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Community charter remittance compensation changes OKed by NCUA

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ALEXANDRIA, Va. (11/18/11)--The National Credit Union Administration (NCUA) on Thursday approved an expanded community credit union charter, and separate final rules that correct its golden parachute and indemnification rule and add remittance transfers to the list of international electronic funds transfers that may be offered by federal credit unions.

Both of these final rules were unchanged from the interim rules that came into effect earlier this year.

The remittance transfer rule final rule strictly adheres to Dodd-Frank Act's statutory language and allows federal credit unions to offer all variations of remittance transfers to their members and those within their fields of membership, subject to consumer protections.

The Golden Parachute and Indemnification Rule correction finalizes the interim final rule's changes to portions of the NCUA's original regulation that "did not accurately reflect the Board's intent regarding certain deferred compensation plans," the NCUA said.

The NCUA in a release added that the technical correction provides an exception to the definition of golden parachute payments pertaining to plans offered under section 457 of the Internal Revenue Code, and clarifies that 457(b) plans are excluded from the golden parachute definitions. The rule will exclude 457(f) plans from the golden parachute definition if they meet certain criteria, the NCUA added.

The NCUA also unanimously approved Indianapolis, Indiana-based Finance Center FCU's application to expand its community charter. That $419 million in asset, 44,000-member credit union will now be able to draw membership from citizens that live, work, worship, or attend school in the greater Indianapolis area, including the surrounding counties of Boone, Brown, Hamilton, Hancock, Hendricks, Johnson, Morgan, Putnam and Shelby. The credit union currently draws membership from Marion County.

The Credit Union National Association urged the NCUA to make the correction to the golden parachute rule and was also actively involved in the remittance transfer issues.

For more on the NCUA board meeting, use the resource link.

Feds clarify financial supervisory enforcement responsibilities

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WASHINGTON (11/18/11)--The National Credit Union Administration (NCUA) and other regulators that comprise the Federal Financial Institutions Examination Council (FFIEC) have released guidance addressing "how the total assets of an insured bank, thrift or credit union will be measured for purposes of determining supervisory and enforcement responsibilities" under the Dodd-Frank Wall Street Reform Act.

The FFIEC is comprised of the leaders of the NCUA, the Federal Reserve Board, the Office of the Comptroller of the Currency (OCC), the Office of Thrift Supervision, the Federal Deposit Insurance Corp. (FDIC) and the Consumer Financial Protection Bureau. NCUA Chairman Debbie Matz is in the first year of a two-year stint at the FFIEC helm.

The FFIEC release notes that the CFPB "has exclusive authority to examine for compliance with federal consumer financial laws and primary authority to enforce those laws for institutions with total assets of more than $10 billion, and their affiliates." The Fed, FDIC, NCUA, and OCC "will retain supervisory and enforcement authority for other institutions," the release adds.

Three credit unions would come under the purview of the CFPB under these terms.

Quarterly call reports will be used as "a common measure of the asset size of an insured depository institution," the release adds. The size of financial institutions will not be changed for regulatory purposes "unless four consecutive quarterly reports indicate that a change in supervisor is warranted," the FFIEC said.

Allowing institutions to frequently switch between financial regulators "could both impose increased burden on institutions and interfere with the orderly implementation of the agencies' responsibilities with respect to the federal consumer financial laws," according to the release.

CUNA to push for cuts as NCUA unveils 2012 budget

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ALEXANDRIA, Va. (11/18/11)--Credit Union National Association (CUNA) President/CEO Bill Cheney said the National Credit Union Administration's 2012 budget, which, at $236.9 million, represents a 5.1% increase over 2011's total, "is considerably lower than what we had feared it would be," but the CEO added that CUNA "will still push the agency to contain all costs going forward."

NCUA Chairman Debbie Matz during Thursday's open board meeting noted the 5.1% increase is less than half of the 12% to 13% budget growth rates that the agency has seen over the past three years. Matz said the NCUA budget is a valuable investment in the safety and soundness of credit unions, adding that "budget investments that credit unions have made in NCUA these past few years are paying off."

Click to view larger image The NCUA board approved a series of agenda items, including the  2012 agency budget with a 5.1% increase over the prior year,  in a quick Thursday open meeting. (CUNA photo)

The 2012 budget adds 33 new positions, including 15 specialists in the areas of lending, capital markets, information systems, supervision and troubled institutions, eight examiners and three supervisory examiners, to the NCUA payroll. Just over $7 million of the $11.5 million budget increase is tied to the extension of health, dental and vision benefits to all NCUA employees. However, the NCUA said this increase is more than offset by the $7.9 million savings resulting from applying a pay freeze to all staff for 2012.

The budget also contains a $2.6 million increase in travel expenses and a combined $1.1 million in contracted services and rent, communications and utilities payments.

CUNA is reviewing the new budget in detail and will be following up to get more answers for credit unions on specific numbers and assumptions.

The agency also announced that its 2012 overhead transfer rate (OTR) would increase to 59.3%, and said 2012's operating fee rate for federal credit unions would decline by .90%. CUNA will review the OTR change.

The 2012 Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment will likely be between 8 and 11 basis points (bp), the NCUA said, and the agency added that will not charge a National Credit Union Share Insurance Fund (NCUSIF) premium in 2011. Matz added that the NCUA would prefer not to charge an NCUSIF premium in 2012, but added that an assessment, if charged, would be between 0 and 6 bp.

CUNA has many concerns about the increases in the agency's budget, in light of the fact that costs in other federal regulatory agencies are being contained. Credit unions deserve to have more information about the need for these increases, Cheney said.

The agency also reported on the status of the NCUSIF and TCCUSF during the meeting, noting that the NCUSIF's equity ratio was 1.32% as of October 31. The NCUSIF holds $872 million in reserves. There are currently 394 CAMEL 4 and 5 credit unions, which represent 3.89% of insured shares, or approximately $30 billion in assets. NCUA staff also noted that there are 1,761 CAMEL 3 credit unions, which represent 15.87% of insured shares, or $124 billion in assets. Combined, insured shares in CAMEL 3, 4, and 5 credit unions represent approximately 20% of total insured shares, the NCUA said.

For more on Thursday's NCUA Board Meeting, use the resource link.

Inside Washington (11/17/2011)

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  • WASHINGTON (11/18/11)--Corporate credit unions will no longer be required to execute 314a Bank Secrecy Act searches, according to guidance offered in a letter released by the National Credit Union Administration. Financial Crimes Enforcement Network (FinCEN) established the 314(a) program through the issuance of a rule established in 2002. As amended, its requirements are now published in 31 CFR Part 1010.520. The 314(a) program requires certain financial institutions to search their records and identify if they have responsive information with respect to the particular investigative subject when they receive such requests from FinCen. After consultation with FinCEN, NCUA determined that the searches would no longer be necessary because corporate credit unions do not service accounts for natural person members and provide services only to member credit unions and other such entities …
  • WASHINGTON (11/18/11)--The Consumer Financial Protection Bureau (CFPB) is seeking information from stakeholders in the private student loan market. The CFPB published a notice and request for information to collect data on a series of issues impacting private student loans from origination to servicing to collection. The CFPB is asking the public, students, families, the higher education community, and the student loan industry to provide information voluntarily. The bureau is seeking a broad swath of information, including information available to shop for private student loans; the role of schools in the marketplace; underwriting criteria; repayment terms and behavior; impact on field of study and career choice; servicing and loan modification; financial education and default avoidance …
  • WASHINGTON (11/18/11)--The chief executives at Fannie Mae and Freddie Mac on Wednesday defended $12.8 million in bonuses and deferred salary paid last year to 10 top executives at the government-sponsored enterprises (American Banker Nov. 17). Freddie Mac CEO Charles Haldeman Jr. and Fannie Mae presdent/CEO Michael Williams, appearing before the House Oversight Committee, said the pay packages were necessary to attract and retain the talent required to manage trillions of dollars in assets and annual new business. Haldeman said he understood the outrage, but he noted that overall spending at Freddie Mac has been drastically reduced. Freddie Mac leadership tried to cut spending in a way that did not risk disrupting the functioning of the company, he said. Employee attrition at Fannie Mae this year is double its historical rate, Williams said …

CUNACFA holiday spending predictions coming Monday

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WASHINGTON (11/18/11)--On Monday, Nov. 21, at 10:00 a.m. (ET), the Consumer Federation of America (CFA) and the Credit Union National Association (CUNA) will release the results of their 12th annual survey on consumers' holiday spending plans and their concerns about debt levels.

The CFA/CUNA survey, conducted Nov. 10-13, provides fresh findings on consumer attitudes towards their financial condition and holiday spending plans just before Black Friday kicks off the holiday shopping season. 

This year's survey documents consumers' concerns about spending amid persistent high unemployment and a weak economic recovery.

The survey again asks those who expressed their intent to spend less why they plan to do so.  And, in this uncertain economic environment, the survey benchmarks whether consumers feel their financial situation has gotten better or worse compared to a year ago.

CFA and CUNA representatives will discuss their complete survey findings, including:

  • The latest look at consumers' holiday spending plans.
  • Consumer concern about credit cards and paying off the full monthly balance.
  • How the findings compare to consumer attitudes last year and two years ago at this time.
  • How consumer attitudes have changed over the past twelve years.
  • Helpful advice for managing holiday spending.

The information will be released during a press conference at the National Press Club. Stephen Brobeck, CFA executive director, and Bill Hampel, CUNA's chief economist, will present the results and answer questions.

Philly CDCU subject of cease and desist order

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ALEXANDRIA, Va. (11/18/11)--People for People Community Development CU of Philadelphia was the subject of an Order to Cease and Desist issued by the National Credit Union this week.

The order requires the credit union to take the following actions:

  • Complete a financial statement audit;
  • Charge off uncollectible loans;
  • Properly fund the Allowance for Loan and Lease Losses;
  • Collect on delinquent loans guaranteed by a third party;
  • Reconcile general ledger accounts monthly; and
  • Establish and maintain a Bank Secrecy Act compliance program.

The credit union's officials have agreed to the terms of the order, which is effective as of Nov. 1. People for People has 1,500 members and was chartered in 1999.

Use the resource link to read the cease and desist documents.

NCUA enforcement orders also can be inspected Monday through Friday at NCUA's Office of General Counsel from 9 a.m. to 4 p.m. (ET).  Copies may also be ordered by mail from NCUA at 1775 Duke Street, Alexandria, VA 22314-3428.