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CUs call for less reg burden in field hearing

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Wausau, WIS. (11/1/11)--The increasing number of regulations imposed on credit unions is costly, confusing to members, and creates "an unnecessary burden without any measure of the effectiveness of these changes," Central City CU CEO and Credit Union National Association (CUNA) board member Pat Wesenberg said in testimony delivered before a Monday House Financial Services financial institutions and consumer credit subcommittee field hearing.

She reiterated CUNA's recent call for the National Credit Union Administration to impose a moratorium on new regulations for at least the next six months and reinstate the RegFlex program. "There are no new, material systemic problems with the credit union system, and current safety and soundness concerns within natural person and corporate credit unions are being well managed, Wesenberg said.

Credit union executives Pat Wesenberg and Mark Willer are among those that testified during a Monday House Financial Services financial institutions and consumer credit subcommittee field hearing on regulatory burden. (Wisconsin CU League photo)
Wesenberg added that she is concerned by potential new regulations from the Consumer Financial Protection Bureau.

"In the wake of the financial crisis, credit unions face what might be best described as a crisis of creeping complexity related to regulatory burden.  It is not necessarily any one single regulation that is overly burdensome but rather the totality of regulations, the frequency with which the regulations change, and the sometimes varying application of the regulation by field examiners which sometimes conflicts with or expands upon the original intent of the regulation," Wesenberg added.

Mark Willer, COO of Eau Claire, Wis.-based Royal CU, also testified on behalf of his credit union. Willer said the current regulatory environment harms his credit union's central goal of "providing services designed to improve the economic and social well-being of all Members from all socio-economic backgrounds and to return financial value to all those who participate in our Member-owned financial cooperative."

Recent financial regulatory legislation, "while well intentioned," has resulted in "significant unintended consequences that confuse and financially harm the very consumers they intended to protect," Willer added.

Wesenberg said this regulatory creep has forced her $178 million in asset, 22,000-member credit union to hire a full time compliance officer and has redirected her lending staff's priorities to training for the constant changes. "This is valuable time that could be spent trying to develop products that would help serve our membership better during these extremely difficult economic times," she said.

Both credit union representatives said their credit unions also deal with increased software costs and other compliance costs as a result of new regulations. "If regulations continue to come from so many directions, I don't see how we will be able to keep up," Wessenberg said.

Mosinee, Wisconsin Mayor Al Erickson, Metropolitan Milwaukee Fair Housing Council representative Bethany Sanchez, and bank and business representatives also testified during the field hearing.

For more on the hearing, and a recent story on CUNA's discussion of regulatory priorities with the NCUA, use the resource links.

Inside Washington (10/31/2011)

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  • WASHINGTON (11/1/11)--The Consumer Financial Protection Bureau (CFPB) must navigate a disagreement between banks and consumer groups to finalize a rule that would require lenders to verify a borrower's ability to repay a mortgage loan. The Dodd-Frank Act amended the Truth in Lending Act and required regulators to establish "qualified mortgages" that would be exempt from the ability-to-repay standard. Raj Date, the bureau's de facto chief, said CFPB plans to issue a final rule by early next year. Banks and consumer groups are at odds over whether lenders should receive safe harbor protection from liability if they make a so-called qualified mortgage that meets certain criteria rather than verifying the ability of the borrower to repay. Two alternative definitions for a qualified mortgage have been proposed. One would create safe-harbor protection, which is promoted by banks, and would require the loan to meet four specific criteria. The other plan would establish a rebuttal presumption of compliance with a weaker safe harbor. The second plan would require a creditor to meet up to nine criteria. The Credit Union National Association (CUNA) supports the safe harbor  proposal because it will make compliance less resource intensive for credit unions. CUNA will monitor the progress of the rule and work with the CFPB to ease the compliance burden for credit unions …

  • WASHINGTON (11/1/11)—The U.S. Treasury on Monday reminded credit unions and other stakeholders that they have until Nov. 14 to comment on how the Treasury's Office of Financial Education and Financial Access (OFEFA) can design, implement and administer certain financial access activities to aid the underbanked and unbanked. The Treasury is developing a multi-year program of grants, cooperative agreements, financial agency agreements, and similar undertakings to promote initiatives aimed at enabling low- and moderate-income individuals to establish accounts in a federally insured depository institution, including federally insured credit unions. The Credit Union National Association (CUNA) in a comment call asked credit unions to comment on how the Treasury could best help low- and moderate-income individuals to establish accounts in federally insured depository institutions and how the treasury could evaluate which types of accounts would best meet the financial needs of low- and moderate-income individuals. CUNA is also seeking comment on how the Treasury can enable, enhance and assist local, regional, and state start-up collaborations that work with the underbanked. Credit unions must forward their comments to CUNA by the end of today…

CUNA NCUA board nominee could be confirmed in 2011

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WASHINGTON (11/1/11)--The Senate Banking Committee has not announced a date for National Credit Union Administration (NCUA) board nominee Carla León-Decker's confirmation hearing, but that hearing could take place before Thanksgiving, Credit Union National Association (CUNA) Senior Vice President of Legislative Affairs Ryan Donovan said.

Forecasting what happens after a confirmation hearing is not easy; however, Donovan said it is possible that the nomination could clear the Senate by end of the year, if everything goes smoothly.

"The Senate is scheduled to be here well into December and assuming there are no hiccups, a Senate vote on the confirmation before the end of this year isn't out of the question.  Having said that, there are a number of steps before the final vote, and small issues sometimes turn into long delays," he added.

Donovan said León-Decker's nomination is likely to be paired with other recent nominees, including Thomas Hoenig, who was picked to be vice chairman of the board of directors of the Federal Deposit Insurance Corporation last month. Hoenig and León-Decker were nominated by President Barack Obama in mid-October.

León-Decker is the current president/CEO of D.C. Government Employees FCU and has also served as operations manager and president/CEO of PAHO/WHO FCU and branch manager of Transportation FCU. She is also a credit union development educator and director of the Network of Latino Credit Unions & Professionals. León-Decker will take the NCUA board spot vacated by the pending departure of Gigi Hyland, whose six-year term on the NCUA board ended in August. Hyland is still serving as an NCUA board member.

CUNA President/CEO Bill Cheney said CUNA appreciates the White House nominating to the NCUA board an individual with credit union experience, and added that the nomination of León-Decker "is important when appropriate safety and soundness policy is under consideration."

CFPB hearings in House Senate this week

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WASHINGTON (11/1/11)—The U.S. House and Senate are back in House in Washington this week after a week-long in-state work period, and credit unions will want to keep an eye on upcoming hearings.

One such hearing will take place when the Joint Select Committee on Deficit Reduction discusses previous debt reduction proposals today. Former Sens. Alan Simpson (R-Wyo.) and  Pete Dominici (R-N.M.), former White House Chief of Staff Erskine Bowles, and former Federal Reserve Vice Chairman Alice Rivlin, are scheduled to testify during that hearing.

The first 100 days of the Consumer Financial Protection Bureau's (CFPB) work will be the topic of a Wednesday House Financial Services financial institutions subcommittee hearing. De facto CFPB leader Raj Date is the sole scheduled witness for that hearing.

The CFPB will also be in the spotlight on Thursday morning when CFPB Office of Servicemember Affairs leader Holly Petraeus appears before a Senate Banking Committee hearing on "Empowering and Protecting Servicemembers, Veterans, and their Families in the Consumer Financial Marketplace." Bonnie Spain of the Rushmore Consumer Credit Resource Center and retired Admiral Charles Abbott, president/CEO of Navy-Marine Corps Relief, are also scheduled to testify, and more witnesses could be added.

A House Financial Services subcommittee on capital markets hearing on the Private Mortgage Market Investment Act is scheduled for Thursday morning. That legislation, which was introduced by Rep. Scott Garrett (R-N.J.), would require the Federal Housing Finance Agency to develop underwriting standards and securitization agreements and abolish the risk retention standards set forth by the Dodd-Frank Act. The legislation would also provide new disclosures for mortgage investors and securities purchasers. (See related story in resource links.)