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CUNA Witness Will Testify on Patent Issues This Week

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WASHINGTON (12/16/13)--John Dwyer, president/CEO of New England FCU, Williston, Vt., will discuss credit union patent troll concerns in a Tuesday Senate Judiciary Committee hearing.

Dwyer will testify on behalf of the Credit Union National Association and his credit union at the hearing, "Protecting Small Businesses and Promoting Innovation by Limiting Patent Troll Abuse." 

CUNA will be the only group testifying representing financial institutions.

The Innovation Act of 2013 (H.R. 3309), which would remove some of the financial incentives sought by firms that assert low-quality patents in the hope of quick settlements, was approved by the U.S. House early this month on a 325 to 91 vote.

The Senate is preparing to consider the issue. Judiciary Committee Chairman Pat Leahy (D-Vt.) and others have introduced their own bills to address the problem. (See Dec. 13 News Now item: CUNA Urges Hill Action on 'Main Street' Patent Reform.)

So-called "patent trolls" continue to use low-quality patents to try to extract settlements from credit unions and others. Credit unions have been sued for the use of certain ATM technologies, check imaging applications and check cashing applications, and providing members with mobile transactions through their smartphones.

Credit unions and others have also received vague demand letters from patent trolls, and CUNA hopes to see reforms that will affect these demand letters.

Dwyer is a member of CUNA's Federal Credit Union Subcommittee and is one of four credit union representatives on the 12-member Federal Reserve Bank of Boston First District Community Depository Institution Advisory Council.

NCUA, Regulators Release QM Guidance

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ALEXANDRIA, Va. (12/16/13)--Residential mortgage loans will not be subject to safety-and-soundness criticism solely because of their status as Qualified Mortgage or Non-qualified Mortgage loans, the National Credit Union Administration and other federal financial regulators said in guidance released on Friday.

The guidance addresses Ability-to-Repay and Qualified Mortgage standards set to go into effect on Jan. 10. The NCUA, Federal Reserve Board, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency issued a joint statement to clarify safety-and-soundness expectations and Community Reinvestment Act (CRA) considerations related to QM and non-QM loans offered by regulated institutions.

In the release, the agencies said they continue to expect institutions to underwrite residential mortgage loans in a prudent fashion and address key risk areas in residential mortgage lending, including:
  • Loan terms;
  • Borrower qualification standards;
  • Loan-to-value limits;
  • Documentation requirements; and
  • Portfolio- and risk-management practices.
These standards apply regardless of whether a residential mortgage loan is a QM or non-QM loan, they said.

Agencies responsible for conducting CRA evaluations do not anticipate that financial institutions' decision to originate only Qualified Mortgages, absent other factors, would adversely affect their CRA evaluations.

For the full guidance, use the resource link.

CUs Should Not Be Subject To New Cyberthreat Requirements: CUNA to NIST

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WASHINGTON (12/16/13)--Credit unions and other financial institutions are already subject to robust cybersecurity and data security requirements, and should not be subject to additional prescriptive requirements, the Credit Union National Association said in a Friday comment letter to the National Institute of Standards and Technology.

Cybersecurity measures that credit unions are subject to include the Gramm-Leach-Bliley Act (GLBA) and other applicable data security laws, regulations, and standards from the Federal Financial Institution Examinations Council and the National Credit Union Administration.

CUNA in the comment letter said it supports NIST's goals to develop a "critical infrastructure" cybersecurity framework. However, the framework "should recognize existing, robust data security requirements and standards that apply to financial institutions," CUNA said.

The CUNA letter also urged NIST to coordinate closely with the National Credit Union Administration and other regulators to ensure a finalized framework "is consistent with, and does not expand the scope of, existing rules and regulations."

CUNA said any voluntary critical infrastructure initiatives that are developed must remain voluntary, and should not result in additional requirements on entities such as credit unions.

The letter also urged additional coordination between the public and private sectors on cybersecurity.

For the full comment letter, use the resource link.

Cheney Report: Risk-Based Net Worth Proposal on the Horizon

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WASHINGTON (12/16/13)--A proposed rule on risk-based net worth could be considered by the National Credit Union Administration as soon as next month, Credit Union National Association President/CEO Bill Cheney said in this week's edition of The Cheney Report.

The agency has said its developing risk-based capital framework will protect credit unions and consumers from losses, and replace the "outdated and insufficient" one-size-fits-all capital requirement. The NCUA plan could result in higher capital levels for credit unions with high concentrations of risky assets. The current 7% leverage capital standard, which is required by the Federal Credit Union Act, would remain the floor. However, the agency has said credit unions with assets of $50 million and above could be subject to improved risk-based capital requirements to better correlate required capital levels to risk.

"Particularly since no one outside of NCUA has seen the proposal, it remains of great concern to us. In our view, the current system for net worth standards (written into the law--unlike that of other financials) is flawed, but credit unions have adjusted accordingly and are doing well. In short: If it ain't broke, don't fix it," Cheney wrote.

NCUA Chairman Debbie Matz has said the risk-based capital rule, if adopted, is unlikely to impact many credit unions.

The Cheney Report also includes a timely reminder of how credit unions continue to "unite for good": Rogue CU, Medford, Ore., has created a Hope for the Holidays Campaign, which helps local families who need an extra hand during the holiday season. Twelve needy families that were nominated by community members were presented with a combined $6,500 in donated funds. Unite for Good refers to CUNA's shared strategic vision, unveiled at the 2013 Governmental Affairs COnference, in which Americans choose credit unions as their best financial partner.

Other issues addressed in this week's Cheney Report include:
  • Details on items approved at the December NCUA open board meeting;
  • NCUA student loan guidance;
  • The positive credit union news seen in the annual "American Customer Satisfaction Index";
  • What the recent budget accord means for credit unions; and
  • The status of several regulatory relief measures.
Use the resource link to read the latest in The Cheney Report.

CUNA on Bloomberg TV: Strong Seasonal Spending Could Continue into 2014

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WASHINGTON (12/16/13)--The strong seasonal spending seen so far this year could continue into early 2014, Credit Union National Association Chief Economist Bill Hampel said in a recent appearance on Bloomberg Television's Bottom Line with Mark Crumpton.

Click to view larger image CUNA Chief Economist Bill Hampel, right, appears on Bloomberg Television's Bottom Line with Mark Crumpton.
Retail sales rose by 0.7% in November, and these numbers indicate that holiday spending could increase by 3.5% to 4%, despite the shortened season and early concerns that there would not be a strong season, Hampel said.

This increase is in line with what was reported in the 14th annual holiday spending survey conducted by the Consumer Federation of America (CFA) and CUNA. That survey was released just ahead of the Thanksgiving holiday.

"This is going to be, I think, the strongest [holiday spending season] we've had since 2007...We're back to normal just about," Hampel told Crumpton.

However, Hampel noted, there has been a change in the mix of spending this year, with fewer shoppers going to brick and mortar stores and more doing their holiday shopping online. "We're in the middle of a long-term change of how business is done...brick and mortar stores are going to make some adjustments," Hampel noted.

He said consumer loan demand at the nation's credit unions is the strongest it has been since 2005. This demand, he said, has been largely fueled by new car purchases.

Unemployment could reach pre-recession levels by May of next year, and while wages for lower income Americans have been flat for some time, they too could turn upward next year, he added.

For the full interview, use the resource link.