WASHINGTON (10/23/08)--The Federal Bureau of Investigation (FBI), the U.S. Postal Inspection Service and state and local authorities are investigating more than 30 threatening letters received at financial institutions in ten states and the District of Columbia. In addition to a threatening message, most of the letters also contain a powder substance, according to a statement from the FBI. Field and laboratory tests on the powder so far have been negative, said the agency. Financial institutions in New York, New Jersey, Washington, District of Columbia, Ohio, Illinois, Colorado, Oklahoma, Georgia, California and Texas have reported receiving the letters. “Should your any part of your institution--corporate offices, branches--receive one of theses letters, please contact your local FBI office and ask for the WMD Coordinator,” said the FBI. Use the resource link for more information.
WASHINGTON (10/23/08)—As part of the Financial Crimes Enforcement Network’s (FinCEN’s) ongoing effort to provide feedback on Bank Secrecy Act (BSA) enforcement to those the agency regulates, Director James Freis recently offered what he termed “explicit clarity on the purpose and conduct of FinCEN’s enforcement program.” Freis said that misperceptions about enforcement matters will “erode the trust and confidence in our financial system that the BSA seeks to protect.” He reiterated that it is FinCEN’s general policy to reserve civil money penalties for the “most significant and systemic violations of the BSA.” In fact, he added, over the past two years FinCEN has assessed only eight civil money penalties and just three of them have been against banks. “To put these figures into context, there are tens-of-thousands of financial institutions subject to the BSA, including over 17,000 depository institutions,” he said. “While lesser BSA infractions should not be ignored, FinCEN has other vehicles to address these deficiencies outside of the context of enforcement,” Freis said. He made his remarks at a money laundering enforcement conference here, sponsored by the American Bankers Association. The FinCEN director said that his agency’s efforts to make its processes more transparent are intended to help depository institutions allocate resources in a manner commensurate with their actual money laundering and terrorist financing risks. He said FinCEN fully recognizes that even a “reasonably designed” compliance program will occasionally suffer from minor and isolated compliance deficiencies. “Good faith efforts to establish, implement, and maintain a sound BSA compliance program and to prevent money laundering and terrorist financing, will not result in the assessment of penalties. However, he added, if a financial institution fails to establish and maintain a reasonably designed anti-money laundering program to ensure compliance with the BSA, or deprives law enforcement of valuable information by failing to report currency and suspicious transactions in accordance with the law or regulation; FinCEN may assess penalties under the provisions of the BSA. Freis said his agency will continue to work toward improved BSA compliance on a national basis and noted an upcoming Chapter X initiative to provide a simplified, centralized and industry-specific codification of the BSA for different segments of the financial services industries. The Credit Union National Assocation expects a Notice of Proposed Rulemaking on Chapter X to be issued in the next few days with an extended comment period.
WASHINGTON (10/23/08)--Changes to fair-value accounting rules could be on the House Financial Services Committee’s agenda next year, Chairman Barney Frank (D-Mass.) said Tuesday at a hearing on financial regulatory restructuring. Several financial services companies have complained that the rules have prevented them from establishing market prices (American Banker Oct. 22). Some changes to the rules would not require legislation, Frank added. Rather, the regulators could be urged to be more flexible with the rules, he said. Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn said of the chairman’s comments, “This is extremely encouraging news and we would welcome a decision by the chairman and others to bring their thoughtful consideration to this problem. We hope he will look into this sooner rather than later.” CUNA said earlier this month that a Financial Accounting Standards Board’s (FASB) proposed accounting guidance does not go far enough to address key issues used to determine fair value for certain assets where there is an ability and intent to hold until recovery or maturity. CUNA has written a comment letter to FASB on the matter. To read the letter, use the link.
WASHINGTON (10/23/08)--Just about a week after federal credit union, bank and thrift regulators approved the examination procedures required to determine a financial institution's compliance with rules regarding identity theft "red flags" (12 CFR 222.90), the Federal Trade Commission (FTC) said it will suspend enforcement of the rule for six months until May 1, 2009. State-chartered credit unions fall under the FTC’s rules. The FTC said that its announcement and the release of an Enforcement Policy Statement do not affect other federal agencies’ enforcement of the original Nov. 1 deadline for institutions subject to their oversight. The National Credit Union Administration’s rule applies to federal credit unions. The FTC explained that it moved back its compliance timetable to give creditors and financial institutions “additional time in which to develop and implement written identity theft prevention programs.” The agency said that during its outreach effort, it found some industries and entities under the FTC’s jurisdiction were uncertain about their coverage under the rule. “Many entities also noted that, because they generally are not required to comply with FTC rules in other contexts, they had not followed or even been aware of the rulemaking, and therefore learned of the Rule’s requirements too late to be able to come into compliance by Nov. 1, 2008. "The Commission’s delay of enforcement will enable these entities sufficient time to establish and implement appropriate identity theft prevention programs, in compliance with the rule,” the FTC said in a release. Although the Credit Union National Association (CUNA) recognizes that the FTC's action is primarily directed at non-financial institution creditors not aware of these rules until recently, CUNA has contacted the NCUA to seek clarification regarding the extent to which that agency might apply this suspension to federal credit unions. The FTC’s delay does not apply to address discrepancy rules that were issued at the same time as the Red Flags rules. The Red Flags Rule was developed to implement parts of the Fair and Accurate Credit Transactions (FACT) Act of 2003. Under the rule, financial institutions and creditors with covered accounts must have identity theft prevention programs to identify, detect, and respond to patterns, practices, or specific activities that could indicate identity theft. A covered account generally is a consumer account or any other account the institution determines carries a foreseeable risk of identity theft. Earlier this month, the federal credit union, bank and thrift regulators approved the examination procedures required to determine a financial institution's compliance with identity theft "red flags" rules (12 CFR 222.90) and other regulations under the Fair Credit Reporting Act (FCRA). Use the resource link below to interagency exam procedures.
* WASHINGTON (10/23/08)--The Federal Deposit Insurance Corp. (FDIC) and Washington Mutual are disagreeing over $4.4 billion that WaMu deposited into two subsidiaries Sept. 25 before they failed. The thrifts were then sold to JPMorgan Chase and Co. (American Banker
Oct. 22). WaMu is seeking approval from a judge to transfer funds transfer from JPMorgan Chase to the bankruptcy estate, which would compensate WaMu’s creditors. However, the FDIC filed a motion Monday to stay the transfer because the agency said the funds should be used to compensate the subsidiaries’ debtholders ... * WASHINGTON (10/23/08)--The Securities and Exchange Commission (SEC) will take a closer look at disclosures and financial statements regarding executive compensation, John W. White, Division of Corporate Finance director at the SEC, said in a speech Tuesday. White also noted that the Troubled Asset Relief Program (TARP) will bring up some new compensation disclosure challenges. “This is certainly something that companies should, and no doubt are, beginning to gear up for,” he added. Nine of the nation’s largest financial institutions already have agreed to participate in TARP and sell $125 billion of their senior preferred stock to the U.S. Treasury. The SEC is required to look at public companies’ annual reports once every three years (American Banker
Oct. 22) ... * WASHINGTON (10/23/08)--The National Association of State Credit Union Supervisors (NASCUS) urged the House Financial Services Committee to consider credit union capital improvements in its deliberation of regulatory reform proposals. The committee held a hearing Oct. 21 to address reform for financial markets. NASCUS wrote the committee, saying that credit unions need comprehensive reform, including access to supplemental capital. Access to capital would allow credit unions to accumulate net worth beyond retained earnings, protect their liquidity, and plan and respond proactively in the financial environment, NASCUS said ... * WASHINGTON (10/23/08)--President Bush invited 20 world leaders to Washington, D.C., Nov. 15 for an international summit meeting on the economy. The meeting will take place two weeks after the presidential elections, have a broad agenda, and allow leaders to agree on reform of the institutional and regulatory regimes in the world’s financial sectors, Bush press secretary Dana Perino said (The New York Times
Oct. 22) ... * WASHINGTON (10/23/08)--Last month, 13 credit union representatives from Oregon met with National Credit Union Administration Chairman Michael Fryzel and board member Gigi Hyland during a Hike the Hill event (Oregon Outlook
The group also met with Oregon Reps. David Wu (D), Greg Walden (R), Earl Blumenauer (D), Peter DeFazio (D) and Darlene Hooley (D). It also met with staff for Sens. Ron Wyden (D) and Gordon Smith (R), and Small Business Administrator Sandy Baruah. From left are: Chuck Garner, Oregonians FCU; Troy Stang, president/CEO, Credit Union Association of Oregon (CUAO); Tim and Linda Wheeler, Oregon First Community CU; Mark Turnham, NW Priority CU; Carlyn Roy, OSU FCU; Brooke Van Vleet, First Tech CU; Mike Clack and Dave Loprinzi, NW Priority CU; Matt Purvis, Northwest Community CU; Dann Penn, MaPS CU; Char Shinn, Northwest Resource FCU, and Pam Leavitt, CUAO senior vice president of governmental affairs. (Photo provided by the Credit Union Association of Oregon) ...
WASHINGTON (10/23/08)—Pressing credit union compliance issues are the subject of an Oct. 30 Credit Union National Association (CUNA) audio conference. Participants will receive an overview of recent compliance developments that will affect credit union operations and insights into why federal regulators are pursuing certain proposals. The 90-minute audio conference, scheduled to begin 2 p.m. ET, will be broken into two parts. Part I will cover the following areas:
* Conducting due diligence reviews of third party relationships; * Increase in share insurance coverage from $100,000 to $250,000; * The Housing and Economic Recovery Act amendments to the Servicemembers Civil Relief Act; * The Federal Housing Administration’s new Hope for Homeowners Program; * The Federal Reserve Board's payment of interest on depository institutions' required and excess reserve balances; * Compliance tips when considering adjustments in home equity lines of credit; AND * Reporting bankruptcies on credit reports.
Part II will provide a quick update on developing compliance issues, such as:
* The Housing and Economic Recovery Act's mortgage licensing and registration provisions; * Truth in Lending – The Federal Reserve Board’s expected final action on open-end changes to Reg Z; * FACT Act – an anticipated final action on accuracy and risk-based pricing regulations; as well as * Other legislative and regulatory developments.
CUNA compliance experts will answer questions at the conclusion of each part of the program on those or any other subjects. For more information or to register for the audio conference, use the resource link below.
ALEXANDRIA, Va. (10/23/08)—Gigi Hyland, a member of the National Credit Union Administration (NCUA) board, noted in a recent speech that credit unions must remain vigilant in their asset-liability management and liquidity management planning to weather the current economic crisis. Hyland said the financial condition of credit unions remains sound and cited as evidence their continued high net worth levels. However, she added, credit unions are not immune from the ripple effects of the country’s credit freeze and subprime mortgage crisis. “The nation’s economy and, specifically, the financial services industry finds itself in a dynamic and fluid situation,” Hyland said. She was addressing the AICPA National Conference on Credit Unions this week in San Francisco, Calif. Hyland also addressed key examination issues for this year. She outlined the NCUA guidance on credit unions due diligence and noted, "Credit unions need to partner with vendors to effectively serve members. However, credit unions must take the time to understand what they are buying from a vendor, to implement programs slowly and to monitor and manage the risks associated with the implementation of new products and services." See the resource link below for more on the NCUA due diligence guidance. Also, the Credit Union National Association is offering an Oct. 30 audio conference entitled “Pressing CU Compliance Issues,” which will include information on conducting due diligence reviews of third-party relationships (See related story this issue).