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Washington Archive

Washington

NEW: NCUA Liquidates ICE FCU

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ALEXANDRIA, Va. (UPDATED: 3/15/13, 12:25 p.m.ET)--I.C.E. FCU, Inglewood, Calif., has been liquidated by the National Credit Union Administration.

The agency in a release said it moved to liquidate the 942 member, $3.4 million-in-asset credit union after it determined the credit union was insolvent and had no prospect for restoring viable operations.

The credit union, which was chartered in 1939, served Inglewood city employees and their families.

I.C.E. FCU is the third federally insured credit union to be liquidated in 2013.

For more, use the resource link.

PCA, Risk Management Discussed In CUNA/NCUA Meeting

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WASHINGTON (3/15/13)--Agency efforts to update prompt corrective action (PCA) requirements was one of the many regulatory issues discussed when Credit Union National Association President/CEO Bill Cheney and CUNA's Executive Committee met with National Credit Union Administration Chairman Debbie Matz this week.

CUNA General Counsel Eric Richard, Chief Economist Bill Hampel and Deputy General Counsel Mary Dunn joined Cheney and NCUA senior staff at the meeting, which lasted over an hour. Matz during the meeting emphasized that the NCUA "can't hold credit unions back when there aren't safety and soundness issues."

The agency is reviewing its PCA requirements in response to a January 2012 study of the NCUA's handling of problem credit unions, and the NCUA has developed a working group to tackle the issue. The NCUA said it is also considering ways to enhance risk based net worth provisions.

Cheney suggested the NCUA could add supplementary capital authority changes to any PCA reforms it develops, and noted that CUNA wants to work with the NCUA to pursue this. CUNA is also developing PCA recommendations in this area and will be meeting with NCUA Director of Examinations and Insurance Larry Fazio on this topic in early May.

CUNA also plans to discuss due diligence concerns with Fazio in the near future. CUNA has noted that due diligence requirements, regardless of the level of risk, can stymie innovation.

Enterprise risk management, and what it means for examiners and credit unions, was another topic addressed during the meeting. Matz said the NCUA is preparing a supervisory letter to examiners on this issue, a step that CUNA has urged.

Matz during the meeting reiterated her support for derivative authority as a means to help address rising interest rates, and agency staff stated that interest rate risk (IRR) is the biggest forward facing risk NCUA has. On issues such as the measurement of IRR, where there can be legitimate disagreements between credit unions and their examiners, Matz said the agency is urging credit unions to talk with their supervisory examiner.

The CUNA officials strongly urged the agency to allow credit unions to invest in simple derivatives to manage interest rate risks. An NCUA IRR proposal is expected this summer, and CUNA is pressing the agency to move forward on this issue.

Corporate stabilization fund management and examination issues were also discussed during the meeting. Dunn said overall the meeting was productive. "CUNA will continue to pursue all of these issues with NCUA," she added.

New CUNA Resource Backs CUs In 'Unite For Good' Effort

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WASHINGTON (3/15/13)--Credit unions across the country are embracing the Credit Union National Association's new strategic vision where "Americans choose credit unions as their best financial partner," and CUNA has unveiled a new resource with specific actions individual credit unions can take to "Unite for Good" and advance this shared vision.

The action steps align with the three key goals credit unions will need to reach to achieve CUNA's shared vision for the credit union system: removing barriers, creating awareness; and fostering service excellence. The broad range of advocacy and service improvement steps are listed on CUNA's strategic vision website, uniteforgood.org.

The suggested steps run the gamut of local and large-scale credit union involvement, from legislative and grassroots mobilization, regulatory action, political/campaign involvement, and media and community interaction.

Credit unions can also consider a service excellence and standards initiative at their branches, support local financial literacy efforts, or send communications to their members seeking their support for credit union friendly candidates, CUNA suggests.

"The list is not meant to be exhaustive, and we know not every suggestion will be right for every credit union, but it's a good blueprint and one we hope you will factor into your strategic planning," CUNA President/CEO Bill Cheney said. "Rallying credit unions to take actions that will move us toward our common vision is what Unite for Good is all about," he added.

To see the full range of CUNA's s suggested action steps for credit unions, use the resource link.

Fixed-Asset Rule Clarifications Proposed, Charter Change Approved: NCUA

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ALEXANDRIA, Va. (3/15/13)--The National Credit Union Administration voted to seek comments on a proposal that clarifies and reorganizes portions of its rule addressing federal credit union ownership of fixed assets during a swift March open board meeting.

Click to view larger image NCUA Chairman Debbie Matz, center-right, Board Member Michael Fryzel, center-left, and agency staff share a light moment before a less-than-lengthy NCUA open board meeting on Thursday. The meeting took around 20 minutes to complete. (CUNA Photo)
The NCUA's current fixed assets rule, Section 701.36, allows federal credit unions to purchase, hold and dispose of property necessary or incidental to their operations. These fixed assets include office buildings, branch facilities, furniture, computer hardware and software, and ATMs.

The proposal is not intended to impose new requirements on credit unions. It revamps portions of the rule to use more plain language, reorganizes certain definitions, and adds a new introduction to define the scope and application of the regulation. The proposal also clarifies the processes for obtaining regulatory waivers from the rule. New definitions for the terms "partially occupy" and "unimproved land or unimproved property" have also been added, the NCUA said.

The proposal is not intended to impose new requirements on credit unions. It revamps portions of the rule to use more plain language, reorganizes certain definitions, and adds a new introduction to define the scope and application of the regulation. The proposal also clarifies the processes for obtaining regulatory waivers from the rule. New definitions for the terms "partially occupy" and "unimproved land or unimproved property" have also been added, the NCUA said.

NCUA Chairman Debbie Matz credited board member Michael Fryzel with first suggesting that the agency could simplify the regulation into plain English. She said the NCUA will look for ways to treat other existing regulations in a similar fashion as the agency moves forward with its regulatory modernization initiative.

"By reorganizing the rule, adding definitions and using the principles of plain writing, we're making it easier for credit unions to follow the rule," Matz said.

Comments on the proposal will be due 60 days after the plan is published in the Federal Register.

Credit Union National Assocition Deputy General Counsel Mary Dunn said "CUNA will be using this opportunity to review the rule in detail and provide broad comments."

The NCUA also voted to approve a community charter conversion request from Cinfed FCU, Cincinnati, Ohio. That multiple common-bond chartered credit union was established in 1934, and holds $312.9 million in assets. Cinfed has 29,791 members, representing nearly 75% of the credit union's potential membership base. The charter expansion will allow the credit union to serve residents of Boone, Campbell and Kenton counties in Kentucky and Hamilton County in Ohio. This expands the credit union's potential field of membership to 1,171,241, the agency said.

Matz acknowledged Cinfed for putting a great deal of thought into their charter change proposal. The credit union plans to diversify its membership, increase earnings and reach into the Latin American community with outreach activities and potentially a Spanish-language version of its website. The credit union also plans to work extensively with underserved populations by offering low-deposit checking accounts, credit rebuilder loans, and rate reductions for members once they establish payment history, the NCUA said.

For more on the meeting, use the resource links.

Nonbank Student Loan Servicers Are New CFPB Focus

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WASHINGTON (3/15/13)--Large servicers of both federal and private student loans may soon fall under the oversight of the Consumer Financial Protection Bureau under a proposal issued Thursday.  The bureau said the plan would add the final tool for the CFPB to have visibility into the complete cycle of student loan debt, from origination through servicing to debt collection and credit reporting.

"Student loan servicers can have a profound impact on borrowers and their families.  Servicers collect payments on loans, work with struggling borrowers on repayment options, and may report borrowers' activity to credit reporting agencies," said CFPB Director Richard Cordray when announcing the proposal.

"In many ways, a student loan can make or break people's financial lives.  A borrower's sole contact regarding a loan, for most of the life of the loan, is with a servicer.  So we need to make sure they are complying with federal consumer financial laws."

The Credit Union National Association commended the CFPB for taking steps to regulate entities that have been operating without regulation. CUNA has urged the CFPB to focus on these entities rather than on regulated institutions.  

If adopted, the rule would place any nonbank student loan servicer that handles more than 1 million borrower accounts under CFPB supervisory authority. The bureau estimated that threshold places  the seven largest student loan servicers under its authority and that, combined, those seven service the loans of 49 million borrower accounts, representing most of the activity in the student loan servicing market.

The proposed rule would cover servicing of both federal and private student loans. Federal student loans are commonly serviced by private companies, and any of those companies that handle more than 1 million borrower accounts would be subject to the Bureau's supervisory authority. The CFPB will continue to coordinate closely with the U.S. Department of Education, which conducts reviews of companies handling loans in accordance with the federal student aid program.

The public will have 60 days to comment on the proposed rule after it is published in the Federal Register.

Use the resource link to access a factsheet on the student loan servicing proposed rule.

Housing Policy Bills Unveiled In House And Senate

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WASHINGTON (3/15/13)--The future of federal housing policy continues to be hotly debated in Congress, and U.S. House and Senate members on Thursday introduced separate bills addressing the government's role in that market.

In the House, Financial Services Committee Ranking Member Maxine Waters (D-Calif.) reintroduced legislation that would strengthen the Federal Housing Administration (FHA) and help ensure that agency's long-term solvency.

The bill, known as the FHA Emergency Fiscal Solvency Act, would in part accomplish this by:
  • Giving the FHA greater flexibility to take action against loan originators that have high loan losses or take part in faulty underwriting; and
  • Authorizing FHA to require indemnification for improperly written loans.
Waters in a release noted that similar legislation was passed by the House last session. The bill is co-sponsored by Rep. Michael Capuano (D-Mass.).

Another Massachusetts legislator, Sen. Elizabeth Warren (D), joined with Senate Banking Committee colleagues Bob Corker (R-Tenn.), Mark Warner (D-Va.) and David Vitter (R-La.) to introduce the Jumpstart GSE Reform Act.

According to a release, the Senate bill would:
  • Prohibit any increase in the guarantee fees charged by government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac from offsetting other government spending; and
  • Prohibit the sale of preferred GSE shares without congressional approval and structural housing finance reform.
The U.S. Treasury has held the preferred GSE shares since the two institutions were taken under government conservatorship in 2008. That agency has the authority to sell or dispose of the shares.

The senators in a release said any premature actions outside of structural reform will only build obstacles to a new housing finance system. "We know our housing finance system is not sustainable in its current form, and this legislation will keep us on a path to accomplish real reforms," Warner said in the release.

A range of mortgage market reforms have been discussed, including almost completely privatizing the housing finance system, limiting the government's intervention in the mortgage market to times of financial distress, and using a system of reinsurance to backstop private mortgage guarantors to a targeted range of mortgages. Congressional hearings on mortgage market reforms have also been held.

The Credit Union National Association has repeatedly said that any changes to secondary mortgage market structure must allow credit unions and other small issuers to maintain full and unrestricted access to that market. CUNA has also highlighted the importance of preserving 30-year, fixed-rate mortgages and ensuring that the secondary market is strong enough to weather economic adversity.