit union regulatory topics, CUNA members can use the final resource link below to access the RAR.

House Lawmakers Urge Senate Action On Flood Insurance Rate Hikes

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WASHINGTON (10/1/13)--Seventy-three members of the U.S. House--representing at least 23 states and both sides of the aisle--urged the Senate to follow in House footsteps and approve legislation that would give relief to National Flood Insurance Program policyholders who face steep increases in rates today.
 
The House lawmakers urged Senate leadership to add a provision to any appropriate legislative vehicle--"including legislation used to complete the appropriations process for the 2014 fiscal year"--to address an unintended consequence of a 2012 bill that could bring sharp payment increases to more than 20% of policyholders.
 
The House letter noted that in July that chamber adopted an amendment to the FY14 Homeland Security Appropriations Act to shield certain flood insurance policyholders from excessive rate increases triggered by Federal Emergency Management Agency flood insurance rate map changes.
 
"The amendment received broad bipartisan support with over 280 House members voting in favor of the provision. This is a positive step toward providing a comprehensive solution to the affordability challenges plaguing the National Flood Insurance Program," the House letter noted.

Use the resouce link to access the lawmakers' letter.

Former Fin. Services Chair Bachus Won't Seek Re-election

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WASHINGTON (10/1/13)--Rep. Spencer Bachus (R-Ala.), a former chairman of the House Financial Services Committee, announced Monday morning that he will not seek another term in office.
 
Bachus, 65, has 16 months left to his current term and noted in a public statement that he will "devote his full energies to his legislative duties and serving his constituents during the remainder of his current term."
 
Bachus has been considered by some to be a lawmaker strongly guided by a conservative political philosophy but willing to consider individual issues on their own merits.
 
For credit unions, this has meant an interesting journey in a relationship with the prominent lawmaker, according to Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan.
 
Donovan noted Monday, "Here you have someone who voted against H.R. 1151...and through the tireless effort of the Alabama credit unions and CUNA, he developed into a strong credit union supporter as chairman of the House Financial Services Committee, ultimately co-sponsoring our supplemental capital legislation."  H.R. 1151, of course, is the landmark 1998 legislation that authorized credit unions to have multiple common bonds among their memberships.
 
"Bachus' development as a credit union supporter has been remarkable and it shows what can happen when credit union advocacy is viewed as a long game," Donovan remarked.
 
In his statement announcing his decision not to seek re-election, Bachus said, "There is much important work that remains to be done and what I would like to see above anything else before I leave is a spending reduction plan that will put the federal government on a sensible and sustainable financial path going forward."
 
He added, "It has been the greatest privilege imaginable to serve as the representative of the people of Alabama in the United States House of Representatives. It is an honor that I never dreamed could have been possible for me and the words 'thank you' are far from adequate."
 
He said his planned exit was a family decision and added that now is the time to "allow others to have the opportunity to serve."
 
Bachus was first elected to the U.S. House in 1992.  He currently serves on the Financial Services Committee as chairman emeritus and chairs the House Judiciary Committee subcommittee on regulatory reform, commercial and antitrust law.

Welcome Cybersecurity Month With Policy Reviews, NCUA Says

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ALEXANDRIA, Va. (10/1/13)--Cybersecurity Awareness Month, which begins today, "is an ideal time for credit unions to review their information systems policies, practices and procedures," National Credit Union Administration Chairman Debbie Matz said Monday.

"We live in a world where individuals increasingly buy their groceries, book their trips and manage their credit union accounts online. As a result, the threat of identity theft and cybercrime continues to grow," Matz added. She urged credit unions to proactively put in place effective controls to protect against these cyber threats, and to "make cybersecurity an important part of their financial literacy efforts in October and all year long."

Cybersecurity Awareness Month is a national initiative sponsored by Department of Homeland Security, in cooperation with the National Cyber Security Alliance and the Multi-State Information Sharing and Analysis Center that raises awareness and educates Americans about cybersecurity, and increases the resiliency of the nation and its cyber infrastructure.

The agency in a release highlighted its consumer website MyCreditUnion.gov and financial literacy microsite Pocket Cents as two resources for credit unions looking to increase cybersecurity awareness among their members. Other methods will be highlighted on the agency's Facebook and Twitter feeds, as well as the October edition of the NCUA Report.

For more on Cybersecurity Awareness Month, use the resource link.

The Federal Bureau of Investigations' Internet Crime Complaint Center received 289,874 consumer complaints of internet fraud and other cybercrimes in 2012, and these crimes resulted in $525 million in losses, according to the agency.

The Credit Union National Association continues to be engaged on cybersecurity issues, by working with the credit union system, FSSCC, regulators, BITS, and other entities. CUNA is also monitoring developments with the National Institute of Standards and Technology (NIST) framework.

On July 1, NIST released a discussion draft outline on a "Framework to Reduce Cyber Risks to Critical Infrastructure." NIST plans to issue a proposed cyber framework this October for notice and comment, and to finalize the framework by February. (See Aug. 6 News Now story: CUNA Takes CU Cybersecurity Concerns To Treasury.)

CUNA has repeatedly emphasized that credit unions are already subject to robust data security requirements and standards, and should not be subject to additional regulations.

Additional coordination on cybersecurity would be helpful, CUNA has said.

CUNA To Warn Of Reg Burden At Chicago CFPB Hearing

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WASHINGTON (10/1/13)--Credit Union National Association Deputy General Counsel Mary Dunn will again voice the concerns of credit unions impacted by regulatory burdens at a Wednesday Consumer Financial Protection Bureau hearing on credit cards in Chicago.

Dunn plans to meet with CFPB officials following the hearing, and she said she will urge the agency not to contribute further to credit unions' heavy regulatory burdens and instead, to help minimize them.

She will also encourage the agency to exempt credit unions from future regulatory requirements to the greatest extent possible.

"Credit unions simply do not need, and will have increasing difficulties assimilating, additional regulatory burdens if they are to fulfill their purpose of responding to their members' financial needs," she said Monday.

The field hearing is scheduled to begin at 11 a.m. (CDT) on Oct. 2 in the Winter Garden of the Harold Washington Library.  CFPB Director Richard Cordray, consumer groups, industry representatives, and members of the public will also be in attendance. (News Now Sept. 20)

For more on the event, use the resource link.