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Corp. loss update reaffirms good news for CUs: CUNA

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WASHINGTON (3/19/14)--Tuesday's announcement that the upper end of projected corporate stabilization assessments declined by $2.2 billion between July and December 2013 "reaffirms the good news credit unions received last fall," Credit Union National Association Chief Economist Bill Hampel said.

"The current projected range for total future remaining assessments is now between negative $2 billion and negative $600 million. At the end of the second quarter of 2013, the total range was negative $200 million to $1.6 billion," the National Credit Union Administration reported.

The agency said the Temporary Corporate Credit Union Stabilization Fund assessment decrease was largely due to the JPMorgan Chase settlement reached in November 2013.

"The more than $1.75 billion in recoveries from NCUA's litigation has certainly brought relief to credit unions, but it's also good to see the general trends continuing," NCUA Chairman Debbie Matz said in a release. "An improving economy and NCUA's continuing efforts to effectively manage losses from the corporate failures at this time make us hopeful that we will not need to make future credit union assessments," she added.

CUNA's Hampel said the midpoint of the range of total projected corporate resolution costs is now $9.1 billion, down from $15 billion as of mid-2010. "That's almost $6 billion of costs that credit unions will not have to pay," he noted.

Credit unions can expect some combination of assessment rebates or repayment of depleted corporate capital, Hampel said, noting that these refunds are extremely likely, but not guaranteed.

"They'll depend on the future performance of the remaining legacy assets. That's the good news. The not-so-good news is that those payments are several years in the future," Hampel advised.

NACHA restarts discussions of same-day ACH settlement

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WASHINGTON (3/19/14)--NACHA--The Electronic Payments Association is planning a phased approach to reforms that would create a ubiquitous, same-day automated clearinghouse (ACH) settlement system.
The planned change would move the payment system from the current single, next-day settlement system to multiple, same-day settlement options that would be available for virtually any ACH network transaction, NACHA said in a Tuesday release.
NACHA plans to study the costs and transaction volume such a system could create. "The information gathered on implementation capabilities, costs and volume will then inform rulemaking that could occur as early as fall 2014," NACHA said.
NACHA said it is planning to introduce multiple, new settlement windows, and greater certainty around faster funds availability.

In the first phase of implementation, users will be able to provide same-day ACH credits for payroll, person-to-person payments and expedited bill pay.

In the second phase, NACHA plans to introduce same-day ACH debits and allow same-day payment of utility, mortgage, loan and credit card bills.

In a third phase, NACHA said it would focus on improving the level of service across the ACH network and on reducing counter-party risk by adding a second same-day settlement and by accelerating funds availability.
The phased-in approach to these changes will allow NACHA to introduce new capabilities more quickly, and then continue to build over time, creating value for all participants at each step along the way, NACHA President/CEO Janet O. Estep said.
"The Credit Union National Association and its payments subcommittee continue to meet and work with NACHA on payments and same-day ACH issues. We expect additional updates in upcoming months," said Dennis Tsang, CUNA assistant general counsel for regulatory research.
For the full NACHA release, use the resource link.

CUNA at Treasury talks of IT improvements for FIs

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WASHINGTON (3/19/14)--The Credit Union National Association attended a recent U.S. Treasury Department discussion on how information technology (IT) is transforming financial institutions.
Treasury Assistant Secretary for Financial Institutions Cyrus Amir-Mokri in introductory remarks said the agency is interested in the role of IT changes on the broader financial system, business models, communications to consumers, compliance and the regulatory framework.
During the event, different perspectives regarding investment banking, asset management, commercial banking and academia were presented.
Several points that credit unions may be interested in include:
  • Technology is changing the financial services landscape rapidly, including non-traditional providers;
  • Vendor and overall risk management are very important for financial institutions; and
  • Additional coordination among financial institutions and various regulators would be helpful to address evolving IT data standards, compliance and risk management issues.
Members of the Financial Services Sector Coordinating Council and other stakeholders also attended the discussion, and CUNA and these groups will continue to coordinate on these issues.

Risk-based capital webinar is today: Slots open

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WASHINGTON (3/19/14)--Hundreds have signed up, but a few slots are still open for those who wish to take part in today's webinar from the Credit Union National Association on the National Credit Union Administration's risk-based capital (RBC) proposal.

The RBC 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.
CUNA has warned that the RBC plan, as proposed, could affect the core operations of most, if not all, credit unions with assets over $50 million, and is working with the agency to reinforce the need to reduce credit unions' regulatory burdens, not increase them.
If the RBC proposal is not withdrawn, changes must be made, CUNA has emphasized. NCUA Chairman Debbie Matz, in a letter sent to CUNA last week, said key changes to the proposal are "not out of the question" prior to the rule becoming final.
CUNA has urged credit unions to weigh in on the proposal to let regulators know their concerns.
CUNA's free, hourlong webinar today, titled "NCUA's Risk-based Capital Rule: Can It Be Fixed?" is scheduled to begin at 3 p.m. (CT). Topics to be explored during the webinar include:
  • Key aspects of the proposal;
  • The proposal's financial impact on credit union operations; and
  • The top legal issues create by the proposal.
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 will wrap up the session. 

A recording of the webinar will be available on the CUNA website 24 hours after the live event.
In addition to the webinar, CUNA is offering a catalog of reference tools to help credit unions determine if and how they will be affected by the NCUA proposal, and to take action by sending comment letters to the agency. Also, CUNA has produced an "Inside Exchange" video segment on the steps for writing an effective comment letter on this issue.
To register for the webinar and access more CUNA risk-based capital content, use the resource link.

Class action suit alleges debt collection misconduct by Chase

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WASHINGTON (3/19/14)--A new class action suit has challenged default judgments that JPMorgan Chase was awarded in cases against several credit card debtors, alleging that the financial firm used robo-signed affidavits to support its motions for default in these cases.

The suit was brought by a South Florida woman, Ruth Moya, and more than 100 individuals have joined the class action suit. The suit relates to more than $5 million in funds and is filed in the U.S. District Court for the Southern District of Florida.

JPMorgan Chase & Co., Chase Bank USA, N.A., Chase Bankcard, LLC and Chase Bankcard Services, Inc. or their subsidiaries or affiliates, are named as defendants in the suit.

Chase has frequently committed debt collection abuses against thousands of their credit card customers who have purportedly defaulted on their accounts, the 51-page complaint alleges. "To collect on these accounts, Defendants have flooded state courts, including Florida courts and state courts across the United States, with collection proceedings against their credit card customers seeking to collect on alleged credit cardholder debt," the complaint adds.

"Chase has been successful in obtaining default judgments due to this large-scale pattern and practice of fraud and abuse of the legal process. Rather than follow basic procedures to ensure fairness to its cardholders and properly meet the burdens prescribed by law, Chase engaged in a scheme to obtain default judgments, writs of execution, and wage-garnishment orders through lawsuits (and other proceedings) designed to render rapid default judgments without scrutiny," the complaint states.

The class action suit seeks to force Chase to:
  • Stop engaging in unlawful, unfair and fraudulent practices;
  • Provide the plaintiff and other litigants with notice of Chase's misconduct and the borrower's option and procedure to reopen their cases so they may seek to expunge the default judgments;
  • File notice in the state court actions notifying the courts of Chase's use of fraudulent affidavits in support of obtaining the default judgments;
  • Reimburse all funds unlawfully taken from plaintiffs; and
  • Pay damages to the plaintiffs.
The plaintiffs have also sought relief under the federal Racketeer Influenced Corrupt Organizations Act.

The state of California last year took its own action against JPMorgan Chase, alleging that the bank "engaged in fraudulent and unlawful debt-collection practices against tens of thousands of Californians" (News Now May 13, 2013).