Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Washington Archive

Washington

Inside Washington (11/06/2012)

 Permanent link
  • WASHINGTON (11/7/12)--The Federal Deposit Insurance Corp. (FDIC) on Monday advised financial institutions to inform customers in advance that special coverage of certain deposits, granted during the financial crisis, may expire. The FDIC's blanket coverage for noninterest-bearing transaction accounts will expire at yearend, as defined in the Dodd-Frank Act. Community banks have pressed for the coverage to be extended. Bankers maintain that ending the coverage now could cause depositors to flee and boost liquidity at institutions with an implicit government guarantee. However, in a letter issued Monday the FDIC requested that all insured depository institutions (IDIs) prepare their customers. "Although the Dodd-Frank Act imposes no specific notice requirement for IDIs in connection with the expiration of temporary unlimited coverage for NIBTAs, we encourage IDIs, as a matter of prudent commercial practice, to remind their [Noninterest Bearing Transaction Account] depositors about the pending expiration and the impact that expiration will have on their deposit insurance coverage," the letter said. The amount held in a noninterest-bearing transaction account by any credit union member or depositor is also fully, though temporarily, insured under Dodd-Frank. This unlimited coverage is separate from, and in addition to, the coverage provided to members with respect to other accounts held at an insured credit union …
  • WASHINGTON (11/7/12)--The Federal Housing Finance Agency (FHFA) has added 30 days to its comment period for its proposed rulemaking concerning stress testing of Fannie Mae, Freddie Mac, and the 12 Federal Home Loan Banks as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Comments are now due by Dec. 4. The Dodd-Frank Act requires certain financial companies with total consolidated assets of more than $10 billion, and which are regulated by a primary federal financial regulatory agency, to conduct annual stress tests to determine whether the companies have the capital necessary to absorb losses as a result of adverse economic conditions …
  • WASHINGTON (11/7/12)--Goldman Sachs is requesting U.S. Supreme Court to overturn a mortgage securities class-action lawsuit. Goldman is challenging a Sept. 6 decision by the 2nd U.S. Circuit Court of Appeals in New York allowing the lawsuit, which accuses it of misleading investors about the securities' risks (American Banker Nov. 6). The court allowed NECA-IBEW Health & Welfare Fund to sue Goldman on behalf of investors for allegedly misleading investors about mortgage-backed securities the fund itself did not own. The bank maintains the suit could cost it billions of dollars. NECA purchased securities from two of 17 trusts Goldman offered in 2007 and 2008. The fund purchased $390,000 worth of securities from one trust and $50,000 from another, according to Goldman's appeal …
  • WASHINGTON (11/7/12)--The Consumer Financial Protection Bureau has released a list of financial tips for consumers recovering from the impact of Hurricane Sandy. The tips include advice on how to proceed with insurance claims, disaster assistance, and contractors ...

NCUA hails WesCorp repayment as major milestone

 Permanent link
ALEXANDRIA, Va. (11/7/12)--The Nov. 2 payment of a $1.5 billion obligation of now-defunct Western Corporate FCU (WesCorp) is a major step forward in the National Credit Union Administration's (NCUA) work to resolve corporate credit union issues, the agency said.

The $1.5 billion WesCorp Medium Term Note obligation was one cost incurred when the NCUA acted to stabilize the corporate credit union system. Last week's $1.5 billion payment was made with the proceeds of credit union assessments, cash on deposit and other assets from the failed corporate credit unions, the NCUA said.

The WesCorp repayment is "an important milestone in NCUA's efforts to resolve the failure of five corporate credit unions in an orderly manner and maintain confidence in the credit union system," NCUA Chairman Debbie Matz said in an agency release. "With this final payment completed, we will continue our efforts to mitigate costs to federally insured credit unions over the remaining life of the [Temporary Corporate Credit Union Stabilization Fund (TCCUSF)]," she added.

The agency also paid off a $2 billion medium term note obligation of another failed corporate, U.S. Central FCU, last month. Members United Corporate FCU, Constitution Corporate FCU and Southwest Corporate FCU were liquidated by the NCUA in the fall of 2010, and costs related to these failed corporates were also paid by the TCCUSF.

A total of $5.1 billion in outstanding borrowings from the U.S. Treasury still need to be repaid by the TCCUSF, the NCUA release added. The agency noted that this outstanding balance may be repaid over the remaining life of the stabilization fund, which expires in June 2021. The NCUA said it will determine future assessments to repay this balance.

The NCUA last week reduced the projected cost of corporate credit union stabilization assessments to between $6 billion and $8.9 billion, a $400 million reduction from the previous maximum cost of $9.3 billion.

Credit unions have already paid $4.1 billion in TCCUSF assessments, including a 2012 TCCUSF assessment of 9.5 basis points (bp) of their insured shares as of June 30. With the new estimates, they will need to pay between $1.9 billion and $4.8 billion in additional assessments before the stabilization fund expires in 2021.

Credit Union National Association (CUNA) Chief Economist Bill Hampel said the 2013 TCCUSF assessment is likely to be in the range of 5 bp to 10 bp. A 2013 TCCUSF assessment of no more than 5 bp "would be sufficient to responsibly make headway on paying down the fund, pending further information on what the ultimate losses will actually be," he said. (See Nov. 2 News Now story: NCUA reduces TCCUSF high estimate by $400M)

The NCUA plans to release its own estimate of the 2013 assessment this month.

For the full NCUA release, use the resource link.

CUNA says mortgage disclosure fixes needed by CFPB

 Permanent link
WASHINGTON (11/7/12)--Credit unions are concerned that the Consumer Financial Protection Bureau's (CFPB) proposed mortgage disclosure changes could increase the cost of providing those loans, Credit Union National Association (CUNA) Senior Assistant General Counsel Jared Ihrig wrote in a Tuesday comment letter.

CUNA in the comment letter offered a number of recommendations that--if adopted--would mitigate the impact of the CFPB's pending mortgage disclosure proposals on credit unions while fully protecting consumers' access to key information about home mortgage products.

The CFPB proposal, which is expected to be made final early next year, attempts to combine the complicated documents required under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) into a single disclosure.

CUNA wrote that it supports the objective of consolidated mortgage disclosures, but noted that the proposed rule would be overly burdensome for credit unions to properly complete, generate, deliver and explain to mortgage loan applicants.

To ease the process, CUNA urged the agency to consider a number of recommendations, including:
  • Exempting credit unions from certain portions of the final rule to minimize costs for credit unions where possible;
  • Providing further clarity concerning the definition of "application" under RESPA for purposes of requiring the issuance of the CFPB's proposed Loan Estimate;
  • Releasing explicit guidance regarding how to handle mortgage loan transactions that are initiated under existing Regulation Z and Regulation X rules, but are not yet consummated as of the time that new rules become effective;
  • Eliminating portions of the mortgage disclosure proposal that would require lenders to maintain "standardized, machine-readable" electronic versions of loan estimates and closing disclosures provided to consumers; and
  • Allowing a lengthy implementation period and a delayed mandatory compliance date that is at least 18 to 24 months after the adoption of any final rule to implement the new mortgage disclosures.
CUNA also suggested that the CFPB retain the existing 10% tolerance level as required by current RESPA regulations with respect to third party charges such as appraisal and title services.

In the letter, CUNA said it also strongly supports the CFPB's proposal to eliminate the total interest percentage and lender cost of funds disclosures required by Section 1419 of the Dodd-Frank Act, as these are of questionable value to consumers.

For the full CUNA comment letter, use the resource link.

A second CUNA comment letter on portions of the TILA/RESPA changes that impact finance charges will also be released this week.

iCompBlog Wrap-Upi offers remittance transfer toolkit

 Permanent link
WASHINGTON (11/7/12)--A checklist of resources that will help credit unions prepare for and comply with the Consumer Financial Protection Bureau's upcoming remittance transfer rule is one of many resources included in the October edition of the Credit Union National Association's (CUNA) CompBlog Wrap-Up.

The CFPB's new international remittance transfer rule is scheduled to go into effect on Feb. 7. Under the CFPB's rule, remittance transfer providers would be required to provide prepayment and receipt disclosures to the consumer sender that include the exchange rate, fees and taxes  associated with a transfer, and the amount of money that will be received on the other end of the transfer. Remittance transfer providers will also be required to investigate disputes and correct errors.

In the Wrap-Up, CUNA Federal Compliance Counsel Colleen Kelly lays out links for a recent CFPB webinar on the remittance rules, a small business compliance guide, and a list of countries that have been granted some safe harbor from the rule.

Steps that credit unions will need to take to ensure that their institution, and its mortgage loan originators, are on track for compliance with the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) are also covered in the Wrap-Up.

The Nationwide Mortgage Licensing System & Registry (NMLS) Annual Renewal Period begins Nov. 1 and ends Dec. 31 each year. Both credit unions that offer residential mortgage loans and most individual MLOs need to annually renew their registrations through NMLS, as required by the SAFE Act, the Wrap Up notes.

CUNA Director of Compliance Information Valerie Moss in the Wrap Up also reminds credit unions of the need for yearly independent testing of their SAFE Act policies and procedures, and notes that MLOs will soon be subject to new duties under the Truth in Lending Act (TILA).

And, as it does every month, the October CompBlog Wrap-Up lists the upcoming effective dates of new regulations, important compliance articles and reports to read, as well as CUNA training programs.

For more of the CUNA CompBlog Wrap-Up, and other compliance gems, use the resource links.

Cheney on iFoxi CU structure means lower fees

 Permanent link
WASHINGTON (11/7/12)--Credit Union National Association (CUNA) President/CEO Bill Cheney discussed the better rates and lower fees that credit unions offer their members, and the growth that those rates and fees have helped create both before and after last year's Bank Transfer Day, in an appearance this week on Fox Business Network's Willis Report.

How successful was last year's Bank Transfer Day? Cheney in a live interview with Fox Business' Gerri Willis noted recent credit union membership growth has occurred at the fastest rate seen in a more than a decade.



Last year, Bank Transfer Day gained significant social and traditional media attention, and helped spur credit union membership growth of more than 2.2 million in the 12 months ended June 20, 2012.  He noted the 2.2 million gain in new CU members is nearly twice what is typically seen in that period and four times what CUs experienced the prior year.

"Something happened with Bank Transfer Day, and it continues," Cheney said. Not-for-profit, member-owned credit unions have attracted people tired of paying high fees at banks, he explained.

The CUNA CEO also discussed the benefits of credit union membership during his Fox Business appearance.

Willis cited Consumer Reports numbers that show credit unions charge far less than banks for overdraft fees and stop payment fees. Consumer Reports also found credit unions they surveyed did not charge for online bill pay services, and required lower minimum balances to waive typical member fees.

"How is it that credit unions can give consumers, in many cases, a better deal than some of the biggest banks in the world?" Willis asked Cheney.

Cheney said credit unions, which are member-owned, are "fundamentally different" than banks. They focus on their members, and can return earnings to their members in the form of lower fees, he added.

Asked about consumer access, Cheney said most credit unions are part of national ATM networks like the CO OP Network, and 4,000 also participate in shared branching. "Your credit union may not have 30,000 ATMs, but you have access to them, surcharge free, if you are a member of a credit union," Cheney said.

Separately, a CUNA radio news release featuring Cheney's comments on credit union growth and appeal since last year's Bank Transfer Day has been distributed to 225 radio outlets, including Fox News Radio and the USA Radio Network.

[Editor's note: Although the Fox segment was erroneously titled "Two Million Transfer to Credit Unions in Decade," the news segment correctly states that credit union membership grew more than 2.2 million in the 12 months ended June 20, 2012.]

this is a double of Inside Washington

 Permanent link
WASHINGTON (11/7/12)--The Federal Deposit Insurance Corp. (FDIC) on Monday advised financial institutions to inform customers in advance that special coverage of certain deposits, granted during the financial crisis, may expire. The FDIC's blanket coverage for noninterest-bearing transaction accounts will expire at yearend, as defined in the Dodd-Frank Act. Community banks have pressed for the coverage to be extended. Bankers maintain that ending the coverage now could cause depositors to flee and boost liquidity at institutions with an implicit government guarantee. However, in a letter issued Monday the FDIC requested that all insured depository institutions (IDIs) prepare their customers. "Although the Dodd-Frank Act imposes no specific notice requirement for IDIs in connection with the expiration of temporary unlimited coverage for NIBTAs, we encourage IDIs, as a matter of prudent commercial practice, to remind their [Noninterest Bearing Transaction Account] depositors about the pending expiration and the impact that expiration will have on their deposit insurance coverage," the letter said. The amount held in a noninterest-bearing transaction account by any credit union member or depositor is also fully, though temporarily, insured under Dodd-Frank.  This unlimited coverage is separate from, and in addition to, the coverage provided to members with respect to other accounts held at an insured credit union …

WASHINGTON (11/7/12)--The Federal Housing Finance Agency (FHFA) has added 30 days to its comment period for its proposed rulemaking concerning stress testing of Fannie Mae, Freddie Mac, and the 12 Federal Home Loan Banks as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Comments are now due by Dec. 4. The Dodd-Frank Act requires certain financial companies with total consolidated assets of more than $10 billion, and which are regulated by a primary federal financial regulatory agency, to conduct annual stress tests to determine whether the companies have the capital necessary to absorb losses as a result of adverse economic conditions …

WASHINGTON (11/7/12)--Goldman Sachs is requesting U.S. Supreme Court to overturn a mortgage securities class-action lawsuit. Goldman is challenging a Sept. 6 decision by the 2nd U.S. Circuit Court of Appeals in New York allowing the lawsuit, which accuses it of misleading investors about the securities' risks (American Banker Nov. 6). The court allowed NECA-IBEW Health & Welfare Fund to sue Goldman on behalf of investors for allegedly misleading investors about mortgage-backed securities the fund itself did not own. The bank maintains the suit could cost it billions of dollars. NECA purchased securities from two of 17 trusts Goldman offered in 2007 and 2008. The fund purchased $390,000 worth of securities from one trust and $50,000 from another, according to Goldman's appeal …

WASHINGTON (11/7/12)--The Consumer Financial Protection Bureau has released a list of financial tips for consumers recovering from the impact of Hurricane Sandy. The tips include advice on how to proceed with insurance claims, disaster assistance, and contractors ...