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CUNA to NCUA Lighten CU reg burden

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WASHINGTON (2/28/12)--The National Credit Union Administration (NCUA) could be moving in the right direction with its proposal to eliminate the Regulatory Flexibility (RegFlex) program and, instead, allowing federal credit unions to engage in activities permitted by the existing RegFlex rule without the need to apply for RegFlex designation. However, the agency should go further and give credit unions even greater freedom from burdensome regulations, the Credit Union National Association (CUNA) said in a comment letter Monday.

Under the proposal to eliminate RegFlex, the NCUA would allow all credit unions to: donate funds to charities of their choosing;  accept non-member deposits, subject to predetermined limits, from local governmental entities or other credit unions;  and purchase private-label commercial mortgage-related securities, subject to certain net worth constraints and safety and soundness rules. Other rights would also be granted to credit unions that are not covered under the RegFlex designation.

While the NCUA  intends the change to relieve general regulatory burden on credit unions and remove the burden created by the RegFlex application process, CUNA questioned how much the changes would actually help overburdened credit unions.

The NCUA has revised its RegFlex program several times over the years, and many of these changes have rendered the RegFlex program much less helpful to credit unions, CUNA Deputy General Counsel Mary Dunn noted in the letter.

"As the NCUA looks to relieve credit unions regulatory burden, it should revisit the elements addressed in the original RegFlex program and work from there," Dunn recommended.

For the full comment letter, use the resource link.

CUs help members banks help banks voter survey says

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WASHINGTON (2/28/12)--A recent Credit Union National Association (CUNA) poll of voters has revealed that 77% of those surveyed believe banks charge too much for their services, and assess too many fees on their customers. This was an increase of six percentage points over 2011's number.

Credit unions fared much better in terms of voters' assessment of fees. Only 9% of respondents said credit union fees are too high. That was a decrease of two percentage points from the previous year, and 11% is the highest this total has been in the past nine years.

The majority of survey respondents continued to recognize the credit union difference, as 78% said that credit unions are owned and operated for the benefit of their members and 71% said that credit unions "look out for the little guy."

Only 14% of respondents said that banks seek to benefit their customers, and 15% said that banks "look out for the little guy."

Credit unions were also recognized as an excellent lending choice for low-income citizens, with 54% of voters surveyed saying that credit unions were more willing to work with their low-income members. This perception has remained steady since 2004, with around half of those surveyed acknowledging the positive work of credit unions in low-income communities.

The percentage of respondents that believe that banks work with low income people is significantly lower, totaling 20% this year and never exceeding the 27% total recorded in 2009.

CUNA's 2012 National Voter Survey drew responses from 1,000 randomly selected registered voters in locations nationwide. CUNA has conducted an annual voter survey since 1999.

Specific financial products were also addressed in the survey, as 51% said they would prefer a credit union for a small personal loan, 48% said they would use a credit union to take out a new car loan, and 50% said they would obtain a used car loan from a credit union. Banks received ratings of around 35% for all three of these categories.

The surveyed showed credit unions had some work to do to compete in other areas. Credit unions continued to trail banks when it comes to credit cards, home mortgages, home equity lines of credit, and other financial services.

However, credit unions have posted significant gains in recent years, posting seven percentage point increases over 2007's results for home mortgages and HELOCs, and smaller gains in other financial services categories.

Credit unions did not lose ground to banks in any of these categories.

The vast majority of those voters surveyed said that credit unions should be allowed to offer their higher level of service to more Americans, with 82% saying that credit unions should be "able to grow."

Overall, the survey shows credit unions have outshone banks in consumers' perceptions of safety and soundness with 40% of respondents to a recent poll saying they believe credit unions are the safest financial institutions. Thirty four percent said they felt banks were safest, and another 19% said both institutions were equally safe. (This is the second in a series of News Now articles on the results of CUNA's 2012 National Voters' Survey. See related Feb. 23 story: Survey shows continuing growth in CU reputation.)

Monetary policy housing and Reg Q on Congress hearing agenda

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WASHINGTON (2/28/12)--With few votes scheduled as U.S. House and Senate members return to Washington this week, credit unions will want to keep an eye on hearings related to housing policy, monetary policy, and the impact of the recent repeal of Regulation Q.

The Senate Banking Committee on Tuesday will hold a hearing entitled "The State of the Housing Market:  Removing Barriers to Economic Recovery." U.S. Department of Housing and Urban Development (HUD) Secretary Shaun Donovan, Federal Reserve (Fed) Governor Elizabeth Duke, and Federal Housing Finance Agency Acting Director Edward DeMarco are expected to testify.

The House Financial Services insurance, housing and community opportunity subcommittee will also hold a housing hearing on Tuesday, as it meets to discuss HUD oversight issues. Acting Federal Housing Administration Commissioner Carol Galante and four HUD assistant secretaries are scheduled to testify.

Fed Chairman Ben Bernanke will deliver the semiannual monetary policy report to the House Financial Services Committee on Wednesday and the Senate Banking Committee on Thursday.

The House financial institutions subcommittee has scheduled a hearing on "Understanding the Effects of the Repeal of Regulation Q on Financial Institutions and Small Businesses" for Thursday.

The Fed last year released a final rule that repealed Regulation Q, and, as a result, community banks and other for-profit financial institutions are now be permitted to pay interest on commercial checking accounts. Many opposed the repeal, saying that it would have 'devastating' effects on smaller and community banks.

The Senate Budget Committee is also expected to hold a hearing on tax reform on Thursday, with a panel of academics scheduled to testify.

The Obama administration's new corporate tax reform plan, which was released last week, calls for a wide-range of corporate tax law changes, but nothing in the proposal specifically targets credit unions.

Debate over the tax proposal is expected to be contentious, and could continue into next year. The Credit Union National Association (CUNA) will continue to remain "engaged and vigilant" as the debate moves forward, CUNA President/CEO Bill Cheney said.

CUNA is also watching two bills that may receive consideration in the coming weeks.  The first is H.R. 4014, which would protect the privilege of information submitted to the Consumer Financial Protection Bureau. (See related Feb. 27 story: House could soon vote on CFPB privacy bill).

The Cybersecurity Act of 2012 (H.R. 2105) could also come up for a vote in the coming weeks.

Action needed on ATM issue CUNA to CFPB

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WASHINGTON (2/28/12)--The Credit Union National Association (CUNA) in a comment letter has asked the Consumer Financial Protection Bureau to review and suspend the duplicative ATM notice requirements under Regulation E, and revise its Reg E requirements to no longer mandate duplicate ATM notices.

Reg E, which implements the Electronic Fund Transfers Act (EFTA), is one of many consumer related financial regulations the CFPB is taking authority over.

Under current ATM notice requirements, credit unions and other financial institutions must display at each ATM location that fees will or may be charged. More detailed ATM fee information must also be provided before the transaction is completed, either by showing it on the ATM's screen or providing the ATM user with a small printed disclosure before the consumer is committed to paying the fee.

Credit unions and others have found that the outside notices on ATMs are, in some cases, being intentionally removed or destroyed, without the financial institution's knowledge, and that pictures are then taken of the ATM to show noncompliance. Some ATM users may then use this as evidence of apparent non-compliance and as grounds for lawsuits, and the number and cost of these lawsuits continues to climb.

"We urge CFPB to use its authority to eliminate redundant ATM disclosures, which are of questionable utility to consumers and are subjecting credit unions to needless costs and potential lawsuits," CUNA Regulatory Counsel Dennis Tsang said in the CUNA comment letter.

CUNA has also called on Capitol Hill to address the ATM issue, cosigning a letter to Congress with the Electronic Funds Transfer Association (EFTA) and other groups. (See related Feb. 10 story: ATM disclosure changes needed, says CUNA joint letter)

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

Inside Washington (02/27/2012)

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  • WASHINGTON (2/28/12)--The Federal Deposit Insurance Corp.'s (FDIC's) Quarterly Banking Profile for the fourth quarter of 2011 is due out tomorrow and it also will include the banking and thrift  industry's full 2011 earnings. The third-quarter report, released in November, announced institutions' earning of $35.3 billion in the third quarter--a 50% jump from a year earlier.  Much of the dramatic rise was attributed to lower loss provisions. (American Banker Feb. 27) There will be an FDIC briefing today at 10 a.m. (ET) on the quarterly figures, which will include a statement from acting FDIC Chairman Martin Gruenberg, followed by a question-and-answer period with agency staff. …
  • WASHINGTON (2/28/12)--The U.S. Small Business Administration (SBA) has raised the size definitions of small businesses in the transportation and warehousing sector. The final rule will increase the revenue-based size standards in 22 industries and retain the current size standards for the remaining 37 industries in the sector.  The SBA estimates as many as 1,200 additional firms in this sector will become eligible for SBA programs as a result of these revisions.  The agency also has proposed a rule to increase the size standards for the health care and social assistance sector. The plan would increase the small business size standards for 28 industries in that sector, and as many as 4,100 additional firms could become eligible for SBA's programs and services if the proposed increases are adopted, according to the SBA. …
  • WASHINGTON (2/28/12)--It appears that continued pressure from consumer groups, and perhaps from state and federal officials, may be working to bring the opinion of the Office of the Comptroller of the Currency (OCC) more into alignment with the aforementioned parties and the Federal Reserve Board regarding whether borrowers who have received compensation from a mortgage servicer under the $25 billion settlement should have waive any rights to future legal action. The OCC has maintained that there may be some situations where a borrower should be required to waive legal rights as a condition of compensation under the independent foreclosure review being conducted by the 14 largest servicers. The Fed generally has been opposed to such releases. An article in the Feb. 27 issue of American Banker reported that a person involved in the process of building the remediation framework said borrowers would retain the right to sue mortgage servicers even under the $25 billion mortgage servicers' settlement. …