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Reed amendment seeks to shield troops from shady lending

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WASHINGTON (12/1/11)--Sen. Jack Reed (D-R.I.) has proposed legislation that would "enhance the Military Lending Act by closing loopholes that allow lenders to charge exorbitant fees" on some loans that are provided to service members and their families.

The Department of Defense (DoD) in 2007 implemented a rule that applied a 36% cap to payday loans, vehicle title loans, and tax refund anticipation loans to military service members and their dependents. The cap covers all members of the military, reserves, National Guard, and their families.

Reed in a release said the amendment would apply the DoD mandated standards to both "open-end" credit and "closed-end" credit, and would "help end the practice of charging high-cost overdraft fees." The amendment would also prevent financial service providers from reordering customer transactions from largest to smallest to maximize overdraft fees that can be charged.

The amendment has been proposed as an addition to the 2012 Defense Authorization bill.

CFPB says it will take consumer mortgage complaints

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WASHINGTON (12/1/11)—The Consumer Financial Protection Bureau (CFPB) Wednesday said it will soon begin accepting consumer complaints and inquiries regarding mortgage loans and, in fact, said that process could begin as soon as today.

Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn said CUNA will be urging the bureau to focus on egregious complaints against nonregulated entities in the financial marketplace.  The bureau indicated in a blog posting that it would be accepting complaints about home-secured loans, as well as mortgages.

The CFPB said it plans to work with consumers on "a majority of consumer financial product complaints and inquires by the end of 2012," the agency said.

Dunn noted that the National Credit Union Administration (NCUA) has a complaint procedure already in place that credit union members can use if there are material issues and CUNA will be making sure the CFPB is mindful of that when it moves forward with its complaint program.

The CFPB also on Wednesday released a report on consumer credit card complaints it has received since late July. Acting CFPB leader Raj Date said the complaints received by the CFPB show "there is a lot of consumer confusion about credit card terms."

CUNA will be following up with the CFPB as it has on a number of other issues already to ensure the agency is well informed about the range of consumer education credit unions provide their members, in addition to meeting regulatory disclosure requirements, Dunn noted Wednesday.

The CFPB has received more than 5,000 credit card complaints from consumers. The report does not provide a break down of the entities that are the subject of the complaints.  However, Dunn noted that only 249 appear to involve financial institutions with $10 billion and less in assets and those complaints were directed to the appropriate prudential financial regulators.

According to the CFPB report, credit card companies have resolved 3,100 of 5,000 complaints, with only 400 consumers disputing the credit companies' response.

Slightly more than over 13% of the consumer complaints were billing disputes, and nearly 11% were tied to instances of fraud, identity theft or embezzlement. Another 11% of the complaints related to annual percentage rate issues, the CFPB said.

"We will continue to work with consumers, credit card companies, government agencies, and others to improve consumer education and ensure CFPB's regulation, supervision, and enforcement efforts are effective," Date said.

The agency has proposed creating a searchable public database that would provide relevant data on each financial product complaint while avoiding the release of private personal information. A database of credit card complaints would be developed first, with databases of mortgage complaints and other complaints set to follow, the CFPB said.

The CFPB is accepting public comment on the credit card complaint database proposal through early 2012.

In addition to meeting with CFPB officials, CUNA will be working with leagues, CUNA subcommittees and credit unions to develop a response to the agency.

For the full CFPB release, use the resource link.

Cheney takes CU message to D.C. public radio

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WASHINGTON (12/1/11)--Credit Union National Association (CUNA) President/CEO Bill Cheney joined National Credit Union Administration Chairman Debbie Matz and a pair of credit union journalists to discuss credit union history, their cooperative business structure, and the benefits that credit unions offer to their members in a Wednesday discussion on Washington, D.C.-based NPR affiliate WAMU's The Kojo Nnamdi Show.
Click to view larger image CUNA President/CEO Bill Cheney, right, appeared on host Kojo Nnamdi's radio show on Wednesday in Washington, D.C. (CUNA Photo)

Opening the show, Nnamdi, who said that he has been a longtime credit union member, noted that one in three Americans is a credit union member, and said that those that think they do not qualify for credit union membership should "think again."

Cheney followed up on this during the panel discussion, saying that "just about everyone is eligible to join a credit union, just not the same credit union." He said potential members can use CUNA's website,, to find a local credit union they can join.

The panel also addressed the recent move away from big banks and toward credit unions and other smaller institutions, as Cheney said the recent missteps by Bank of America and other large banks have shone a light on credit unions and let more people see that they truly are "a better deal."

CUNA has estimated that credit unions brought in around 700,000 new members and $4.5 billion in new deposits as a result of November's Bank Transfer Day, with the bulk of those members and deposits coming in the month leading up to Bank Transfer Day, Nov. 5. Cheney said credit unions have seen this growth continue as new credit union members have recognized the benefits of credit unions and told their friends about these benefits through social media and other means.

Basics such as online banking, branch access, customer service, the NCUA's account insurance coverage, and that agency's role in the credit union system, were also discussed during the interview.

Kiplinger's Personal Finance reporter Joan Goldwasser and Credit Union Times Editor-in-Chief Sarah Snell Cooke also took part in the panel discussion.

For the full hour-long discussion, use the resource link.

Survey says young more likely to act on account transfers

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WASHINGTON (12/1/11)--A youth movement away from big banks, and toward smaller institutions such as credit unions, could be catching on if a recent survey is any indication, as nearly 23% of respondents under 30 said they were planning to change their financial institution or had already done so.

That same percentage said they were aware of last month's Bank Transfer Day activities. Bank Transfer Day, which was created on Facebook and reached well in excess of 600,000 through that social media site, and even more through media coverage of the event, spoke mainly to younger adults.

Overall, American Banker reported, the survey by TNS Research found that around 12% of the 2,500 respondents questioned had already closed their big bank accounts or would do so in the future. The article also noted that while the over-60 crowd was more likely to be aware of Bank Transfer Day, the under-30 crowd was even more likely to act on it and move accounts.

Nearly 14% of so-called "wealthy" respondents, i.e. those making $75,000 or more per year, reported they would close their accounts. Around 10.2% of lower income respondents (those making less than $30,000 per year) said they planned to close their accounts.

Close to half of those that left their big bank (41%) said they would part ways with Bank of America, whose decision to charge $5 per month debit account fees led to the creation of Bank Transfer Day. Other large banks were also cited in the survey, with 13.7% of respondents saying they planned to leave JPMorgan Chase, 10% fleeing Wells Fargo, and 3.1% closing Citigroup accounts.

In a recent Fox News interview, Credit Union National Association (CUNA) Chief Economist Bill Hampel said that while Bank Transfer Day officially ended on Nov. 5, "Bank Transfer Season" has begun. Around 650,000 new members, and $4.5 billion in new deposits, flooded into credit unions in the month before Bank Transfer Day, and credit unions brought in an additional 40,000 in new members, and added $80 million in new savings account funds and $90 million in new loans, on Bank Transfer Day, according to CUNA. However, Hampel said, the real story is not asset growth, but membership growth "and the new, mostly young members that credit unions have now gained."

And, he added, Bank Transfer Day's longest lasting legacies will unfold as those new members relate their positive credit union experiences to their friends and families, creating even more new members.

Visions FCU assumes BCT FCU assets after liquidation

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ALEXANDRIA, Va. (12/1/11)--Visions FCU of Endicott, N.Y., has assumed the assets, liabilities, and member shares of Binghamton, N.Y.-based BCT FCU after the National Credit Union Administration (NCUA) liquidated BCT on Wednesday.

The NCUA said it made the decision to liquidate the 3,900 member, $41.3 million in deposits credit union "after determining the credit union was insolvent and has no prospect for restoring viable operations on its own." BCT FCU served the educational community in New York's southern tier for 67 years.

BCT FCU was placed into conservatorship by the NCUA in June. It is the 13th credit union liquidation in 2011.

Visions FCU holds $2.7 billion in assets and has approximately 127,000 members.

Inside Washington (11/30/2011)

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  • WASHINGTON (12/1/11)--A Nov. 22 letter from House Financial Services Committee Chairman Spencer Bachus (R-Ala.) requested detailed spending data from the Consumer Financial Protection Bureau (CFPB). The letter asks for an account of the CFPB's spending to date and plans for funds it has received but not yet spent (American Banker Nov. 30). The bureau has requested $28 million more from the Federal Reserve for fiscal year 2011, a 21% increase from the $142 million budget estimated by the White House, according to the letter. Among the spending details requested in the letter are transfers from the Fed; expenses listed by services, department, office and subdivision of the bureau; number of positions filled by quarter and by pay band; and  detailed salary information and organizational charts. The letter also requests a detailed construction and renovation budget for the CFPB's future offices …
  • WASHINGTON (12/1/11)--The Office of the Comptroller of the Currency (OCC) Tuesday proposed a rule to remove references to credit ratings from OCC regulations and related guidance to assist national banks and federal savings associations in meeting due-diligence requirements in assessing credit risk for portfolio investments. The Dodd-Frank Act requires regulators to remove references in rules to credit ratings, and substitute them with an alternative standard. The National Credit Union Administration (NCUA) adopted a similar proposal in February that would replace or remove references to credit ratings in NCUA regulations (News Now Feb. 18). The NCUA's proposal would affect credit rating references for investments, counterparty transactions and other uses of such references …
  • WASHINGTON (12/1/11)--Janet Yellen, vice chairman of the Federal Reserve, on Tuesday warned that if Congress does not reach an agreement on the federal budget deficit it may place the nation's economy in further peril. The ratio of debt to gross domestic product will continue to edge higher the next decade unless the Congress and the Obama administration are able to agree on a deficit reduction program that is more ambitious than last summer's Budget Control Act, said Yellen, speaking at the Federal Reserve Bank of San Francisco. "A failure to put in place a credible plan to address our long-run budget imbalance would expose the U.S. to serious economic costs and risks in the long term and possibly sooner," Yellen said. At the same time, too much fiscal tightening in the near term could harm the economic recovery, she added. "We need, and I believe we have scope for, an approach to fiscal policy that puts in place a well-timed and credible plan to bring deficits down to sustainable levels over the medium and long terms while also addressing the economy's short-term needs," Yellen said …