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Compliance Three questions CEOs should ask staff

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WASHINGTON (3/9/12)--The Credit Union National Association's (CUNA) Comp Blog has released its latest compliance wrap-up, a monthly CompBlog feature that, in part, suggests important questions that credit union CEOs should be asking members of their staff.

CUNA suggested:

  • That CEOs ask whether their credit union is filing currency transaction reports (CTR) and suspicious activity reports (SAR) electronically. CUNA's Comp Blog noted that the Financial Crimes Enforcement Network--or FinCEN--will require all CTR and SAR reports to be filed electronically, starting on July 1.  It will grant temporary hardship extentions to some small credit unions, like those without internet access. Credit unions should decidesoon  whether this temporary compliance extension to  March 31, 2013 is worth applying for. Another option is spending the next four months getting the needed technology in place to comply with the CTR and SAR Filing requirements, CUNA said.
  • CEOs whose credit unions offer home equity lines of credit and second mortgages should ask if their credit union will be prepared to show that they have conducted an acceptable assessment of probable allowances for loan and lease losses (ALLL) for mortgage loans, especially where the credit union does not hold the first mortgage. CompBlog noted that the National Credit Union Administration and other federal financial regulatory agencies earlier this year issued supervisory guidance on ALLL estimation practices associated with loans and lines of credit secured by junior liens on one- to four-family residential properties. The guidance addresses the responsibilities of financial institution management and examiners and builds on existing supervisory guidance for home equity lending and the allowance for loan and lease losses. Credit unions should expect increased examiner focus on this issue during this exam cycle as a result, CUNA's compliance wrap-up said.
  • That CEOs ask if their credit union can effectively defend their overdraft protection programs. Regulatory scrutiny of overdraft programs may also soon increase, CUNA said, noting that the CFPB is now asking hard questions about whether consumers are being informed of alternatives, whether the institution is manipulating the order transactions are processed, how dependent the institution is on overdraft fee income, and whether certain groups are incurring most of the overdraft costs. The CFPB is accepting comment until April 30. CUNA will also soon release a comment call and a survey on the CFPB's overdraft questions.
The monthly wrap-up also features information on upcoming compliance events, training sessions, and effective dates. For more of CUNA Comp Blog's monthly wrap up, and other compliance gems, use the resource links.

FCUs members may agree to waive some membership rights NCUA

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ALEXANDRIA, Va. (3/9/12)--In the latest legal opinion letter posted to the National Credit Union Administration (NCUA) website, the agency said it is permissible for a federal credit union and an ex-employee to have a contractual agreement that the person will never run for the board of directors or serve on the supervisory committee.

The legal opinion letter, which is dated January 20, describes a situation in which a former employee of an unnamed credit union was offered a lump sum payment, and the chance to say they voluntarily resigned from their former position instead of being fired, if they agreed to certain terms.

Those terms included signing a confidentiality agreement, releasing the credit union from any claims, and refraining from seeking election or accepting appointment to the credit union's board of directors or supervisory committee for five years from the separation date. While the member in question said the final part of the agreement violated their rights as a member of the credit union, NCUA Associate General Counsel Hattie Ulan said this sort of agreement is permissible under the Federal Credit Union Act.

"While an FCU may impose only a few limitations on eligibility for election to the board of directors, a member may contractually agree not to run for or accept appointment to the board. For such a contract to be valid, the member must receive something from the FCU in return," the NCUA said.

Ulan said other aspects of the contract would be subject to state law.

For the full opinion, use the resource link.

Reps will speak from dais and desk at 2012 GAC

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WASHINGTON (3/9/12)--Members of Congress will speak from the dais and the desk at the Credit Union National Association's (CUNA) 2012 Governmental Affairs Conference (GAC), which will take place March 18-22.

Rep. Maxine Waters (D-Calif.), the second highest ranking Democrat on the House Financial Services Committee, is the latest member of Congress to join the list of speakers at the GAC. She has served 11 House terms and is the ranking member on the House capital markets and government sponsored enterprises subcommittee and a member of the insurance, housing and community opportunity subcommittee and the oversight and investigations subcommittee.

Waters is a cosponsor of the Small Business Lending Enhancement Act (H.R. 1418), and has said she is "very much involved" in the credit union member business lending cap issue. Waters in a House financial institutions subcommittee hearing late last year urged credit unions and community banks to work out their differences, and added that she wants to work with Republicans to assist credit unions and other small institutions.

Fellow H.R. 1418 cosponsor Rep. Ed Perlmutter (D-Colo.) will also appear at this year's GAC, joining Rep. Lynn Jenkins (R-Kan.) at a March 20 GAC "breakout session" discussion entitled: From the State House to Capitol Hill – The Critical Nature of State Advocacy.

Perlmutter and Jenkins, who have both served in their respective state legislatures, will discuss the relevance of legislative advocacy at the state level during the panel, which will be moderated by Ron McDaniel, President/CEO of Glendale-based California CU.

Several key U.S. House and Senate members are scheduled to speak at the GAC, including House Minority Whip Steny Hoyer (D-Md.), House Financial Services Committee Chairman Spencer Bachus (R-Ala.), House Majority Whip and House Financial Services Committee member Kevin McCarthy (R-Calif.), Assistant House Democratic Leader James Clyburn (D-S.C.), and Reps. Jeb Hensarling (R-Texas), Ed Royce (R-Calif.), Barney Frank (D-Mass.), Shelly Moore Capito (R-W. Va.), Carolyn Maloney (D-N.Y.), and Carolyn McCarthy (D-N.Y.)

Sens. Jon Tester (D-Mont.), Mark Udall (D-Colo.) and Rand Paul (R-Ky.) are also scheduled to speak.

Consumer Financial Protection Bureau Director Richard Cordray, all three National Credit Union Administration board members, former Secretary of State Condoleezza Rice, premier, non-partisan political analyst Charlie Cook, and journalistic duo Bob Woodward and Carl Bernstein are also on the schedule of speakers.

The 2012 GAC will provide more than 4,000 credit union representatives an opportunity to hear from influential leaders from Congress and the federal regulatory agencies during the meeting's sessions, as well discuss pressing credit union issues with federal lawmakers and regulators in private meetings.

Recognized as the premier conference to attend for political impact, credit union networking and industry updates, the GAC also offers a wide array of educational breakout sessions, the industry's largest exhibitor showcase, guest/family programs to tour Washington's sights, and special entertainment including an opening concert and the closing Gala Reception and Dance. This year's event will be kicked off by American Idol star Taylor Hicks, who will perform at the opening concert, sponsored by the CUNA Councils.

Registration, housing information, and other information can be found using the resource link below.

Inside Washington (03/08/2012)

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  • WASHINGTON (3/9/12)--Several Democratic House members Wednesday called on President Barack Obama to dismiss Edward DeMarco if the Federal Housing Finance Agency acting director would not commit to large-scale principal reductions for Fannie Mae and Freddie Mac mortgages. The demands were made during a press conference, where some housing activists called for DeMarco's immediate firing (American Banker March 8). Activists have called for write-downs of mortgage principal for underwater homeowners to save families from foreclosure, reset the housing market, and drive an economic recovery. "Writing down these mortgages is the best tangible step forward to help homeowners immediately," said Rep. Yvette D. Clarke (N.Y.). "The best way to combat the rise of foreclosures is for Fannie Mae and Freddie Mac--now the largest holders of subprime mortgages--to be directed to provide straightforward principal reductions." DeMarco, whose agency has authority over Fannie Mae and Freddie Mac, said reductions are not in the best interests of U.S. taxpayers …
  • WASHINGTON (3/9/12)--Sen. Chuck Grassley (R-Iowa) Wednesday criticized the U.S. Department of Justice's fair lending settlement with Countrywide. Grassley said it only amounts to an average of $1,700 per victim--although the case's original complaint sought to make victims whole again. The $335 million settlement is the largest fair lending settlement in history (American Banker March 8). Grassley also said a $25 billion mortgage servicer settlement does not provide adequate compensation to borrowers. Tom Perez, the assistant attorney general of Justice' civil rights division, defended both settlement agreements. Perez said banks view the penalties as too harsh. There is no "home run" in such settlements, nor is there a panacea for the settlement abuses of the previous 10 years, he added. Grassley is the ranking Republican member of the Senate Judiciary Committee. He also criticized justice for failing to file any criminal charges related to the financial crisis ...
  •  VIENNA, Va. (3/9/12)--Financial institutions, of course, are not the only ones required to file Suspicious Activity Reports (SARs) under the Bank Secrecy Act. The Financial Crimes Enforcement Network (FinCEN) Thursday reported an increase in filings of suspicious activity reports by casinos and card clubs or (SAR-Cs), as these reports are known. Filings rose to 13,986 in 2010, up from 5,962 in 2004. The FinCEN report, "Suspicious Activity Reporting in the Gaming Industry," also showed 8,327 SAR-Cs were filed in the first half of 2011, the most recent data available. FinCEN noted that the types of activities reported in SAR-Cs reflected known money laundering and criminal techniques. For instance, the types of activities described most frequently in SAR-C narratives, the section of the SAR-C where filers provide details of what they detect, were suspected structuring of cash transactions to avoid the currency transaction report (CTR) threshold of more than $10,000, and financial transactions with minimal or no gaming activity. FinCEN further noted: Based on total filings, the average dollar amount of suspicious activity reported per filing was $23,664, and the median was $10,000. However, some casinos reported much higher amounts: reports by one casino averaged $402,319. Over the study period, the total amount of suspicious activity reported was $1.77 billion …