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Washington Archive

Washington

Inside Washington (10/04/2011)

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* WASHINGTON (10/5/11)--The apparent end of mortgage malfeasance settlement talks between several state attorneys general (AG) and banks could benefit banks in the end, American Banker reported on Tuesday. The state attorneys were proposing a settlement of over $20 billion, but bankers balked, saying this was well above their liabilities. Many state representatives gradually backed away from this deal, and as their numbers decreased, so too did banks’ willingness to settle with the state AGs. Some have said that the end of state-based negotiations could lead to a glut of individual lawsuits, or action by the Consumer Financial Protection Bureau. A settlement reached with federal officials may amount to less of a hit on the banks bottom line …

Cheney invites upset bank customers to join a CU

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WASHINGTON (10/5/11)--Consumers upset by the recent spate of news about escalating bank fees on debit cards and checking accounts should take their business to a credit union where fees are lower and service is better, Credit Union National Association (CUNA) President/CEO Bill Cheney said this week. “Consumers do not have to sit still. They should give credit unions a close look and take advantage of credit unions’ emphasis on service over profits, typically with no or lower fees overall,” said Cheney. “When free checking at banks seems to be disappearing, our surveys show eight out of 10 credit unions still offer at least one free checking account with no minimum balance requirement and no maintenance or activity fees,” Cheney added. He noted that CUNA’s website, www.aSmarterChoice.org, can help consumers learn more about credit unions and find one they are eligible to join. “Everybody can join a credit union, just not the same credit union,” Cheney explained. “It’s just a matter of knowing the ones you’re eligible to join and making the move. This is the time. People need a financial institution that put their best interests above its own bottom line.” Cheney’s comments come amid recent news reports that Bank of America and other big banks will begin charging customers new fees on debit cards and checking accounts. The publicity is driving outraged consumers to seek out alternative banking solutions. Credit unions are financial cooperatives owned by their accountholders, rather than outside investors. Because they are member-owned and not-for-profit, credit unions return their excess earnings back to the members they serve, typically through higher rates on savings accounts, lower rates on loans, and by charging lower and fewer fees. Cheney noted that 92 million Americans already belong to the nation’s 7,500 credit unions. Those members, he added, save more than $6.7 billion a year in lower fees and better rates by using credit unions rather than banks, representing an average yearly savings of $75 per person or $142 per family, according to a CUNA survey. Cheney also noted that 80% of credit unions provide free checking, more than 70% of credit unions offer debit/ATM cards, and credit unions provide more than 28,000 surcharge-free ATMs nationwide via the CO OP Network. He also cited independent surveys by Forrester Research and others that have rated credit unions tops in consumer trust and satisfaction.

FHFA IG Foreclosure abuses reported as early as 2003

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WASHINGTON (10/5/11)--Government-sponsored mortgage giant Fannie Mae was informed of foreclosure abuses, including the filing of false pleadings and affidavits, as early as 2003, but Fannie Mae’s overseer, the Federal Housing Finance Agency (FHFA), did not officially act to address these types of actions until 2010, the FHFA’s Office of the Inspector General (OIG) reported on Tuesday. An outside law firm that was hired by Fannie Mae to follow up on reports of abuses that were made in 2003 found that “Fannie Mae did not take steps to ensure the quality of its foreclosure attorneys’ conduct, the legal positions taken in the attorneys’ pleadings, or the manner in which the attorneys processed foreclosures on [Fannie Mae and Freddie Mac’s] behalf,” the OIG said. The outside law firm advised Fannie Mae to stop the practice. While Fannie Mae claims to have addressed these issues in a later discussion with the Office of Federal Housing Enterprise Oversight (OFHEO), there is no record of this contact, the FHFA OIG said. (OFHEO was the regulatory body that was the precursor to FHFA.) The OIG found that Fannie Mae continued to fail to act as press reports and consumer complaints of foreclosure abuses mounted in 2008 and 2009. Further, the OIG report said, the FHFA did not conduct its own internal investigation of the foreclosure abuses, which also said included creating and filing incomplete and improper documents, fraudulent affidavits, improper notarizations and the use of robo-signing to process foreclosure documents, until heavy media reporting on these issues began in 2010. The OIG in its report said that the FHFA “had not considered risks associated with foreclosure processing to be significant, and, instead, had focused its limited examination resources on assessing high risk areas such as [Fannie Mae and Freddie Mac’s] management of credit risk.” Overall, the OIG report found there “were multiple indicators of foreclosure abuse risk prior to 2010 that could have led FHFA to identify and act earlier on the issue.” To correct these issues, the OIG suggested that the FHFA enhance “its capacity to identify new and emerging risks,” create and implement new guidance and supervisory plans for default-related legal services, and “develop and implement policies and procedures to address poor performance by default-related legal services vendors” that work on behalf of Fannie Mae and Freddie Mac. For the FHFA release, use the resource link.

CUNA welcomes first new CU of 2011

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ALEXANDRIA, Va. (10/5/11)--"It's a joyous event whenever a new credit union is born, and we wish Stepping Stones FCU every success," Credit Union National Association (CUNA) President/CEO Bill Cheney said on Tuesday. “CUNA and the Delaware Credit Union League stand by to provide any help the new credit union may ask for. We look forward to helping them succeed,” he added. Alice Smith, director of the league’s communications and governmental affair departments, noted that the league has been watching the development of this new credit union for about three years. “We are excited to have a new credit union chartered in Delaware. The last one was chartered in 1984,” Smith said. She also noted that recently Delaware witnessed its smallest credit union merge into its largest. Cheney’s and Smith's remarks followed the National Credit Union Administration’s (NCUA) Tuesday announcement that it had approved the first newly chartered credit union of 2011: Wilmington, Del.-based Stepping Stones FCU. The credit union, which is designated as a low-income credit union, will serve the 72,700 people that live, work, worship, volunteer, attend school or transact business in Wilmington. Stepping Stones is expected to open this month, and initially plans to offer multiple savings accounts, including regular shares, club accounts and share certificates. It also plans to offer a variety of personal loans, including signature, used auto, and share-secured loans, within the first 12 months of operation. Planned future services include share drafts and travelers checks. NCUA Chairman Debbie Matz in a release said she is “pleased to see the outstanding work of so many dedicated people result in a newly chartered credit union,” and added that the agency’s Office of Small Credit Union Initiatives “will offer assistance to help it prosper.” For the full NCUA release, use the resource link. The agency approved six new credit union charters last year. A total of four new corporate credit unions were also chartered in 2010. The NCUA last year approved changes to its rules for creating or expanding a community credit union charter, saying at that time that its new rule removed some burdensome elements of the previous charter application process and provided credit unions with the flexibility to serve consumers that would otherwise go unserved. The changes also were intended to shortened the amount of time needed to approve an application to "a couple of months" in most situations, with the more difficult situations needing slightly more time to be resolved, the NCUA said.

Small CUs may be regulated out of business CEO warns

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WASHINGTON (10/5/11)--Wright-Patt FCU President/CEO Doug Fecher on Tuesday said burdensome regulations are a central challenge to his credit union’s pro-consumer work, adding that it is “not an exaggeration to say our nation’s small, community-based financial institutions are exposed to a situation where they ultimately may be regulated out of business.” “This should concern us all,” he added. Fecher spoke before a Tuesday Senate Banking subcommittee on financial institutions hearing entitled "Consumer Protection and Middle Class Wealth Building in an Age of Growing Household Debt." Wright-Patt helps its members “achieve financial freedom for themselves and their families” by only making affordable loans that the members will be able to repay, by fully disclosing the terms of loans up front, and advising members on how they can increase their own savings, even while taking out a loan, Fecher said. “While credit unions would rather hire loan advisers and financial counselors to help consumers improve their financial situation, we’re instead hiring compliance offers to deal with the new rules,” he added. The Fairborn, Ohio-based credit union is the most regulated financial institution in its neighborhood, the CEO said. Fecher noted that it has been given “more than 160 new rules and regulations from some 27 different federal agencies” since 2008. Fecher said he hopes the Consumer Financial Protection Bureau “empowers credit unions to do their jobs of helping consumers make smart use of credit without creating even higher regulatory costs.” He also spoke in support of his fellow Ohioan and nominee for CFPB director, Richard Cordray, saying Cordray “has outstanding qualifications and understands the unique role credit unions play in the lives of consumers.” He noted that until a director is confirmed, unregulated entities like payday lenders and check cashers will go without regulation while credit unions and banks will be subject to regulation. Fecher also addressed the regulatory burden in early 2009 when he testified on the Credit Union National Association’s behalf before a House Financial Services subcommittee hearing.

Durbin letter calls CUs small banks superior

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WASHINGTON (10/5/11)--With the public backlash against the debit account actions of Bank of America and other large institutions continuing to grow, interchange rule author Sen. Richard Durbin (D-Ill.) said “now is the moment” for credit unions and other small institutions to make the superior benefits and customer service offered by their institutions “crystal clear” to these consumers. In a letter to the Illinois Credit Union League, the Illinois Bankers Association, and the Community Bankers Association of Illinois, Durbin noted that many consumers are looking to move their accounts away from “Wall Street giants” to smaller institutions, and he urged smaller institutions “to seize this competitive opportunity.” The senator made similar remarks in a floor statement earlier this week, and is planning to release legislation that would make it easier for bank customers to transfer their accounts between financial institutions. Durbin sought to reassure credit unions and community banks on such issues as the viability of the two-tiered interchange system and potential steering by merchants. For instance, he said he is alert to the possibility “that Visa and MasterCard might act in collusion with large banks to adjust rates over time in a way that diminishes the ability of smaller institutions to issue debit cards.” The Credit Union National Association (CUNA) is monitoring merchants for any signs that they are steering consumers away from using debit cards issued by institutions that are not subject to the cap, and has developed a website to help consumers and credit unions report any instances of steering. CUNA is also working with regulators to ensure the two-tiered interchange system is followed.

NEW Stepping Stones FCU is first newly chartered CU of 2011

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ALEXANDRIA, Va. (UPDATED: 9:30 a.m. ET, 10/4/11)--The National Credit Union Administration (NCUA) today announced the first newly chartered credit union of 2011: Wilmington, Delaware-based Stepping Stones FCU. The credit union, which is designated as a low-income credit union, will serve the 72,700 people that live, work, worship, volunteer, attend school or transact business in Wilmington. Stepping Stones is expected to open this month, and initially plans to offer multiple savings accounts, including regular shares, club accounts and share certificates. It also plans to offer a variety of personal loans, including signature, used auto, and share-secured loans, within the first 12 months of operation. Planned future services include share drafts and travelers checks. NCUA Chairman Debbie Matz in a release said she is “pleased to see the outstanding work of so many dedicated people result in a newly chartered credit union,” and added that the agency’s Office of Small Credit Union Initiatives “will offer assistance to help it prosper.” For the full NCUA release, use the resource link.