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No TCCUSF assessment this year, nor likely going forward

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WASHINGTON (2/13/14)--Credit Union National Association President/CEO Bill Cheney called it "welcome news for credit unions" when the National Credit Union Administration confirmed Wednesday that there would be no Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment charged in 2014.
"As CUNA has argued since last summer, the need for continued assessments has been unnecessary for some time. With the improved performance of the NCUA's legacy assets, we are glad that the NCUA agrees that stabilization fund assessments should end after the 2013 payment," Cheney remarked.
The agency also went so far to say that credit unions are much less likely to be charged another TCCUSF assessment going forward.

These are outcomes CUNA has been pushing for with NCUA.
The agency said the positive TCCUSF news is the result of a $1.4 billion settlement with JP Morgan and the continued improvement in the performance of the legacy assets underlying the NCUA Guaranteed Notes program.
"Our legal team is diligently pursuing our claims against the Wall Street securities firms who sold faulty securities to five corporate credit unions, causing them to fail and triggering a crisis in the system," NCUA Chair Debbie Matz said in a release. "That hard work is paying off, and we will continue our efforts to hold accountable those who helped precipitate the crisis."
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 -$1.9 billion to -$0.4 billion.
CUNA Chief Economist Bill Hampel said future TCCUSF rebates are now very likely.​
For more on the TCCUSF announcement, use the resource link.

CFPB, NCUA talk CU issues in online town hall

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ALEXANDRIA, Va. (2/13/14)--Concerned credit unions should weigh in on the National Credit Union Administration's risk-based capital proposal and be assured the agency takes comments letters "very seriously," said federal regulator Debbie Matz.  She made her remarks during an online event Wednesday with Consumer Financial Protection Bureau Director Richard Cordray and NCUA and CFPB staff members.

Matz went on to say that the NCUA "oftentimes will change a final rule from the proposed version to reflect" public comments received.

Another item both regulators addressed was potential regulatory responses to recent data breaches.

Discussing consumer card safety is a healthy debate, CFPB Director Richard Cordray noted.

NCUA Chairman Debbie Matz said data breaches are a statutory issue, and the U.S. Congress is likely considering action. NCUA does not have the authority to create new data security standards, she said

CFPB staff said data breaches are an area of interest for the agency, but what can be done by individual agencies depends on their jurisdiction. The bureau does not have any immediate plans for its own new data security regulations. However, Credit Union National Associatin President/CEO Bill Cheney has raised this issue with Cordray and CUNA is following up on this with the bureau and other agencies. The Michigan Credit Union League also wrote to Director Cordray on this issue earlier this week. .

On another topic, the CFPB said it is looking at overdraft protection issues, but also recognizes that the overdraft product is a great service for some. The bureau is doing analytical work and likely will not issue regulations on it this year.

Credit union call report data will be examined as the CFPB considers remittance rule changes, including an adjustment to the exemption level for credit unions. The agency is also considering whether it should extend the ability of international remittance transfer providers to use estimates in their disclosures.

In addition, CFPB staff also stressed that the agency's current data collection practices do not put consumers at risk.

Cordray during the town hall encouraged credit unions to continue writing mortgages according to their current underwriting standards and to make non-Qualified Mortgage loans when they think it is appropriate. "We have confidence in your model, you should have confidence in your model," he told credit unions.

The bureau's qualified mortgage rule is not much of an issue for responsible lenders with few foreclosures, Cordray claimed.

Previously CFPB Director Corday has said the agency would look at possible changes to some of its CFPB's mortgage rules; staff on the call said the CFPB is not contemplating revisions to its mortgage loan originator regulations.

CFPB staff  indicated the agency is studying payday lending and deposit advance products and there are a number of concerns that have been identified.

A question was asked as to when NCUA would expect total compliance with the CFPB's Qualified Mortgage/Ability to Repay rule. NCUA's Director of Examination and Insurance Larry Fazio responded that the agency would take into consideration a credit union's good faith compliance efforts to comply with the rule, with respect to the examination findings and ratings assigned to credit unions as part of the examination process.

Non-compliance with CFPB regulations can result in fines, and can adversely impact a credit union's CAMEL rating, Matz said.

She also noted that even with all the trade press and a letter from NCUA, 500 credit unions filed call reports late for this past quarter. They will all receive warning letters this quarter. However, there will be no letters next quarter--late filers will receive civil money penalties, she advised.

The NCUA on Wednesday also said it will not know if credit unions can be given Temporary Corporate Credit Union Stabilization Fund rebates until 2021. NCUA Guaranteed Note investors will need to be paid off, and U.S. Treasury borrowings taken out by the agency will need to be repaid, before that can be determined.​ (See News Now story: No TCCUSF assessment this year, nor likely going forward.)

Updated CUNA projections show high CU cost of Target breach

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WASHINGTON (2/13/14)--With updated projections on the cost of the Target stores data breach, the Credit Union National Association estimates that credit unions have thus far incurred costs of $30.6 million, and reissued around 4.6 million credit and debit cards.

However, CUNA again emphasized that future fraud losses associated with the breach likely will greatly add to the total.

"Although Target is ultimately responsible for this data breach, credit unions must solely cover these costs of their card program administration," CUNA President/CEO Bill Cheney said. "It's time for retailers like Target to step up and accept their fair share of the costs associated with these types of data breaches."

The CUNA leader added, "Credit unions are owned by their members, and because of that cooperative structure, the costs of these types of breaches fall directly to credit union members.

"Congress should act to stop this cycle, and hold merchants accountable."

Nearly all of the more-than 1,100 credit unions that responded to the survey offer debit and/or credit cards to their members, and 94% of respondents had been notified by their processor or network that some of their members' cards had been affected by the breach.

The Target breach has cost credit unions on average about $5.68 per card affected by the security lapse. Other expenses have come from administrative costs.

Some credit unions have had to increase staffing and add overtime shifts as a result of the data breach. Smaller credit unions typically must pay more to replace cards, according to CUNA's Cheney.

"Unlike trillion-dollar banks, with their economies of scale, smaller credit unions face a more expensive proposition in replacing their cards--but still they must cover those costs alone," Cheney said.

Senate mortgage refinancing reforms could come soon, according to HUD chief

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WASHINGTON (2/13/14)--There is bipartisan will to move forward with housing finance market reforms, and a U.S. Senate reform bill could be introduced in the coming weeks, U.S. Housing and Urban Development Secretary Shaun Donovan said Wednesday.

Donovan made his remarks at a "Morning Money" event hosted by Politico. Both Democrats and Republicans recognize that housing finance reform could be more difficult to achieve if it does not happen this year, Donovan observed.

Both parties support maintaining the 30-year mortgage. Donovan said legislators must remember that the Federal Housing Administration is a critical part of the overall housing system.

"We have learned that there are flexibilities that can help FHA operate in a crisis, and that should be on Congress's agenda as well," Donovan said.

He added that HUD and Obama administration regulatory partners are working through policy issues daily as the reform process moves forward. Each regulator brings his or her own expertise to the table in "one of the best team efforts" he says he has seen in government.?

New NIST cybersecurity framework contains CUNA suggested changes

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WASHINGTON (2/13/14)--The National Institute of Standards and Technology's (NIST) final "critical infrastructure" cybersecurity framework, released Wednesday, contains several improvements advocated by the Credit Union National Association. For instance, NIST dropped the proposed Appendix B, which potentially would have required a prescriptive set of steps regarding privacy and civil liberties.

CUNA had urged NIST to recognize that existing, robust data security requirements and standards already apply to financial institutions.

The framework was released as part of President Barack Obama's executive order on "critical infrastructure" cybersecurity. This voluntary framework is intended to improve U.S. cybersecurity among all critical sectors, including financial services, and should complement existing standards and rules.

NIST said in a release that the framework consists of three parts:
  • The framework core, which is a set of cybersecurity activities, outcomes, and informative references that are common across critical infrastructure sectors;;
  • The framework profile, which will help organizations align their cybersecurity activities with its business requirements, risk tolerances, and resources; and
  • The framework implementation tiers, which provide a mechanism for organizations to view and understand the characteristics of their approach to managing cybersecurity risk.
"The framework enables organizations--regardless of size, degree of cybersecurity risk, or cybersecurity sophistication--to apply the principles and best practices of risk management to improving the security and resilience of critical infrastructure," NIST said.

NIST said its framework will be updated and improved as industry provides feedback on implementation. 

CUNA is reviewing the final framework, and commended NIST on Wednesday for taking positive steps by engaging with the financial sector.

CUNA also urged NIST and other government entities to address cybersecurity issues and to coordinate closely with all financial regulators, including the National Credit Union Administration, to ensure the framework is consistent with, and does not expand the scope of, existing rules and regulations for credit unions.