WASHINGTON (3/17/14)--The Federal Reserve System Friday released the 2013 combined annual financial statements for the Federal Reserve Banks, as well as statements for the 12 individual Federal Reserve Banks, the consolidated variable interest entities that were created to respond to strains in financial markets, and the Fed Board of Governors.
The financial statements are audited annually by an independent auditing firm.
The Fed said in a release that:
The Federal Reserve Banks' 2013 earnings, inclusive of other comprehensive income, were $81.4 billion.
The Reserve Banks provided for remittances to the U.S. Treasury of $79.6 billion.
Interest income on securities acquired through open market operations--U.S. Treasury securities, government-sponsored enterprise (GSE) debt securities, and federal agency and GSE mortgage-backed securities (MBS)--totaled $90.4 billion, an increase of $9.9 billion over the previous year.
Use the resource link to read more.
ALEXANDRIA, Va. (3/17/14, UPDATED 1:22 p.m. ET)--The Temporary Corporate Credit Union Stabilization Fund has received a clean audit opinion for the fifth consecutive year of its five-year existence, the National Credit Union Administration announced today.
The fund's condition is on the agenda for this Thursday's NCUA open board meeting and at that time the NCUA's Chief Financial Officer will provide a detailed report. However, in its release today the NCUA highlighted that in 2013 the Stabilization Fund's financial condition "remained stable, maintaining sufficient available liquidity to meet its obligations while its deficit net position continued to decline."
KPMG LLP, the independent firm that audits the stabilization fund's financial statements, issued an unmodified audit opinion with no reportable findings. The agency released that opinion as well as the stabilization fund's 2013 audited financial statements (see resource link).
"Congress created the Stabilization Fund in 2009, and an independent auditor has given NCUA a clean financial statement audit opinion every year since then," NCUA Chairman Debbie Matz said in the release. "KPMG's latest report, following the board's announcement last November that we do not expect an assessment in 2014, demonstrates the agency's planning and management are prudent and that we are maintaining transparency as we work to complete the resolution of the corporate credit union crisis."
WASHINGTON (3/17/14)--Enactment of the Credit Union Residential Loan Parity Act (H.R. 4226) would enable credit unions to better meet the needs of their members and also would contribute to the availability of affordable rental housing, Credit Union National Association President/CEO Bill Cheney wrote in a letter of support for the newly introduced bill.
The bill, introduced late last week by Reps. Ed Royce (R-Calif.) and Jared Huffman (D-Calif.), would amend the Federal Credit Union Act to exclude from the 12.25%-of-assets member business lending cap any credit union residential loans made for the purchase of a one- to four-unit, non-owner-occupied residential dwelling.
The amendment would address an existing disparity in the treatment of those loans made by banks as compared to those made by credit unions.
"Enactment of this legislation would not only correct this disparity but it would also enable credit unions to provide additional credit to borrowers seeking to purchase residential units, including low-income rental units," Cheney wrote. He noted that CUNA looks forward to working with the bill's sponsor to see its enactment.
WASHINGTON (3/17/14)--Voting 55-0, the House Financial Services Committee passed a bill Friday to broaden credit unions' ability to apply for Federal Home Loan Bank membership.
The bill is strongly supported by the Credit Union National Association to put the country's privately insured credit unions on the same footing as their federally insured counterparts where it comes to membership in the Federal Home Loan Bank system.
The bill was one of three passed over two days, all strongly supported by CUNA, the state credit union leagues and credit unions across the country, that--when they become law--will potentially provide significant relief for credit unions from their regulatory burden.
Together with National Flood Insurance Program reforms passed Thursday by the Senate and a bill to make changes to the operating structure of the Consumer Financial Protection Bureau also approved Friday morning by House Financial Services--CUNA says the bills will help credit unions by cutting costs, increasing their voice in the regulatory process, and giving credit unions more flexibility to fund mortgage lending. (See related story: CFPB restructure bill moves through committee.)
In a markup session Thursday for the FHLB bill, House Financial Services Committee Chairman Jeb Hensarling said approval of the bill (H.R. 3584) would correct a "drafting oversight" that occurred years ago.
The new bill, introduced by Rep. Steve Stivers' (R-Ohio), amends the Federal Home Loan Bank Act to authorize privately insured credit unions to become members of an FHLB.
CUNA urged committee leaders in a letter Wednesday to vote in favor of the Stivers' bill.
CUNA noted that the bill would create no additional risk of loss to any FHLB or to taxpayers. In the Thursday committee markup session Stivers underscored that there is only $11 billion total in privately insured credit union assets. And Rep. Joyce Beatty (D-Ohio), a bill co-sponsor, noted that the bill only affects credit unions in nine states, and they represent less than 2% of all credit unions in the U.S.
The bill states that a privately insured credit union will be considered to have met the eligibility criteria for Federal Home Loan Bank membership if, six months after its application date, the state supervisor has failed to act upon the application.
If H.R. 3584 is approved by the full House, it would then move to the Senate for consideration.
WASHINGTON (3/17/14)--The Federal Deposit Insurance Corp. has taken action against 16 of the world's biggest banks, alleging they manipulated the London interbank offered rate (LIBOR), several outlets reported last week.
Bank of America, Merrill Lynch, Barclays, Citigroup, Credit Suisse, Deutsche Bank, HSBC, JPMorgan Chase and Bear Stearns Capital Markets are among the institutions reportedly named in the suit, which was filed in the Southern District of New York. The British Banking Association is also named in the suit. The suit references actions taken between 2007 and 2011.
The FDIC is seeking an unspecified amount of damages, according to several reports.
LIBOR is used by financial institutions to set interest rates on a variety of financial products, including mortgages, student loans and credit cards. LIBOR for the U.S. dollar is based on information provided by 18 global financial institutions, including several U.S. banks.
British bank Barclays PLC in 2012 admitted that some of its employees between 2005 and 2009 conspired with employees of other financial firms to manipulate LIBOR and the Euro Interbank Offered Rate to support their own financial positions. The firm has been fined by the U.S. Department of Justice, the U.S. Commodity Futures Trading Commission, and the United Kingdom's Financial Services Authority.
More than 40 suits alleging LIBOR manipulation have been filed, including a 2013 suit by the National Credit Union Administration. The agency filed suit in federal district court in Kansas against 13 international banks, alleging violations of federal and state anti-trust laws through LIBOR manipulation. The NCUA said this alleged manipulation resulted in a loss of income from investments and other assets held by five failed corporate credit unions: U.S. Central, WesCorp, Members United, Southwest and Constitution.
The NCUA claims the defendants in today's action individually and collectively gave false interest rate information through the LIBOR rate-setting process "to benefit their investments that were tied to LIBOR, to reduce their borrowing costs, to deceive the marketplace as to the true state of their creditworthiness, and to deprive investors of the interest rate payments to which they were entitled."
The false information created the impression the defendant banks were borrowing money at a lower interest rate than they were actually paying, the NCUA said.
WASHINGTON (3/17/14)--Legislation that would grant credit unions and other lenders greater input into rural-area designations made by the Consumer Financial Protection Bureau has moved on to the full U.S. House after it was approved by the financial services committee late last week.
Rep. Andy Barr's (R-Ky.) H.R. 2672 would direct the CFPB to establish an application process determining whether a county should be designated as a rural area if the CFPB has not designated it as one.
The rural county designations determined by regulators can impact the types of products credit unions may offer their members in those areas.
"From our point of view, any time credit unions can gain an additional opportunity to provide input and inspire the process, we should do so," Credit Union National Association President/CEO Bill Cheney said last week.
Barr's bill was one of two pieces of credit union-related regulatory relief legislation that were sent to the U.S. House floor Thursday. (See related story: FHLB membership bill, others, could bring some CU relief: CUNA.)
WASHINGTON (3/17/14)--Legislation that would curb patent troll abuses will be discussed during a March 27 Senate Judiciary Committee executive business meeting, the committee chairman, Sen. Pat Leahy (D-Vt.), announced last week.
Leahy last year introduced the Patent Transparency and Improvements Act of 2013 (S. 1720), which would aid credit unions and other businesses that have been targeted by patent trolls.
"Members of the Senate Judiciary Committee have been working on meaningful, targeted legislation to combat patent abuses in our system. As chairman of the Committee, I am committed to ensuring we move forward with meaningful legislation this spring," Leahy wrote in a statement released last week.
Other Senate bills that would address patent troll issues include the Patent Litigation Integrity Act of 2013 (S. 1612) and the Patent Quality Improvement Act of 2013 (S. 866), offered by Sen. Charles Schumer (D-N.Y.).
Credit union priorities for patent law reform include:
More transparency in demand letters;
Clarification of Federal Trade Commission enforcement authority over unfair and deceptive demand letters;
A demand letter registry; and,
Stronger end user protections.
Use the resource link to read a Credit Union Natoinal Association joint trade association letter to lawmakers in support of patent legislation.
WASHINGTON (3/17/14)--There is still time to register for this week's webinar on the National Credit Union Administration's risk-based capital proposal, the Credit Union National Association reminds.
The hour-long, free webinar, entitled "NCUA's Risk-based Capital Rule: Can it be fixed?" is scheduled to begin at 3 p.m. (CT).
The webinar will explore the key aspects of the proposal, highlight its financial impact on credit union operations, and outline the top legal issue.
CUNA President/CEO Bill Cheney will be joined at the webinar by CUNA Chief Economist Bill Hampel and Deputy General Counsel Mary Dunn. Participants also will 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.
"We'll also bring everyone up to date on our latest efforts aimed at the proposal--and recommend actions credit unions can take on their own to voice their concerns, in their own words," Cheney says.
Registration is limited to 500. A recording of the webinar will be available on the CUNA website 24 hours after the live event.
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.
In addition to the webinar, CUNA is offering a complete catalog of reference tools to help credit unions determine if and how they will be impacted by the NCUA proposal, and take action by sending comment letters to the agency.
To register for the webinar and access more CUNA risk-based capitol content, use the resource link.
ALEXANDRIA, Va. (3/17/14)--For the second consecutive month, the National Credit Union Administration should have a swift-moving open board meeting: A proposed interagency rule addressing minimum requirements for appraisal management companies and a quarterly report on the agency's corporate stabilization fund are the only items on Thursday's agenda.
The interagency proposal is required by the Dodd-Frank Act and relates to financial institutions' use of appraisal management companies.
Dodd-Frank amended the Financial Institutions Reform, Recovery, and Enforcement Act to require regulators to provide new minimum requirements for the registration, reporting and supervision of appraisal management companies. Implementing regulations for new, automated valuation model quality control standards must also be developed.
According to the Consumer Financial Protection Bureau, the implementing regulations must:
Ensure a high level of confidence in the estimates produced by valuation models;
Protect against data manipulation;
Seek to avoid conflicts of interest; and
Require random sample testing and reviews.
Agencies may also address other factors in their regulations.
Share insurance appeals are on the agenda for the March closed board meeting, which is scheduled to begin at 10:45 a.m. (ET).
For the full NCUA March agenda, use the resource link.
ALEXANDRIA, Va. (3/17/14)--The National Credit Union Administration has reminded credit unions of the compliance responsibilities created by new Ability-to-Repay/Qualified Mortgage (ATR/QM) rules, and the protections offered to certain credit unions, in a new regulatory alert (14-RA-09).
The Consumer Financial Protection Bureau's ATR/QM rules became effective on Jan. 10, and apply to all federally insured credit unions. The rules require credit unions to assess a member's ability to repay for virtually all closed-end residential mortgage loans secured by a member's dwelling. Loans with terms that do not exactly match certain CFPB QM requirements, such as 40-year loans, or loans with points and fees exceeding the thresholds established by the rule, will not be purchased by government-sponsored enterprises.
The NCUA alert includes details on:
Which loans are covered by the rule;
Basic ability-to-repay requirements;
Eight factors credit unions must consider when making an ATR determination;
How QMs provide a safe harbor;
The different types of QMs;
Caps on QM points and fees;
How QMs protect against liability;
What makes a QM loan higher priced;
When prepayment penalties are allowed for QM loans; and,
What other guidance has been made available.
The agency said this latest regulatory alert supersedes and replaces 14-RA-01, released in January. The new release clarifies the points and fees limit for each loan amount threshold and types of charges included in ATR/QM calculations, the agency said. 14-RA-09 also references updated guidance for implementing the requirements of the rule, the NCUA added.
The letter also includes an updated ATR/QM small entity compliance guide, a general comparison chart of ATR and QM requirements, and a small creditor QM flowchart.
For the full letter, use the resource link.