Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Washington Archive


Fed System offers free March 5 UDAP compliance webinar

 Permanent link
WASHINGTON (2/12/13)--The Federal Reserve System is offering a free March 5 webinar on compliance issues related to financial institution unfair and deceptive practices (UDAP).

The webinar is part of an ongoing series focused specifically on consumer compliance issues. The March 5 session will cover UDAP topics, including:

  • UDAP legal analysis and examination procedures;
  • UDAP and bank holding company risk;
  • Case studies and emerging areas of risk; and
  • Recommendations for implementing an effective UDAP compliance program.
The webinar will also cover the legal authority of the Fed under the Federal Trade Commission Act to enforce UDAP. The FTC Act charges the Fed, along with the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., and the National Credit Union Administration, to enforce UDAP, issue rules and regulations and receive consumer complaints.

In 2010, the Dodd-Frank Act generally maintained the FTC Act's definitions of "unfair" and "deceptive," while also adding a third element, "abusive."  It assigned the Consumer Financial Protection Bureau with UDAAP enforcement authority for institutions with over $10 billion in assets.

Use the resource link for registration information.

NCUA answers lawmaker: Agency has authority to proceed with Wall St suits

 Permanent link
ALEXANDRIA, Va. (2/12/13)--The National Credit Union Administration's use of law firms that operate on a "contingency basis" to sue banks does not violate an executive order that prohibits such arrangements, the NCUA's Office of the Inspector General wrote in a recent letter to a house member.

NCUA Inspector General William DeSarno was responding to an October letter from Rep. Darrell Issa (R-Calif.). Issa last year asked the NCUA OIG whether the agency's payment arrangements with outside counsel violates a 2007 executive order signed by then-President George W. Bush.

DeSarno said the executive order does not apply when the NCUA is serving as the conservator or liquidating agent of a federally insured credit union. The NCUA as conservator "steps into the shoes'" of the credit union and is no longer functioning as a government agency," DeSarno wrote. "The conservator, therefore, has the same authority to hire outside counsel on a contingency fee basis that the credit union possessed before the NCUA was appointed conservator," he added.

Credit Union National Association Deputy General Counsel Mary Dunn said CUNA agrees with the OIG's basic analysis.

The NCUA has paid two firms, Kellogg Huber Hansen Todd Evans & Figel PLLC and Korein Tillery LLC, on a contingency arrangement basis to pursue legal action against several Wall Street firms. The agency alleges the firms violated federal and state securities laws when they sold securities to now-defunct corporate credit unions.  J.P. Morgan Securities, RBS Securities, Goldman Sachs and Wachovia are among the firms the agency has taken to court. The agency has settled with Citigroup, Deutsche Bank Securities, and HSBC, avoiding the cost of litigation and bringing in more than $170 million in funds that were lost due to the corporate credit union investments.

Funds recovered through these legal actions will be used to help reduce the amount of future corporate stabilization assessments on credit unions, according to the NCUA.

The NCUA payment arrangement with the outside firms would provide the firms with one-fourth of any judgment they secure for the agency, and the total payment could be hundreds of millions of dollars, The Wall Street Journal (Oct . 24) reported.

Issa claimed the payment arrangement could harm credit union members by diverting funds that should go to paying off corporate credit union stabilization costs. However, the NCUA in an October statement noted that these suits benefit credit unions by reducing costs of pursuing the recoveries.

For the full NCUA letter, use the resource link.

Consumer advisory meeting set for Feb 27, CDFI Fund says

 Permanent link
WASHINGTON (2/12/13)--The Community Development Advisory Board of the U.S. Department of the Treasury's Community Development Financial Institutions (CDFI) Fund will hold its first meeting of 2013 on Feb. 27 at U.S. Treasury offices in Washington.

The meeting is scheduled to take place between 9:00 a.m. and 3:30 p.m. (ET).

Fifty members of the public can register to attend by emailing to However, the CDFI Fund in its release noted that discussions at the meeting would be limited to advisory board members, Treasury staff, and certain invited guests.

The advisory board makes broad policy recommendations to CDFI Fund Director Donna Gambrell. The CDFI Fund notes that the granting or denial of any particular application for monetary or non-monetary awards is not discussed during the meetings.

The CDFI Fund helps locally based financial institutions offer small business, consumer and home loans in communities and populations that lack access to affordable credit. The fund expects to provide up to $165 million to eligible financial institutions in 2013.

A total of $186,853,456 was awarded to 210 organizations in 2012, representing the highest amount awarded in the CDFI Fund's history.

Twenty-two credit unions received funding through the 2012 CDFI Fund, and four credit unions received funds through another CDFI project, the Native American CDFI Assistance (NACA) Program. The NACA Program encourages the creation and strengthening of certified CDFIs that primarily serve Native American, Alaskan Native and Native Hawaiian communities.

For more on the meeting and the CDFI Fund, use the resource link.

Johnson announces Senate Banking subcommittee assignments

 Permanent link
WASHINGTON (2/12/13)--Senate Banking Committee Chairman Tim Johnson (D-S.D.) and ranking member Sen. Mike Crapo (R-Idaho) Monday confirmed the panel's membership and announced its subcommittee assignments for the 113th Congress.

Both Johnson and Crapo, in making the announcement, spoke of "working across the aisle" to achieve bi-partisan "areas of agreement" to achieve the committee's work this session.

The committee will be comprised of:

  • Tim Johnson, S.D., chairman; and
  • Mike Crapo, Idaho, ranking Republican member

  • Jack Reed, R.I.;
  • Charles E. Schumer, N.Y.;
  • Robert Menendez, N.J.;
  • Sherrod Brown, Ohio;
  • Jon Tester, Mont.;
  • Mark Warner, Va.;
  • Jeff Merkley, Ore.;
  • Kay Hagan, N.C.;
  • Joe Manchin III, W. Va.;
  • Elizabeth Warren, Mass.; and
  • Heidi Heitkamp, N.D.
  • Richard C. Shelby, Ala.;
  • Bob Corker, Tenn.;
  • David Vitter, La.;
  • Mike Johanns, Neb.;
  • Patrick J. Toomey, Penn.;
  • Mark Kirk, Ill.;
  • Jerry Moran, Kan.;
  • Tom Coburn, Okla.; and
  • Dean Heller, Nev.
For the subcommittee on financial institutions and consumer protection, the members are:

  • Sherrod Brown, Ohio, chairman; and
  • Patrick J. Toomey, PA, ranking Republican member

  • Jack Reed, R.I.;
  • Charles E. Schumer, N.Y.;
  • Robert Menendez, N.J.;
  • Jon Tester, Mont.;
  • Jeff Merkley, Ore.;
  • Kay Hagan, N.C.; and
  • Elizabeth Warren, Mass.


  • Richard C. Shelby, Ala.;
  • David Vitter, La.;
  • Mike Johanns, Neb.;
  • Jerry Moran, Kan.;
  • Dean Heller, Nev.; and
  • Bob Corker, Tenn.

Use the resource link for information on other subcommittee assignments.

CUNA will watch State of the Union for CU impact

 Permanent link
WASHINGTON (2/12/13)--Job creation and aiding the middle class are expected to be two major themes of President Barack Obama's State of the Union address, and the Credit Union National Association will be watching tonight to gauge what Obama's policy objectives could mean for credit unions going forward.

According to USA Today, Obama has told House Democrats he will "[talk] about making sure that we're focused on job creation here in the United States of America." The budget disputes that have gripped the U.S. Congress in recent weeks will also be a central focus of the President's remarks, several outlets have reported.

Also in Washington, both the House and the Senate are in session this week.

The House Financial Services Committee's examination of the Federal Housing Agency's role in mortgage markets will continue on Wednesday, when that committee holds a hearing entitled "Bailout, Bust, or Much Ado About Nothing?: A Look at the Federal Housing Administration's 2012 Actuarial Report." (News Now Feb. 7)

The hearing will examine the FHA's financial status and HUD's Nov. 16, 2012 actuarial review of the fiscal 2012 FHA Mutual Mortgage Insurance Fund. FHA Commissioner Carol Galante will be the sole hearing witness.

The Congressional Budget Office's budget and economic outlook will be examined by the Senate Budget Committee and House Budget Committee on Tuesday and Wednesday, respectively. The House Small Business Committee will examine the state of the small business economy on Wednesday.

Jack Lew's nomination to the position of U.S. Treasury Secretary will be addressed in a Wednesday Senate Finance Committee hearing.

Itemized deductions for charitable contributions will be examined in a Thursday House Ways and Means Committee hearing. Ryan Donovan, CUNA senior vice president of legislative affairs, said CUNA does not expect the credit union tax status to be any part of the focus at this hearing. "However, we will be watching this closely, as it could shed light on how the committee intends to evaluate tax provisions going forward," he said.

Federal banking regulators have been invited to testify before a Thursday Senate Banking Committee hearing on Wall Street reforms, financial stability oversight and consumer and investor protections.

Lee named NCUA's ombudsman

 Permanent link
ALEXANDRIA, Va. (2/12/13)--National Credit Union Administration Chairman Debbie Matz announced Monday that Joy Lee will assume the duties as ombudsman for the agency, effective immediately. Lee has been senior Federal Financial Institutions Examination Council advisor to the chairman.

Lee will succeed Moisette I. Sweat, who has been NCUA's Ombudsman since 2010.

"The ombudsman's role is to be the public's voice to NCUA leadership, and Joy will speak clearly and effectively," said Matz, announcing the change. "Joy has the skills and the knowledge of consumer protection issues and NCUA operations that will serve credit unions and the public well."

NCUA has elevated the position so the ombudsman will now be supervised by the executive director's office and report directly to the board. Until now, the ombudsman's duties were assigned to the Division of Consumer Compliance & Outreach, and reported to the Director of the Office of Consumer Protection.

Lee served in several senior staff positions at NCUA since first joining the agency in 1987 as an examiner. She was Region II associate Regional Director, Operations and Programs, and Director of Supervision for the Office of Examination and Insurance.

Lee has also filled the post of acting Director of the Office of Small Credit Union Initiatives.

New CFPB notice covers mortgage servicer obligations

 Permanent link
WASHINGTON (2/12/13)--In guidance released Monday, the Consumer Financial Protection Bureau reminded mortgage servicers and subservicers of potential risks associated with mortgage transfers, and of their obligations to homeowners.

"This guidance directs all mortgage servicers, both banks and nonbanks, to follow the laws protecting borrowers from the risks of [mortgage] transfers, and makes clear that we will be monitoring them for compliance… Consumers should not be collateral damage in the mortgage servicing transfer process," CFPB Director Richard Cordray said in an agency release.

"The CFPB's concern in this area is heightened due to the number and size of recent servicing transfers that have been made by some of the biggest banks," Credit Union National Association Associate General Counsel Jared Ihrig noted.

CUNA is pushing the CFPB for more guidance regarding the exemption for small servicers and its impact on credit unions, he added.

The CFPB in the guidance emphasizes that mortgage servicers are subject to the Real Estate Settlement Procedures Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act and other laws that prohibit unfair, deceptive, or abusive acts or practices.

The agency also warned servicers that it will monitor:

  • How they have prepared for the transfer of servicing rights or responsibilities;
  • How they plan to treat homeowners;
  • How a homeowner's paperwork is treated;
  • How any loss mitigation efforts that have already begun are addressed; and
  • What policies the servicers have to prevent borrower harm for loans with loss mitigations in process.
In the release, the CFPB noted that mortgage servicing transfers can at times be positive for consumers, "especially when investors require nonperforming servicers to transfer rights to specialty companies that offer better service."

However, a mortgage servicing transfer can also mean new bill paying arrangements, paperwork, servicer mailing addresses and staff. "If the transfer process is not handled properly, consumers may find that their servicer lost important loss mitigation documents or that the servicer did not credit their payments on time," the CFPB warned.

For the full CFPB release, use the resource link.

The CFPB's final mortgage servicing rule, issued last month, requires mortgage servicers to meet new periodic statement requirements, provide additional notice of rate changes to borrowers and help ensure that consumers know their options to prevent foreclosures. The new regulations will become effective in Jan. 2014.

Senate tax loophole bill would help avoid sequester

 Permanent link
WASHINGTON (2/12/13)--Sens. Carl Levin (D-Mich.) and Sheldon Whitehouse (D-R.I.) introduced legislation Monday that would close tax loopholes and produce more than $189 billion in deficit reduction--an amount the senators say is sufficient to significantly help avoid sequestration. The bill sticks to tax loopholes and does not address the tax status of credit unions.

The Cut Unjustified Tax Loopholes Act would close corporate and individual tax loopholes. It would, for instance, remove loopholes that allow multinational corporations to avoid taxes by transferring U.S. profits offshore; that subsidize corporations for the expense of moving U.S. jobs overseas; that subsidize stock-option grants to corporate executives; and would close the "carried interest" loophole that allows hedge fund managers to pay a lower tax rate on their income, and a loophole that subsidizes speculative trading in certain financial derivatives, the lawmakers noted in a release.

The Credit Union National Association is monitoring tax policy discussions in Washington, D.C. and meeting with lawmakers to describe the public policy reasons behind the credit union tax exemption.

Under the Federal Credit Union Act, federal and state-chartered credit unions are exempt from federal income tax because they are cooperatives operated for and by their members, and because credit union shares are essentially members' deposits. The tax status has been re-affirmed periodically by the U.S. Congress and is supported by many lawmakers.

Levin and Whitehouse were among the more than 20 recent meetings CUNA President/CEO Bill Cheney has had recently with federal lawmakers to discuss the need to protect the credit union tax status.

"CUNA has had very positive discussions about the need to protect the credit union tax status," Cheney has reported. No legislator CUNA has spoken with has suggested that the credit union tax status is currently on the table as a tax reform or spending issue. However, Cheney has emphasized, none have suggested that CUNA should be anything but vigilant on this key issue as tax reform talks move forward and all sorts of ideas are thrown into the discussions.

SBA Administrator Mills won't stay for second term

 Permanent link
WASHINGTON (2/12/13)--Karen Mills said Monday that she will not stay on for a second term as administrator for the U.S. Small Business Administration (SBA).

"Karen Mills has been a strong advocate for small business throughout the financial crisis and now as the economy begins to improve," said Credit Union National Association Deputy General Counsel Mary Dunn. "In light of the important role that credit unions play in serving small business, we applaud the SBA's efforts during her tenure to support small business interests."

Mills announced her resignation in a letter to SBA employees, which was posted to the agency website. She told her staff that she intends to stay on as head of the agency until a successor is confirmed to "ensure a smooth and seamless transition."

"Four years ago, when I arrived at the SBA, America's small businesses and entrepreneurs were struggling in the face of the worst economic environment since the Great Depression - and a banking sector that was frozen.

"Together, we rolled up our sleeves and went to work. And from day one, each of you stepped up and fulfilled the mission of what the Agency was created to do. And you should be proud because our accomplishments are significant."

During Mills' tenure, SBA administrator has been raised to a Cabinet-level position.

Mills said in her staff communication that over the last four years, SBA supported more than $106 billion in lending to more than 193,000 small businesses and entrepreneurs. That, she said, included two record years of delivering over $30 billion annually in loan guarantees.