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Metsger: CUs, NCUA Can Work Toward 'Bigger, Faster, Stronger' System

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ALEXANDRIA, Va. (10/16/13)--While he is working to get up to pace on issues his National Credit Union Administration colleagues have been discussing for months, if not years, new agency board member Richard Metsger gave News Now a window into how he plans to address credit union issues going forward: Regulation, he said, can be a collaborative process between credit unions and the NCUA.

Click to view larger image National Credit Union Administration Board Member Richard Metsger told News Now that being a "Monday morning quarterback" never changes the outcome of the game, but can be a good tool for avoiding future mistakes. A focus of the NCUA continues to be evaluating what went wrong leading up to the financial crisis of 2008, and learning how to avoid a similar situation going forward, he said. (CUNA Photo)
Metsger does not see the regulatory process as "adversarial," he said. Rather he sees it "as cooperative, but [with] distinctively different perspectives in some cases."

He invited credit unions to reach out to the NCUA board and engage in a thoughtful manner. "Standing on one end of the room and yelling at someone else seldom produces any results," he said, noting his past work as an Oregon state senator has shown that a collaborative approach can benefit all parties. The NCUA needs "the experience and the expertise of the regulated community, but we don't need sound bites. What we do need is information and facts so we can make informed decisions," he said.

Metsger emphasized that his experience with credit unions, which has come over many years from a number of different angles, will be a boon to the NCUA and credit unions alike. One such angle is his work as a member of the board of directors at Portland Teachers CU from 1993 to 2001. He dealt directly with compliance and budget issues during that time.

"The backbone of the credit union system has been small credit unions," Metsger said.  That's where it all started, and Metsger touted his understanding of how they differentiate from the larger credit unions in the system.

For now, Metsger said the agency is concerned with making sure credit unions are adequately capitalized, prepared for potential interest rate shocks, avoid concentration of risk on balance sheets, and look to see how the increasing threat of cyberattacks on credit unions and other financial institutions can be mitigated. "We don't want to be the vulnerable party," he emphasized.

In the long-term, he hopes to focus on the safety and soundness of the system. Overall, a strong, safe, sound credit union system is the mutual goal of the regulator and the regulated, and while both sides have different opinions, credit unions and the NCUA can listen to each other and work carefully to address shared concerns, he said. And, in the end, a "bigger, faster, stronger" credit union system is the goal.

NCUA Video Highlights Small CU, LICU Resources

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ALEXANDRIA, Va. (10/16/13)--The many boot camps, on-demand webinars and workshops offered by the National Credit Union Administration's Office of Small Credit Union Initiatives (OSCUI) are highlighted in a new agency YouTube video, "March in Double Time with OSCUI."

"While the credit union industry as a whole is doing well, many small credit unions need assistance," NCUA Board Chairman Debbie Matz said. The NCUA's comprehensive training, she noted, is "to build capacity and strengthen small and low-income credit unions so they can remain viable and meet the financial needs of their members, some of whom live in our most underserved communities, for many years to come."

OSCUI workshops and boot camps have been attended by more than 1,500 credit union professionals this year, 6,900 credit union representatives have used the agency's training videos, and 4,500 have taken part in OSCUI-led webinars, the NCUA said.

For more on the video, use the resource link.

CUNA Highlights CUs' Furlough Efforts For Federal Lawmakers

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WASHINGTON (10/16/13)--At the request of U.S. Rep. Maxine Waters (D-Calif.), ranking member on the House Committee on Financial Services, the Credit Union National Association Tuesday provided a letter describing the efforts that credit unions are taking to help those affected by the federal government shutdown.
"The credit union mission is to promote thrift and provide access to credit for provident purposes to members," wrote Bill Cheney, CUNA president/CEO, in the letter to Waters. "As member-owned, not-for-profit cooperatives, credit unions embody a 'people helping people' philosophy.  As a result, when credit union members face hardship, they have confidence that their credit union will stand with them and provide assistance.  It is simply what we do."
The letter outlines specifics of programs at 19 credit unions, including Congressional FCU, which initiated a relief program offering members a 0% 90-day loan that converts to a 4% 36-month loan after the 90 days are up.
Waters had sent a letter to CUNA late Friday asking for examples of specific programs at credit unions.

"Credit unions are not simply waiting for their members to ask for assistance.  In many cases, they are actively reaching out to their membership through e-mail, mail, local media and social media to notify members of the availability of assistance programs," Cheney wrote.

"While CUNA has not conducted a comprehensive survey of credit unions to assess all that is being done to assist government workers, government contractors and other small businesses affected by the shutdown, the anecdotal evidence suggests that credit unions are stepping up in support of their members, as anyone who understands the mission of credit unions would expect them to do."

In addition to the program at Congressional FCU, the letter lists the specifics of furlough assistance programs at 18 credit unions from 14 states.

"While this is far from a comprehensive list of how credit unions have stepped up to help their members over the last two weeks, it is representative of what credit unions are doing as their members endure a government shutdown that has gone on longer than any could have reasonably expected and continues without any meaningful promise of ending soon," said Cheney's letter.

"So far, we have not heard of push back from the National Credit Union Administration or state regulators regarding these programs; however, if the shutdown is prolonged, it is possible that examiners may start to question the continuation of these services.  In the meantime, credit unions will continue to do what they can to assist their members; however, we also encourage Congress to work together to end the shutdown as soon as possible," the letter said.

For yet more examples of programs from credit unions, see related story, "CU Branches Closed By Shutdown Still Helping Members, from today's News Now as well as past articles on the topic. Use the links.

CUNA Reg Advocacy Report Features CU Comment Collection

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WASHINGTON (10/16/13)--The Credit Union National Association continues to work to address the regulatory issues faced by credit unions, and in this week's edition of the Regulatory Advocacy Report, CUNA regulatory staff highlight three areas in which regulators are seeking comments from credit unions and others.

The first area outlined is a Federal Reserve paper on potential payments system changes and improvements. The Fed is working to address potential gaps and opportunities in the payments system, including payment speed, closed payment communities, and international, mobile, and traditional payment channels. The Fed is also exploring where it fits in the payment system going forward, and is seeking extensive public comment as part of this research process.

CUNA is reviewing the paper with its payments subcommittee, CUNA Councils, and others, and has met with the Fed to discuss payments issues and how credit unions can provide feedback.

Another item of interest is Bank Secrecy Act burdens, and CUNA is reaching out to credit unions on this issue as well. In a CUNA-produced survey, credit unions can detail their own regulatory burdens and suggest areas in which BSA regulations can be improved.

Also, CUNA continues to accept comment on an interagency credit risk retention proposal that includes a new definition of "qualified residential mortgage" (QRM). The proposed QRM definition would be identical to the definition adopted by the CFPB for a "qualified mortgage" (QM). Comments on this proposal are due by Oct. 30.

This week's Regulatory Advocacy Report also includes:
  • Details on the Consumer Financial Protection Bureau's recent release of Home Mortgage Disclosure Act guidance;
  • National Credit Union Administration exam modernization efforts; and;
  • The results of an NCUA material loss review of Chetco FCU.
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.

World Council Seeks Basel III Carveout For CUs

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WASHINGTON (10/16/13)--The World Council of Credit Unions in a new letter has asked that bank term deposits made by credit unions and similar  institutions be classified as "retail" or "small business" deposits rather than as "wholesale funding" for Net Stable Funding Ratio (NSFR) purposes under Basel III liquidity regulations.

Such a carveout could apply to federal credit unions and other institutions that are subject to very limited investment power regulations, or institutions that are less than $1 billion in assets, World Council Vice President and Chief Counsel Michael Edwards wrote in a letter to Basel Committee on Banking Supervision Bank for International Settlements Secretary General Wayne Byers.

Basel III currently defines credit union deposits at banks or other Basel III-compliant institutions as "wholesale funding," and the increased cost of capital for "wholesale" deposits has caused Irish banks to reduce the yield on terms deposits made by credit unions by 150 basis points, on average, Edwards explained. This situation has likely caused some banks in Great Britain and the U.S. to cease doing business with credit unions altogether, he noted.

"We expect significant problems for credit unions in developed countries, including possible failures and consolidation, unless the committee clarifies the NSFR so that bank term deposits made by these credit unions are considered "retail" or "small business" rather than "wholesale," Edwards wrote. And, the growing adoption of Basel III regulations could create larger issues for credit unions in developing countries, he added.

"Without clarification from the committee concerning the definition of credit union deposits under the NSFR, we believe that the trends of lower yields on credit unions' term bank deposits or closures of their bank accounts will harm potentially tens of thousands of credit unions and up to 200 million credit union members in both the developed world and the developing world. That outcome would be especially tragic for the world's 2.5 billion unbanked people as well as for the low-income and rural areas where credit unions are often the only financial institution serving the community," Edwards said.

Similar sentiments were echoed in a European Network of Credit Unions letter. For both letters, use the resource links.

CFPB Unveils Additional Mortgage Guidance

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WASHINGTON (10/16/13)--Communications with family members after a borrower dies, contact with delinquent borrowers, and treatment of consumers who have filed for bankruptcy or invoked certain protections under the Fair Debt Collection Practices Act are addressed in a new bulletin and interim final rule released by the Consumer Financial Protection Bureau (CFPB) on Tuesday.

The releases are meant to clarify portions of pending CFPB mortgage servicing regulations that have not yet been addressed. "As servicing implementation enters its final phases, we heard from many sources that it was important to address these remaining issues to ensure a smooth transition and provide certainty to the market," CFPB Director Richard Cordray said.

The CFPB release provides examples of mortgage servicer policies and procedures that will ensure that family members, heirs, or other parties who have a legal interest in the home are identified and contacted if a mortgageholder dies. Mortgage assumption and loss mitigation measures are also addressed, and the bureau also attempted to answer questions regarding the interplay of the servicing rules, bankruptcy code, and the Fair Debt Collection Practices Act (FDCPA). The bureau has also clarified aspects of regulations that require consumers to receive housing counseling before taking out a high-cost mortgage.

The CFPB interim final rule also addresses:
  • The steps that mortgage servicers must take to reach out to delinquent borrowers, and what they must communicate and provide to those borrowers;
  • Some exemptions from regulations that require mortgage servicers to provide periodic account statements and certain early intervention contacts to borrowers in bankruptcy proceedings.
For the full CFPB release, use the resource link.