Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Washington Archive

Washington

Cheney defines how risk-based capital should look

 Permanent link

WASHINGTON (3/10/14)--The Credit Union National Association supports risk-based capital but has strong concerns that there's a multi-billion-dollar price tag of additional capital for credit unions attached to a proposed risk-based capital (RBC) rule. That is the wrong approach for a credit union system that withstood, under current rules, the worst financial crisis in 80 years, CUNA President/CEO Bill Cheney says in the most recent The Cheney Report.

Cheney urges credit unions to comment on the National Credit Union Administration's risk-based plan, unveiled in January, and points to CUNA's increasing arsenal of resources for credit unions at www.cuna.org/riskbasedcapital/. The tools, including a March 19 webinar (see related story), are intended to help credit unions understand the impact of the proposal on their operations--today and into the future--and gear up to respond.

"CUNA absolutely supports risk-based capital for credit unions--that's our long-held position. But NCUA's proposal is not the right approach for our members, and the credit union system at large," Cheney writes, reiterating a point the group has made repeatedly.

For risk-based capital to be implemented correctly, CUNA asserts, it must be part of overall capital and prompt corrective action reform---changes that will require congressional action.

The reforms must include:

  • Lower leverage ratios for well- and adequately capitalized credit unions; and,
  • Authority for supplemental capital for federally insured credit unions that want to use it to meet capital ratio requirements.

Cheney says that the NCUA should be pursuing these legislative plans no less vigorously than it is pushing for its major RBC rule.

Furthermore, Cheney informs, CUNA strongly believes that updated risk-based capital requirements should be in relation to the adequately capitalized, statutorily defined as maintaining a 6% net worth ratio, and not to the well-capitalized level.

"Also, no rule should afford any greater authority for the agency to impose additional capital requirements on a case-by-case basis--and risk weightings must be properly calibrated," the CUNA leader writes.

See the resource links for information on the webinar and on the CUNA RBC resources for member credit unions.

CFPB reports $1M recovered on servicemembers' behalf

 Permanent link
WASHINGTON (3/10/14)--The Consumer Financial Protection Bureau reports that it has recovered more than $1 million  and heard from 14,100 servicemembers, veterans and their family members--both things associated with complaints regarding financial services or products since 2011.
 
"Behind those case numbers are servicemembers with questions about mortgages, military spouses seeking to invoke consumer legal protections on behalf of their deployed spouse, veterans desperately fighting scams that threaten to steal their retirement income, and many more members of the military community with compelling, sometimes heartbreaking, real-life stories," the bureau said in its announcement of the release of its annual "snapshot by the Office of Servicemember Affairs"(see resource link).
 
The report notes that newer categories of complaints added just last year "have climbed steadily and now factor prominently into our complaint totals." They include such things as debt collection and payday loans.
 
"In fact, since we began taking debt collection complaints in July 2013, debt collection has quickly become the highest volume complaint category for military consumers over the last seven months," the bureau notes in its report introductions.
 
The report carries a breakdown of complaints by product, as well as the top issues within each product for military consumers.
 
Use the link to access the report.

NCUA has avenues to MBL relief, CUNA reminds board

 Permanent link
WASHINGTON (3/10/14)--Only the U.S. Congress can increase the 12.25%-of-assets credit union member business lending (MBL) cap, but there are a number of regulatory actions the National Credit Union Administration can and should take to aid credit unions approaching the cap, the Credit Union National Association said. CUNA detailed these Friday in letter to the agency leadership.
 
CUNA President/CEO Bill Cheney wrote, "On a number of occasions, CUNA has urged the agency to revisit its member business loan rule and since March 2012, we have repeatedly advocated that the agency update its regulatory provisions implementing the exemption for credit unions that have a history of primarily making member business loans.
 
"Since 2008, we have been advocating for other changes to the MBL rule, such as removing limitations that are not required by the statute."
 
Other steps suggested in letters sent to NCUA Chairman Debbie Matz and board members Michael Fryzel and Richard Metsger include:
  • Updating Federal Credit Union Act definitions that provide exemptions from the MBL cap for credit unions that have a history of primarily making MBLs to their members;
  • Expanding provisions addressing MBL loans made for the financing of one to four family dwellings; and
  • Removing limitations that are not required by the statute.
The NCUA can take important steps to relieve regulatory burdens associated with MBLs without sacrificing safety and soundness, the top CUNA executive wrote.

CUNA urged the agency to proceed with these recommendations and to aid efforts to encourage the U.S. Congress to increase the cap.

CUNA, CUs will explore RBC rule 'fixes' in new webinar

 Permanent link
WASHINGTON (3/10/14)--Can the National Credit Union Administration's risk-based capital proposal be fixed? Credit Union National Association experts and credit union CEOs will attempt to answer that and other credit union questions during a just-announced March 19 webinar.

The hourlong CUNA webinar, scheduled to begin at 3 p.m. (CT), will be introduced by CUNA President/CEO Bill Cheney. CUNA Chief Economist Bill Hampel and Deputy General Counsel Mary Dunn will detail the risk-based capital proposal and credit union concerns. Participants will also have the chance to hear directly from credit union CEOs about their perspectives on the proposed rule. A short question-and-answer session is planned to end the information session.

The risk-based capital proposal would restructure NCUA's current prompt corrective action regulation to include calculation of a capital-to-risk-assets ratio, analogous to Basel III for community banks. The risk weights would be substantially different, and the proposal would impose higher capital requirements for credit unions with higher concentrations of assets in real estate loans, member business loans, longer term investments and some other assets.

The proposal would apply to credit unions with assets of more than $50 million.

A final version of the rule is not likely to go into effect until 2016 or later. However, CUNA is encouraging credit unions to consider the proposal and its impact on their operations right now and submit their comments to the agency, CUNA and state leagues. Credit unions will also have a chance to take their thoughts on the issue directly to the NCUA during a trio of public town hall meetings this summer.

CUNA has posted a comprehensive, but concise, summary of the rule to help inform credit unions on the rule, and has also produced a Risk-Based Capital Action Center tool to help credit unions file comment letters with the agency. CUNA has also requested that the agency extend the comment deadline for this proposal by at least 90 days.

For more on the webinar and CUNA's other risk-based capital resources, use the links.

Archived NCUA webinar on RBC, QM now available

 Permanent link
ALEXANDRIA, Va. (3/10/14)--A Feb. 12 town hall-style webinar hosted by National Credit Union Administration Chairman Debbie Matz and featuring Consumer Financial Protection Bureau Director Richard Cordray is now available online.
 
The webinar focused on some of credit unions' hottest topics, such as the NCUA's proposed risk-based capital rule, the CFPB's qualified mortgage rules, and data collection and ensuring data security.
 
Also discussed during the 90-minute session: Temporary Corporate Credit Union Stabilization Fund assessments and potential regulation of payday lending. More than 1,900 people registered for the live webinar.
 
Use the resource link for audio recording and written transcript of the virtual town hall. The archived webinar will be available until Feb. 15, 2015.
 

CFPB small business panel meets on HMDA issues

 Permanent link
 
Click to view larger image From left:  Garth Griese, president/CEO, Service One CU, Bowling Green, Ky.; Laura Phillips, director of mortgage services, Alabama Teachers CU, Gadsden, Ala.; Jim Ryan, president/CEO, JM Associates FCU, Jacksonville, Fla.; Bob Aresti, president/CEO, 360 FCU, Windsor Locks, Conn.; Jane Hammil, president/CEO, Wichita (Kan.) FCU; and Dallas Bergl, president/CEO, INOVA FCU, Elkhart, Ind., and CUNA board member. (CUNA photo)

 WASHINGTON (3/10/14)--Six credit union executives were among the 21 Small Business Regulatory Enforcement Fairness Act (SBREFA) panel members who convened last week to discuss proposals the Consumer Financial Protection Bureau has made under its Home Mortgage Disclosure Act (HMDA) rulemaking authority.

Credit Union National Association staff were also in attendance.
The 1975 Home Mortgage Disclosure Act (HMDA) requires credit unions and all lending institutions to report public loan data. While implementation authority rested originally with the Federal Reserve Board, that power was transferred to the CFPB in July of 2011.

Among the matters discussed at the SBREFA meeting Thursday were additional data points that are currently being considered for HMDA reporting. They include:

  • Loan term;
  • ARM introductory period;
  • Nonamortizing features (balloon, interest-only, negative amortization);
  • Property value;
  • Security type (real or personal property);
  • Manufactured property interest (own, cooperative, leasehold);
  • Total units;
  • Multifamily affordable housing;
  • Age;
  • Automated underwriting system results;
  • Loan originator ID;
  • Application channel (retail or wholesale);
  • Credit score;
  • Denial reasons;
  • Total points and fees;
  • Total origination charges;
  • Discount points;
  • Risk-adjusted interest rate;
  • Interest rate;
  • Prepayment penalty term;
  • Debt-to-income ratio;
  • Combined loan-to-value ratio;
  • Qualified mortgage status flag;
  • Reverse mortgage flag; and,
  • A home equity line of redit (HELOC) flag.

March 31 is compliance deadline for NCUA emergency liquidity rule

 Permanent link
WASHINGTON (3/10/14)--Compliance preparations for the National Credit Union Administration's new emergency liquidity rule must be complete by March 31, the Credit Union National Association reminds credit unions.

The liquidity rule sets up three-tiered emergency liquidity requirements for credit unions with less than $50 million in assets, between $50 million and $250 million in assets, and more than $250 million in assets.

The final rule contains asset-cap increases that were advocated by CUNA and will impact approximately 374 credit unions.

Federally insured credit unions (FICUs) with less than $50 million in assets must maintain a basic written emergency liquidity policy but will not be required to take further action. All FICUs with assets of $50 million or more are required to develop contingency funding plans describing how their credit union will address liquidity shortfalls in emergency situations. FICUs with assets of $250 million or more would be required to have access to a backup federal liquidity source for emergency situations.

The NCUA has said the rule is part of a global regulatory effort to promote sound liquidity-risk management. The rule will strengthen individual credit unions and, as a result, the entire system, the agency added.

The final rule does not include the Federal Home Loan Banks (FHLB) as an acceptable source of emergency liquidity, although eligible credit unions required to meet the federal source provisions would be free to borrow from a FHLB for nonemergency purposes. Without the FHLB, credit unions have two options to ensure a federal liquidity source for emergency situations: Becoming a member of the NCUA's Central Liquidity Facility (CLF) by subscribing to CLF stock or access to the Federal Reserve's discount window.

CUNA strongly supports the use of the home loan banks for liquidity.