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Sen Finance Questions Lew About Treasury Post Potential

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WASHINGTON (2/14/13)--The Senate Finance Committee met for more than three hours yesterday to conduct the confirmation hearing of Treasury secretary nominee Jack Lew.

President Obama nominated Lew, currently White House chief of staff, in January for the Treasury post. During the hearing, the finance panel quizzed Lew on topics ranging from the complexity of the nation's tax code, to the qualified mortgage definition issued by the Consumer Financial Protection Bureau, to the Treasury's March 1 deadline to eliminate paper delivery of federal benefits checks.

Senate Finance Chairman Max Baucus (D-Mont.) asked Lew to speak to why he would be a great Treasury secretary, not just a good one. Lew said that since his young professional days he has not hesitated to speak his mind on tough issues even if his differs from his boss's.

"I do it with respect, without 'breaking the China,'" he said, but added he never hesitates to deliver a tough message that must be heard.

The committee must now decide whether to forward Lew's name to the Senate floor for a confirmation vote.

NCBA: Cooperatives Help US Recovery

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WASHINGTON (12/14/13)--Just after the president's State of the Union address Tuesday night, the National Cooperative Business Association (NCBA) sent a message to its members underscoring the importance of the cooperative business community to economic recovery.

The NCBA's membership is comprised of cooperatives ranging from credit unions for financial services, to food and housing co-ops,  to farm co-ops, and more.

"This year, as the president and Congress focus on growing small businesses and creating jobs, NCBA will seek to ensure they understand and recognize the success the cooperative structure can have in the economic recovery of our great nation," NCBA President/CEO Mike Beall wrote.

He cited credit unions as one example of how cooperatives fared better during the recession than many for-profit businesses because cooperatives focus on meeting the needs of their member owners: "Credit unions have seen tremendous growth as consumers seek institutions that value their members and offer better services."

Beall also noted that there are more than 29,000 cooperatives operating in every sector of the U.S. economy, sustaining two million jobs each year, contributing $652 billion in annual sales and possessing $3 trillion in assets.

NEW: Reps King, Sherman Introduce Supplemental Capital Bill

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WASHINGTON (UPDATED: 2/14/13, 3:45 p.m. ET)--Rep. Pete King (R-N.Y.) and Brad Sherman (D-Calif.) today reintroduced legislation that would permit the National Credit Union Administration to allow credit unions to accept additional forms of capital.

Credit Union National Association President/CEO Bill Cheney thanked King and Sherman for introducing the bill. "Your legislation would provide credit unions with the appropriate ability to raise capital from sources other than retained earnings without putting in jeopardy the 'one member, one vote' principle that is the bedrock of the credit union ownership structure," he wrote in a letter to the legislators. "As credit unions emerge from the financial crisis, this legislation would improve the safety and soundness of credit unions by allowing them to develop a supplemental cushion to reduce risk to the National Credit Union Share Insurance Fund," he added.

The capital access bill recognizes that "capital is king" at financial institutions, and allows well-capitalized credit unions to match a growing deposit base from a growing membership with capital from sources other than retained earnings--currently the only type of capital that counts at a credit union. It is substantially similar to H.R. 3993, which was introduced in the 112th Congress and gained 45 cosponsors.

The bill is the second piece of credit union charter improving legislation to be unveiled today: It follows the earlier release of legislation that would increase the credit union member business lending cap to 27.5% of assets, from the current 12.25%-of-assets level. (See related News Now story: Credit Union MBL Bill Is Reintroduced)

NEW: Credit Union MBL Bill Is Reintroduced

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WASHINGTON (UPDATED: 2/14/13, 12:15 p.m. ET)--Rep. Ed Royce (R-Calif.) today reintroduced legislation (H.R. 688) that would increase the credit union member business lending (MBL) cap to 27.5% of assets, from the current 12.25%-of-assets level, and the Credit Union National Association in a letter thanked Royce and co-sponsor Carolyn McCarthy (D-N.Y.) for their action.

The bill, if enacted, would help credit unions lend an additional $13 billion to small businesses in just the first year after enactment. This money, which would be made available at no expense to taxpayers, would in turn help small businesses create over 140,000 new jobs.

"Credit unions understand that in order for the economy to fully recover, small businesses need access to credit, which will help their businesses grow. Credit unions have capital to lend, a history of prudent and safe small business lending, and a mission to help provide access to credit to their members-including their small business-owning members. They just need Congress to enact your legislation," CUNA President/CEO Bill Cheney wrote in a letter of support for the bill.

"We encourage all representatives to cosponsor this legislation, and hope the House will act quickly to pass your bill," he added in his letter to Royce and McCarthy.

Bankers provide the only true opposition to MBL bill progress, Cheney noted. "The bank lobby opposes this bill because they oppose credit unions; their arguments are without merit. The bill will not endanger the small banks in your community; the bill will not alter the nature or focus of credit unions; the bill is not inconsistent with the credit union mission or the purpose of their tax status. This legislation recognizes that credit unions are working in their communities to help small businesses, and it is important to enact even though the bank lobbyists oppose it," Cheney said.

Last year, MBL legislation had strong bipartisan support with 144 co-sponsors in the House and 21 in the Senate.

CNBC: Banks Don't Make Good Valentines

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WASHINGTON (2/14/13)--CNBC is offering free break up tips for consumers just itching for a break up this Valentine's Day--especially if that break up means telling your bank to take a hike.

After all, what is there to love, the article asks, citing a recent McGraw-Hill FCU survey that reveals that more than two-thirds (71%) of consumers surveyed said they would break up with their bank if offered a better alternative.

CNBC said respondents compared dealing with their banks with these other notable horrors:
  • 36% said dealing with their bank was like interacting with their in-laws;
  • 30% likened it to dealing with the cable guy;
  • 25 % said it was a lot like time spent with the IRS; and
  • 23% likened dealing with their bank with going to the dentist.
As Shawn Gilfedder, president/CEO of McGraw-Hill FCU told News Now, "How can you feel loved when you are just a number?

"Trust is established when financial institutions show they are accountable to their customers by the way they treat them. It's about time consumers give themselves a chance to achieve financial wellness and feel the love and trust opportunities provided by credit unions."

So, what's pushing consumers to move on from their bank? "'High or hidden fees' was the strongest repellent, followed by a lack of relevant products and services and that age-old relationship killer-'you never listen to me,'" the article noted.

What's more, those among the most coveted financial services customers--those ages 18 to 29--were the one most interested in hearing about bank alternatives.

So start the conversation this way, CNBC recommended: "Dear bank, I want to say 'it's not you, it's me' but the truth is, it IS you. I'm sorry it had to be on Valentine's Day but when I arrived at your window and saw that heart-shaped doily taped to the window, I knew I couldn't bear to live this lie another day."

Use the resource link to read the article.

CFPB Readies Resources To Ease Mortgage Reg Implementation

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WASHINGTON (2/14/13)--The Consumer Financial Protection Bureau assured Wednesday that it has plans to publish plain language guidance, work with other federal regulators and increase consumer outreach efforts as new mortgage regulations are implemented over the coming year.

The agency last month released a slew of final mortgage rules, many of which are scheduled to go into effect in January 2014. The CFPB regulations address mortgage servicing, mortgage loan originator compensation, high-risk-mortgage appraisals, ability to repay requirements, escrow accounts and "high-cost" mortgages.

"Our plan is to work with the mortgage industry to ensure that the CFPB's new rules are implemented accurately and expeditiously," CFPB Director Richard Cordray said in a release. "Both consumers and industry will win when the new rules are understood, applied, and carried out evenly and effectively. Mortgage borrowers, who have dealt with much heartache since the financial crisis, deserve this level of attentiveness," he added.

To ease implementation of the new regulations, the CFPB said it would:

  • Coordinate with other federal government regulators that also conduct examinations of mortgage companies to ensure all regulators have a shared understanding of the new rules;
  • Release easy-to-understand summaries of the regulations in both written and video form this spring;
  • Publish updates of "official interpretations" of the rules. The interpretations will provide guidance on how to comply with the rules and allow the agency to address industry, consumer and regulatory questions regarding the regulations;
  • Provide mortgage originators and servicers with a checklist of implementation, training and policy revision plans; and
  • Inform consumers about the new mortgage rules through a broad-reaching education campaign.
The Credit Union National Association has produced charts covering the CFPB mortgage rules and their key components. For the charts, use the resource links.

CU Issues Are Part Of Financial Services Oversight Plan

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WASHINGTON (2/14/13)--Credit unions' regulatory treatment, and the safety and soundness of the credit union industry are among the items the House Financial Services Committee plans to address during the 113th session of the U.S. Congress.

"The committee's oversight plan reflects that the committee is listening--and wants to continue to listen--to our concerns about the crisis of creeping complexity. We look forward to continuing this discussion and addressing this critical credit union issue," Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said.

The committee's draft oversight plan also lists National Credit Union Administration activities and National Credit Union Share Insurance Fund solvency as two oversight objectives. "The committee will continue to review the current regulatory burden on banks, thrifts, and credit unions with the goal of reducing unnecessary, duplicative, or overly burdensome regulations, consistent with consumer protection and safe and sound banking practices," the oversight plan adds.

Ensuring that regulators carefully and transparently assess the costs and benefits of regulations called for by the Dodd-Frank Act to strike an appropriate balance between prudent regulation and economic growth will be another goal of the committee.

The Consumer Financial Protection Bureau will also receive close attention, as the committee seeks to "ensure that the CFPB's regulatory, supervisory and enforcement initiatives protect consumers against unfair and deceptive practices without stifling economic growth, job creation, or reasonable access to credit." CFPB enforcement actions, the agency's work with other federal regulators, and how CFPB actions impact small businesses and financial institutions of all sizes, particularly "those with fewer than $10 billion of assets," will also be areas of emphasis, according to the plan.

Other oversight priorities addressed in the plan include:
  • Global financial reform coordination;
  • International accounting standards;
  • The U.S. Treasury's Troubled Asset Relief Program; and
  • Capital Standards and Basel III.
The document "is not intended to be an exhaustive list," and the committee may take on issues that are not covered in the list.

The draft oversight plan will be marked up today at 10 a.m. ET.

For the full draft committee plan, use the resource link.

Cybersecurity Order Offers Public/Private Coordination Chances: CUNA

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WASHINGTON (2/14/13)--The Credit Union National Association is encouraged that President Barack Obama's cybersecurity executive order, which was signed this week, offers opportunities for additional coordination between the public and private sectors on cybersecurity and critical infrastructure issues.

"CUNA believes the cybersecurity framework should recognize existing, robust data security standards that are applicable to financial institutions and credit unions," CUNA President/CEO Bill Cheney said.

The executive order includes a broad, general framework intended to improve "critical infrastructure" cybersecurity coordination and information sharing among government agencies and the private sector. The order is consistent with existing, applicable law--it does not provide new legal authority or "provide an agency with authority for regulating the security of critical infrastructure in addition to or to a greater extent than the authority the agency has under existing law."

"Critical infrastructure" is not defined in the order, but could potentially include the power grid, financial market exchanges, and telecommunications networks, CUNA noted.

Under the order, the U.S. Department of Homeland Security will work with sector-specific agencies to identify critical infrastructure and assess cybersecurity requirements. The U.S. Treasury is the sector-specific agency that would oversee the financial sector on cybersecurity, and will work with federal financial regulators including the National Credit Union Administration, CUNA said.

The National Institute for Standards and Technology will coordinate a cybersecurity standards framework.

CUNA continues to assess the impact of the cybersecurity order, and is working with the NCUA, the Financial Services Sector Coordinating Council, BITS, the Treasury and other entities to coordinate on cybersecurity issues, and to ensure that credit unions are not unduly impacted from the cybersecurity framework for critical infrastructure entities. CUNA is also engaged with Congress on any cybersecurity legislation that would provide new legal authority and requirements, such as with liability provisions on information sharing.

For more on the executive order, use the resource link.

Bipartisan cyber threat information sharing legislation was also reintroduced by House Intelligence Committee Chairman Mike Rogers (R-Mich.) and Ranking Member C.A. Dutch Ruppersberger (D-Md.) on Wednesday. The bill, known as the Cyber Intelligence and Sharing Protection Act (H.R. 624), was supported by CUNA last year and passed the House last spring.

CUNA Analyzing HUD 'Discriminatory Effect' Rule

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WASHINGTON (2/14/13)--The U.S. Department of Housing and Urban Development issued a final rule on "discriminatory effect" related to fair housing practices and the Credit Union National Association is analyzing it to determine how the rule could impact credit unions.

The HUD final rule formalizes the national standard for determining whether a housing practice violates the Fair Housing Act as the result of discriminatory effect. HUD anticipates the rule will make it easier for individuals and organizations covered by the law to understand their responsibilities and comply with the law.

"Through the issuance of this rule, HUD is reaffirming its commitment to enforcing the Fair Housing Act in a consistent and uniform manner," HUD Secretary Shaun Donovan said. "This will ensure the continued strength of one of the most important tools for exposing and ending housing discrimination."

The rule will become effective 30 days after it is published in the Federal Register.

CUNA will release a Final Rule Analysis on the HUD rule in the coming weeks.

Senate Banking To Look at Dodd-Frank Rules Today

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WASHINGTON (2/14/13)--The Senate Banking Committee conducts its first hearing of the year today and the panel is expecting a large cast of bank regulators--along with the heads of the Consumer Financial Protection Bureau (CFPB), the Securities and Exchange Commission (SEC), and the Treasury Department's under secretary for domestic finance--to take stock of implementation efforts surrounding the 2010 Dodd-Frank Wall Street Reform Act.

The hearing title is "Wall Street Reform: Oversight of Financial Stability and Consumer and Investor Protections" and it is scheduled to start at 10:30 a.m. ET.  

In addition to CFPB Director Richard Cordray, SEC Chairman Elisse Walter, and Treasury's Mary J. Miller, slated witnesses are:

  • Federal Deposit Insurance Corp. Chairman Martin Gruenberg;
  • Federal Reserve Governor Daniel Tarullo;
  • Comptroller of the Currency Thomas Curry; and
  • Commodities Future Trading Commissioner Gary Gensler.
The hearing will be live streamed via the resource link below.