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Washington Archive

Washington

NEW: NCUA 2014 Budget Contains 6.7% Increase

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ALEXANDRIA, Va. (11/21/13, UPDATED: 11:15 A.M. ET)--The National Credit Union Administration today approved a 2014 budget of $268.2 million. This spending plan represents an increase of 6.7% from the 2013 NCUA budget and is the sixth straight year that the agency's planned expenditures have grown.

"The Credit Union National Association remains very concerned about the size of the agency's budget and the continued budget growth for NCUA, particularly in light of the welcome decline in the assets in troubled credit unions over the past few years," CUNA President/CEO Bill Cheney said.

"Credit unions have to manage resources prudently or be subject to sanctions. The NCUA should not set one standard for itself and another for credit unions. Credit unions remain concerned that they work hard to contain costs and they feel their agency should do so as well," Cheney noted.

The total amount of 2014 funding increase is $16.9 million.

Employee pay and benefits account for 73%, or $194.6 million, of the 2014 budget.

The NCUA also plans to add $1.7 million in new administrative expenses, an increase in contract service expenses of about $3.1 million and $652,796 in new travel expenses.

The Credit Union National Association has repeatedly encouraged NCUA to use restraint as it sets its budget and CUNA's Examination and Supervision Subcommittee is reviewing today's budget decisions and related budget documents carefully to determine how additional oversight of the agency's budget can be achieved.

The NCUA's original 2013 budget was set at $251.4 million, but the agency in July reduced its projected 2013 budget by $2.6 million, a move CUNA supported and commended.

CU Field Hearing Witness Urges CFPB To Reduce Reg Burden

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WASHINGTON (11/21/13)--Boston Firefighters CU CEO Bernie Winne on Wednesday urged the Consumer Financial Protection Bureau to be cognizant of who credit unions are, what their role is, what their role was before the crisis, and the good deeds that they do in their communities as the bureau continues its regulatory work.

Winne was a panelist at the CFPB's "Know Before You Owe: Mortgages" field hearing in Boston, Mass. The bureau during the hearing released a final rule on the integration of Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) disclosures, and new integrated disclosures. The Credit Union National Association is examining the disclosures and regulations, and is developing a summary. The regulations and disclosures contain some enhancements that were suggested by CUNA and credit unions. (See Nov. 20 News Now story: CU Suggestions In Final CFPB Mortgage Forms.)

The mission of credit unions and the CFPB are very similar, Winne noted during the hearing: Both are consumer oriented. Winne said the concept of simple and honest banking is a hallmark of his credit union, and added that Boston Firefighters CU believes that a knowledgeable member is a good member.

The credit union CEO said the new regulations will help his credit union mortgages look good compared to other options. Deals that Boston Firefighters may have lost in the past due to misinformed consumers should now come their way, he added.

However, Winne said, his credit union is small and is significantly impacted by new regulatory burdens. Boston Firefighters CU has worked closely with underwater homeowners to refinance their mortgages. New regulations could force his credit union to replace some of the simple products it offers with more complex products.

Overall, less is better at the closing table, he emphasized, suggesting that the bureau could improve on the disclosures it released Wednesday by finding a way to include more valuable information at a reduced page count.

For more on the CFPB disclosures and regulations, use the resource link.

NEW: NCUA Approves Final CUSO Rule

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ALEXANDRIA, Va. (11/21/13, UPDATED 11 A.M. ET)--The National Credit Union Administration's final rule addressing credit union service organization (CUSO) supervision, adopted today, is revised from the agency's proposal but concerns remain about the authority of the agency to exercise direct authority over CUSOs.

Under the proposal released in 2011, CUSOs and their subsidiaries would be required to directly file their financial statements with the NCUA, and to forward those reports to state supervisors. The final keeps those controversial provisions.

However, the NCUA noted that the final rule is more limited in scope than the proposed rule: The final rule is targeted to CUSOs that engage in high-risk or complex activities such as credit lending, information technology and custody, safekeeping and investment management.

The final rule will become effective on June 30. A registry for CUSOs to file their documents with the NCUA will be finalized in late 2015.

The Credit Union National Association has actively advocated for another approach since the CUSO rule was proposed and has said the NCUA should take care not to extend its reach beyond its statutory authority. CUNA maintains that the Federal Credit Union Act does not confer authority over CUSOs to the federal credit union regulator except through the oversight of credit unions.

The NCUA should work with natural person credit unions that obtain services from the CUSOs to provide the financial information on CUSOs the agency needs. The agency has said that this method is inefficient and restricts its ability to conduct offsite monitoring and evaluate systemic risks posed by CUSOs.

The NCUA has argued that enhancing the monitoring of CUSOs would protect consumers, credit unions and the National Credit Union Share Insurance Fund (NCUSIF). However, CUNA has said that while a small number of CUSOs have had issues, CUSOs as a whole do not pose a systemic risk to the credit union system or overall concerns to the NCUSIF,and therefore a targeted regulatory approach would be more appropriate.

The CUSO rule was first slated for a final vote in June 2012, when it was the lone item on the agency's open board meeting. That meeting was cancelled.

Fed, CFPB Set 2013 TILA, Lease Thresholds

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WASHINGTON (11/21/13)--The protections of the Truth in Lending Act (TILA) and the Consumer Leasing Act will generally apply to consumer credit transactions and consumer leases of $53,500 or less in 2014, the Federal Reserve reported this week. The agencies are required to adjust this threshold each year.

Private education loans and loans secured by real property, such as mortgage, will be subject to the TILA regardless of the amount of the loan, the Fed said.

The threshold adjustments reflect the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers as of June 1, 2013 and will take effect on Jan. 1, 2014, the Fed said.

For the Fed release, use the resource link.

Merchants Rehash Arguments In Interchange Brief

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WASHINGTON (11/21/13)--Merchants in a Wednesday brief argued that the U.S. Court of Appeals for the District of Columbia Circuit should affirm an earlier court decision that struck down the Federal Reserve's debit card interchange fee cap and network non-exclusivity regulations.

U.S. District Judge Richard Leon in July ruled in favor of a merchant request to strike down the Fed's price caps on debit card interchange fees. He said that the Fed did not follow narrow congressional intent when it implemented the cap. The Fed has appealed that decision.

The merchants in their Wednesday brief argued:
  • The Fed's interpretation of the interchange fee standard outlined in the Durbin Amendment is incorrect, and must be invalidated;
  • The Fed's implementation of the interchange fee statute's non-exclusivity requirement is also incorrect, and must be altered; and
  • The interchange fee standard violates the Administrative Procedure Act.
The merchants brief also took issue with the Fed's estimates of the cost of providing debit cards to users.

Amicus briefs were also filed on behalf of Sen. Richard Durbin (D-Ill.), as well as several other retailers.

The Fed has a Dec. 4 deadline to respond.

Circuit Judges David Tatel, Harry Edwards, and Stephen Williams will hear oral arguments from the Fed and merchants at 9:30 a.m. (ET) on Jan. 17.

Senate Finance Hears From Bloom Raskin On Treasury Nomination

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WASHINGTON (11/21/13)--Sarah Bloom Raskin came before the Senate Finance Committee Wednesday as the panel considered the Federal Reserve Board governor's nomination to become deputy secretary of the U.S. Treasury Department.
 
If the nomination is approved by the committee and confirmed on the floor of the U.S. Senate, Bloom Raskin would be the first female to serve in the deputy secretary post.
 
She described the Treasury Department in her testimony as the executive agency charged with promoting economic prosperity and financial stability. She said it has a "sacred trust to advance the fortunes and livelihood of our people, our businesses, our communities, and our nation."
"The government does not create wealth and prosperity and innovation in our economy, but it does create the conditions in which our people and businesses can, and therefore its role is central and indispensable," she said.
Also in her testimony in support of her confirmation, the Treasury nominee detailed both her private and public sector experience, which included time as Senate Banking Committee counsel under three different chairmen.
 
Bloom Raskin said that her time as a private sector attorney has given her "invaluable management experience," and also taught her "what those in the financial marketplace seek most from government: stability, predictability, fairness, a sense of proportion, attention to the unintended consequences of regulation, pragmatism, and bipartisan effort towards economic prosperity and public efficiency."  
 
As a public servant, as Commissioner of Financial Regulation for the State of Maryland from 2007-2010 and a Fed governor from 2010 to present, she has worked for stability for the country's financial sector and, at the Fed, to "maximize employment, maintain price stability, and restore the underlying strength and vibrancy of the American economy." 

The finance panel also heard the testimony of Rhonda Schnare Schmidtlein, who has been nominated to serve on the International Trade Commission.

Patent Reform, CFPB Bills See Committee Action

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WASHINGTON (11/21/13)--Two topics of interest to credit unions were tackled in Wednesday U.S. House markup sessions: Legislation that would crack down on "patent trolls," and another that would alter the leadership structure of the Consumer Financial Protection Bureau.
 
The patent bill, called "The Innovation Act of 2013" (H.R. 3309), was reported out of the House Judiciary Committee 33-5. Several amendments had been offered during the markup process and debate on those amendments continued late into the day.

The bill was introduced by Rep. Bob Goodlatte (R-Va.) late last month. It would crack down on the so-called "trolls" who abuse the patent system by using low-quality patents to try to extract settlements from credit unions and other parties.  The Credit Union National Association supports the bill.

Debate by the House Financial Services Committee on six bills that would alter aspects of the Consumer Financial Protection Bureau also lasted into the evening, as committee members recessed for votes on the House floor late Wednesday afternoon. A vote on those bills is scheduled to be held this morning.
 
Bills addressed during the markup session and supported by CUNA include:
  • The Responsible consumer Financial Protection Regulations Act (H.R. 2446), which would replace CFPB Director Richard Cordray with a five-member commission;
  • The Consumer Financial Protection Safety and Soundness Improvement Act (H.R. 3193), which would authorize the Financial Stability Oversight Council to stay or set aside any CFPB regulation that is found to be inconsistent with safe and sound operations of financial institutions. The bill would also require the CFPB to take into consideration the impact of its rules on insured depository institutions;
  • The Consumer Right to Financial Privacy Act (H.R. 2571), which would prohibit the CFPB from requesting, accessing, collecting, using, retaining or disclosing nonpublic personal information about a consumer unless proper disclosures are provided to the consumer;
  • H.R. 3183, which would require the CFPB to provide at a consumer's request one free annual report disclosing all of the information about the consumer held by the CFPB; and
  • The Bureau of Consumer Financial Protection Accountability and Transparency Act (H.R. 3519), which would subject CFPB funding to congressional appropriations.The CFPB Pay Fairness Act of 2013 (H.R. 2385) was also on the markup agenda.
Watch News Now for updates on the progress of both sessions.

CFPB Announces First Payday Lender Enforcement

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WASHINGTON (11/21/13)--The Consumer Financial Protection Bureau announced Tuesday its first enforcement action against a payday lender.
 
The regulator said that it reached a settlement with Cash America International over robo-signing practices in debt collection lawsuits that affected approximately 14,000 people.
 
Cash America International, one of the largest payday lenders in the U.S., has agreed to terms that could see it paying up to $14 million in reimbursements. It will also pay a $5 million fine for the infringements and other misconduct, the CFPB reported.
 
The regulator said the offending loans were made between Jan. 1, 2008 and Oct. 1 2012, by Cash America International affiliates: Ohio Neighborhood Finance, Inc.; Cash America Pawn, Inc.; Cashland Financial Services, Inc.; Cash America Net of Ohio, LLC; Ohio Neighborhood Credit Solutions, Inc., and CNU of Ohio, LLC.
 
When CFPB announced earlier this month that it would accept complaints on payday lenders, the Credit Union National Association praised the move, but said it should focus on unregulated entities (News Now Nov. 7).

Credit Union National Associatin President/CEO BIll Cheney commended the CFPB on its action. He said, "Credit unions offer an alternative that serves their members' needs, without creating a dependency." He added, however, that CUNA remains concerned that the agency not over-regulate in this area, and inadvertently put credit union alternatives out of commission for those members who need this service.
 
Under federal rules, credit unions are allowed to make short-term, small-amount loans with an annual interest rate of no more than 18%, with some exceptions. Under National Credit Union Administration guidelines, federally chartered credit unions are allowed to charge no more than 10 percentage points above the established usury ceiling--currently, the statutory maximum is 28%. 

Most credit unions that offer alternatives to conventional payday loans also limit fees, encourage members to open savings accounts and provide financial counseling.

NEW: No TCCUSF Assessment In 2014

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WASHINGTON (11/21/13, UPDATED: 10:15 A.M. ET)--The National Credit Union Administration will not charge a Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment in 2014. The National Credit Union Share Insurance Fund assessment for 2014 will be between zero and five basis points (bp), the agency added.
 
The Credit Union National Association urged the NCUA to set the range for the TCCUSF assessment as narrow as possible, starting with zero bp.
 
Credit unions have paid $4.8 billion in TCCUSF assessments since the fund was established. The projected net remaining assessments over the life of the TCCUSF, based on estimates from the second quarter of 2013, now range from -$0.2 billion to $1.6 billion.
 
The NCUA also will receive $1.4 billion through a settlement with JP Morgan announced this week. The settlement funds "will greatly benefit credit unions" and "will enable NCUA to greatly reduce the assessments that all credit unions have to pay," NCUA Chairman Debbie Matz said this week.

A final rule on credit union service organizations and the 2014 NCUA budget, overhead transfer rate and operating fee scale are also on today's open board meeting agenda.