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Washington Archive

Washington

1.3M in NCUA grants available to LICUs

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WASHINGTON (4/2/12)—Low-income credit unions can now apply for a total of $1.3 million in grants to help support their financial literacy, staff and board member training, internship, and tax prep assistance efforts, the National Credit Union Administration (NCUA) said on Friday.

The NCUA in its letter to credit unions 12-CU-04 said the grant money was appropriated by Congress through the Community Development Revolving Loan Fund (CDRLF). Eligible credit unions may apply for as much as $25,000 in funding. Grant applications are due to the agency by June 29.

The NCUA is also providing grants of up to $7,500 through its Urgent Needs Initiative. Credit unions that have been impacted by a natural disaster or other unexpected event may apply for these funds.

The agency also noted that the grant program has been streamlined, with the addition of a fully automated, online funding application.

Eligible credit unions may file a single application for all funding initiatives, and reimbursement requests for multiple grant initiatives can be bundled together, the NCUA added. These changes will allow the NCUA to process grant requests more quickly, and will also speed the disbursement of grant related funds, the agency said.

NCUA Chairman Debbie Matz encouraged eligible credit unions to apply for the grants, and said those that had questions regarding their eligibility could consult the criteria listed in Part 701.34 of the NCUA Rules and Regulations.

The Wisconsin Department of Financial Institutions and Wisconsin Department of Public Instruction last week also announced they have made $250,000 available to the state's K-12 public and private schools to promote financial literacy. (See related News Now story: Wisconsin regulators announce $250K fin lit grants)

For the full NCUA release, use the resource link.

NCUA should focus on exam improvements reg relief CUNA

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WASHINGTON (4/2/12)--Examination improvements and a continued focus on regulatory relief are two areas that the Credit Union National Association urged the National Credit Union Administration (NCUA) to focus on in the coming months, with particular emphasis on implementing exam improvement procedures now, rather than waiting for legislation to be enacted.

In a Friday letter to the agency, CUNA President/CEO Bill Cheney urged the NCUA to consider how certain provisions of the Financial Institutions Examination Fairness and Reform Act (H.R. 3461) could be implemented outside of the legislative process.

The bill, which is co-sponsored by House Financial Services subcommittee on financial institutions chair Rep. Shelly Moore Capito (R-W.Va.) and ranking member Rep. Carolyn Maloney (D-N.Y.), would allow credit unions and other institutions to discuss examination concerns with a newly created Federal Financial Institution Examination Council (FFIEC) ombudsman, and to appeal regulator decisions before an independent administrative law judge.

The bill would also give credit unions and other financial institutions access to decision-making information gathered in their exams and codify exam policy guidance for financial regulators.

Cheney noted that CUNA had recommended that financial regulatory examiners provide credit unions with background information that supports their regulatory directives. "This recommendation is consistent with NCUA's Examiners' Guide and good public policy," Cheney said. CUNA also suggested that NCUA Chairman Debbie Matz, who is the current leader of the FFIEC, work with that group to establish the FFIEC ombudsman position, and urged the NCUA to provide additional and ongoing information and clarifications to the credit union system on how credit unions can appeal examiner findings, directives and other examination concerns.

Turning to the NCUA's own regulatory agenda, the CUNA CEO said the agency should seriously consider whether any new rules are actually necessary, including ones that are in the pipeline. "Healthy credit unions deserve to be encouraged; they deserve to have support from policymakers and they deserve a break from the constant regulatory pounding they have experienced virtually since the beginning of the economic downturn," Cheney said.

He noted that that CUNA is now conducting a line-by-line review of NCUA's rules to provide additional recommendations on how the rules could be minimized and streamlined. CUNA would also like to explore field of membership issues with the agency, including recommendations to facilitate greater service to rural districts and other communities, in the near future. CUNA has recently discussed these and other issues with NCUA staff.

Cheney also said that the agency's efforts, directed by Matz, to begin a review of the examination process and exam concerns as well as to limit regulations, were important steps in the right direction. CUNA discussed these endeavors with the agency at last month's CUNA 2012 Governmental Affairs Conference, and Cheney in last week's letter said CUNA wants to work with the NCUA on these important matters, including the examination review, which could be one of the agency's most important projects.

CUNA's Examination and Supervision Subcommittee has already met with NCUA Director of Examinations and Insurance Larry Fazio and hopes to follow up with him again in the coming weeks. The Subcommittee is also working on best practices for credit unions in the examination process.  

For the full CUNA letter to the NCUA, use the resource link.

FinCEN addresses BSA e-filing warns of tax fraud

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WASHINGTON (4/2/12)—The Financial Crimes Enforcement Network (FinCEN) last week advised financial institutions on how to identify instances of tax refund fraud, and also provided additional guidance on how to use its e-filing system to file new versions of Suspicious Activity Reports (SAR) and Currency Transaction Reports (CTR).

FinCEN in a release noted that financial institutions "are critical in identifying tax refund fraud because the methods for tax refund distribution--direct deposit into demand deposit accounts, issuance of paper checks, and direct deposit into prepaid access card accounts--are often negotiated and deposited at various financial services providers."

The agency said signs of potential tax refund fraud include:

  • Multiple direct deposit tax refund payments that are made to a single accountholder;
  • Suspicious or authorized account opening at a depository institution, on behalf of individuals that are not present, with the fraudulent actor being named as having signatory authority;
  • Business accountholders that process third-party tax refund checks in a manner inconsistent with their stated business model or at a volume inconsistent with expected activity;
  • Accountholders that process a large number of tax refund checks for individuals that live out-of-state;
  • Processing of multiple refund checks that are for similar dollar amounts;
  • Processing of Treasury refund checks or bank checks that are sequentially numbered or are within a few numbers of each other; and
  • Discrepancies between the dollar amount of refund checks being deposited and the amount of currency being withdrawn to cover the cashing of these refund checks.
The elderly, minors, prisoners, the disabled, or the recently deceased are often victims of this type of fraud, FinCEN said. The agency encouraged institutions that believe this type of fraud is occurring to use the term "tax refund fraud" in the narrative section of their SAR and provide a detailed description of the activity.

FinCEN began accepting new versions of SARs and CTRs through its e-filing system last Friday, and the agency provided guidance for institutions that are using the new versions of these forms.

The new SARs and CTRs can be customized for the various institutions that file them, by greying out sections of the report that do not apply to a given financial institution. The new e-filing versions of SARs and CTRs also include extra data elements on various types of suspicious activities and financial fraud schemes. The agency has also marked certain sections that are "critical" to the reports being filed properly, and has limited the narrative section of the report to 17,000 characters.

FinCEN said it may need to develop additional guidance for the new SAR and CTR forms.

The E-Filing System will continue to accept submissions of the older SAR and CTR forms until March 31, 2013. FinCEN will require financial institutions to e-file all SAR and CTR reports beginning on July 1. A limited number of institutions may be granted a "temporary hardship exemption."

For FinCEN releases on tax fraud and SAR/CTR e-filing guidance, use the resource links.

Inside Washington (03/30/2012)

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  • SPRINGFIELD, Mass. (4/2/12)--Norman Halls, chairman of STCU CU, Springfield, Mass.; and Michael Ostrowski, STCU CU president/CEO, travelled to Washington, D.C. for the Credit Union National Association's (CUNA) Government Affairs Conference (GAC) in March. Halls and Ostrowski met with their congressional representatives and exchanged greetings with National Credit Union Administration chair Debbie Matz. Member business lending, access to alternative capital and increased regulation were among the topics Hall and Ostrowski discussed with legislators. "Member business lending was an especially important issue for us," Ostrowski said. "We agree with the experts who say business growth is the only way out of the current economic situation.  We support efforts to increase the amount of money credit unions are allowed to lend to businesses. We don't want to turn away businesses because of the cap." From left, Matz meets Ostrowski and Halls during CUNA's GAC, where Matz was a general session speaker. (Photo provided by STCU CU) …
  • WASHINGTON (4/2/12)-- The Senate Banking Committee held its first hearing Thursday on mobile payments, discussing ways the technology is disrupting existing regulatory processes (American Banker March 30). The House held a hearing on the same issue last week. If mobile payments are made through a financial institution, the existing banking and consumer protection laws apply, but payments made through a text message via a mobile network provider don't fall under banking laws, said Banking Committee Chairman Tim Johnson (D-S.D.).  Industry participants said they would like regulators to work collaboratively to define the regulatory environment for mobile payments, said Kenneth Montgomery, chief operating officer of the Federal Reserve Bank of Boston, which is leading an industry working group on mobile payments …

Economic improvement stars in latest NCUA update video

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ALEXANDRIA, VA. (4/2/12)--The ongoing economic recovery and the National Credit Union Administration's (NCUA) recently adopted interest rate risk (IRR) rule are addressed in the NCUA's latest YouTube briefing by its Office of the Chief Economist.

In the video, NCUA Chief Economist John Worth notes that while the economy does seem to be bouncing back post-recession, increasing oil prices do pose a risk to this recovery.

Worth in the video is also joined by Office of Capital Markets Director J. Owen Cole, who addresses the NCUA's final IRR rule.



The agency earlier this year announced it would release an ongoing series of YouTube videos to inform the public and credit unions about general economic and credit union specific developments.

The videos can also be viewed on the NCUA's YouTube page by using the resource link below.

Inside Washington (03/29/2012)

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  • WASHINGTON (3/30/12)--Treasury Secretary Timothy Geithner was noncommittal Wednesday in endorsing legislation proposed by Sen. Richard Durbin (D-Ill.) that would allow borrowers to discharge private student loan debt in bankruptcy. Durbin's proposal would make it more difficult for financial institutions to collect on delinquent loans. Geithner, speaking during a Senate appropriations subcommittee hearing, told Durbin he shared his concern about the private student lending market, and said Treasury would be willing to work with him on a specific proposal (American Banker March 29). More than $1 trillion in student debt is currently outstanding, including more than $150 billion in private student loans, according to the Consumer Financial Protection Bureau. In 2005, bankruptcy laws changed to include private student loans as exempt from discharge in bankruptcy. Prior to that, only federal student loans were exempt …
  • WASHINGTON (3/30/12)--The number of new foreclosures initiated during the fourth quarter of 2011 decreased to 292,173--down 16% from the previous quarter, the Office of Comptroller of Currency (OCC) said Wednesday. The inventory of foreclosures in process also decreased to 1,272,287--down 4.1% from the previous quarter and 3.1% from a year earlier. The OCC Mortgage Metrics Report for the Fourth Quarter of 2011 showed delinquencies remained elevated, but declined from a year earlier. Mortgages that were 30 to 59 days delinquent were 3% of the total serviced portfolio at year end, and mortgages that were seriously delinquent were at 5% of the total portfolio …
  • WASHINGTON (3/30/12)--Consumer Financial Protection Bureau Director (CFPB) Richard Cordray said Wednesday a bill that would add the CFPB to the list of regulators to which financial institutions can provide confidential information without waiving attorney-client privilege could become law in May (American Banker March 29). The House passed the bill on Monday. Cordray, speaking before the U.S. Chamber of Commerce, said he was hopeful the Senate would pass the bill by Memorial Day …

Lawmakers help CUs launch annual effort to help sick kids

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WASHINGTON (3/30/12)--The annual Credit Union Cherry Blossom 10-Mile Run will again take over downtown Washington, D.C., this weekend, as around 15,000 runners make their way through the streets of the nation's capital, and the Credit Union National Association (CUNA) will support the race for the 11th-straight time.

Assistant Democratic Leader Rep. James Clyburn (D-S.C.) and Reps. Eleanor Holmes-Norton (D-D.C.), Rob Woodall (R-Ga.) and Steven Palazzo (R-Miss.) joined race organizers and representatives from Congressional FCU, Washington, D.C.; CUNA; PSCU Financial Services; Children's Miracle Network Hospitals, at a Thursday press conference to kick off the Credit Union Cherry Blossom Run.

Click to view larger image Members of Congress, including, from left, Reps. Steven Palazzo (R-Miss.), Rob Woodall (R-Ga.), and Eleanor Holmes-Norton (D-D.C.), joined Congressional FCU CEO Charles Mallon, right, and Patricia Jasper-Zellner, senior associate director of Children's Miracle Network Hospitals, to kick off 2012 Credit Union Cherry Blossom 10-Mile Run festivities at a Thursday Capitol Hill press conference. (CUNA Photo)


Speaker of the House John Boehner (R-Ohio), Democratic Whip Steny Hoyer (D-Md.), and Democratic Caucus Chairman John Larson (D-Conn.) are also among the more than 180 members of Congress that have joined Washington, D.C. Mayor Vincent Gray as honorary chairs of the run.

The 10-mile run and 5k run/walk event raises funds for Children's Miracle Network Hospitals. CUNA President/CEO Bill Cheney said the run "brings together credit unions from across the country in support of a great cause." The title sponsor, Credit Union Miracle Day Inc., is entering its 11th year of race sponsorship, and has raised more than $5 million since beginning its sponsorship of the race in 2002. The group is slated to sponsor the race through 2016.

This year's race will feature a competitive field, with last year's female champion Julliah Tinega and 2011 male runner-up Allan Kiprono among those running.

CUNA has again co-sponsored the "Capitol Hill Competition," a race-within-a-race for runners from congressional offices. This competition set a record this year, as nearly 1,000 runners are registered. Cheney said the record high participation is a testament to the competition's popularity on the Hill, and to the great competitive spirit of the race.

T-shirts for participants in the 2012 Credit Union Cherry Blossom 10-Mile Run await pickup. (CUNA Photo)
A group of CUNA volunteers will again work the race bag check tent, where runners will store their belongings while they race. "It's an honor each year to help out the race in this way each year," Cheney said. CUNA employees are also taking part in the day's festivities by either running or walking the 10-mile or 5k routes.

In addition, two Credit Union FREEDOM Ten Mile Runs have also been planned, with one taking place on Saturday at the U.S. Army Garrison in Wiesbaden, Germany, and another scheduled for Sunday in Camp Arifjan in Kuwait. The Germany-based FREEDOM Run is the first at that location, and 350 runners are expected to take part.The Camp Arifjan run drew 470 runners last year.

Cordray delivers CFPB semiannual report to House committee

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WASHINGTON (3/30/12)--Saying his agency is "already taking important steps to improve the lives of consumers," Consumer Financial Protection Bureau (CFPB) Director Richard Cordray delivered the agency's first semiannual report to members of the House Financial Services Committee on Thursday.

Cordray discussed the same report, which was released in late January, with members of the Senate Banking Committee earlier this year.

In his testimony, Cordray said he is "driven by the challenges and responsibilities" of his agency's mission to protect American consumers, and added that he welcomed the members' thoughts about the CFPB's work. Cordray also noted that this is the 15th time a CFPB representative has testified before the House or the Senate.

The general progress of the CFPB was again addressed during the hearing, and Cordray in a prepared statement said the agency would not set prices, limit the size of banks, or ban any specific financial products. However, the CFPB is working to ensure a level playing field for the various financial institutions that offer consumer finance products such as payday loans, prepaid debit cards, mortgages, and student loans, Cordray added.

While some committee members credited the CFPB for the fast pace of its work, including work on mortgage disclosure form changes and student lending issues, others said they still questioned the validity of Cordray's appointment, which was made by President Barack Obama over the winter recess. Rep. Shelly Moore Capito (R-W. Va.) said the nature of Cordray's appointment could lead to challenges to CFPB authority.

For the full CFPB report, use the resource link.

Fed FDIC nominees approved by Senate Banking Committee

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WASHINGTON (3/30/12)--The Senate Banking Committee Thursday approved five Obama administration nominees, including nominees for Federal Reserve and Federal Deposit Insurance Corp. positions.

The approved nominees are:

  • Fed Board of Governors nominees Jerome Powell and Jeremy Stein;
  • FDIC Board of Directors nominee Jeremiah Norton;
  • Office of Financial Research Director nominee Richard Berner; and
  • Troubled Asset Relief Program special inspector general nominee Christy Romero.
Committee chairman Tim Johnson (D-S.D.) said strong leadership is needed at these posts "to solidify our nation's economic recovery and to help prevent another financial crisis."

Johnson encouraged the full Senate to move quickly to consider and confirm the nominees. "They are qualified, they have the support of members in both parties, and there is no good reason to block their confirmation," he said.

President Barack Obama's recent National Credit Union Administration (NCUA) Board nominee, D.C. Government Employee's FCU President/CEO Carla León-Decker, withdrew her name from consideration earlier this year. León-Decker would have replaced Gigi Hyland, whose six-year term on the NCUA board ended in August, if confirmed.

Inside Washington (03/28/2012)

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  • WASHINGTON (3/29/12)--Federal Reserve Board Chairman Benjamin Bernanke said it would be a great accomplishment to end the "too big to fail" era as part of financial reform. Bernanke, speaking before a group of George Washington University students, said too big to fail is unfair, and bad for the financial system and financial institutions (American Banker March 28). It fosters an incentive for large institutions to take bigger risks because of an implied understanding the government would not allow them to fail, he said. At the time of the financial crisis, regulators didn't have the necessary tools to safely let institutions fail without threatening the entire financial system. Rules created by the Dodd-Frank Act provide regulators with those tools, Bernanke said. Dodd-Frank also prohibits the Fed's emergency lending powers that allowed it to provide funding to non-banks, he added …
  • WASHINGTON (3/29/12)--U.S. banks, businesses, and consumers are benefiting from an agreement between the Federal Reserve and other central banks to swap dollars for Euros and other foreign currencies, William Dudley, president of the Federal Reserve Bank of New York, Tuesday told the House subcommittee on domestic monetary policy. "Our principal aim is to protect U.S. banks, businesses and consumers from adverse economic trends abroad," Dudley said, noting that the swaps seem to be working. "In conjunction with the European Central Bank's long-term refinancing operations, the swaps have helped European banks avoid the significant liquidity pressures we feared a few months ago and have reduced the risk that they would need to sell off their U.S. dollar assets abruptly," he said. …
  • WASHINGTON (3/29/12)--The House on Tuesday approved a bill that raises the threshold that requires banks to register with the Securities and Exchange Commission (SEC) from 500 shareholders to 2,000. The provision also increases the threshold that triggers de-registration from 300 shareholders to 1,200 (American Banker March 28). The bill, known as the JOBS Act, will allow some small banks to avoid the costs of SEC registration. The bill is part of a larger package of legislation aimed at making it easier for small businesses to raise capital. The bill passed by a 380-41 margin, and now goes to President Barack Obama for his signature. The Senate approved the bill by a 73-26 margin March 22 …
  • WASHINGTON (3/29/12)--The Consumer Financial Protection Bureau (CFPB) is expected to release a final rule by the end of June that would require lenders to verify a borrower's ability to repay a mortgage, unless they make a loan that falls under the definition of a "qualified mortgage (QM)" Raj Date, the deputy director of the CFPB said Tuesday (American Banker March 28). Before the rule came under the CFPB's authority, the Federal Reserve offered two alternative QM proposals. One would provide a total safe harbor from liability for lenders, an approach favored by the industry. The other would provide a "rebuttable presumption" protection. Date did not say which approach the CFPB favors …

Banned Former DC FCU board member must leave FI work

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ALEXANDRIA, Va. (3/29/12)--The National Credit Union Administration (NCUA) has prohibited former District Government Employees FCU, Washington, D.C., board and supervisory committee member James Talbert from participating in the affairs of any federally insured financial institution.

District Government Employees FCU is also known as DC FCU.

The prohibition order is the result of an NCUA investigation which followed last year's release of the examination records and CAMEL rating of DC FCU. Those records were leaked to the press last fall, weeks after DC FCU CEO Carla León-Decker was nominated to join the NCUA board by President Barack Obama. León-Decker earlier this year removed her name from consideration for the NCUA post.

NCUA Chairman Debbie Matz asked for a full investigation "to determine which among the parties with access to the confidential examination information, whether NCUA or the credit union's board or management," released the credit union's exam records and CAMEL rating.

The NCUA investigation found that Talbert "had breached his fiduciary duties" by unlawfully disclosing the exam records and CAMEL code information. Talbert consented to the issuance of a prohibition order to avoid the time, cost, and expense of administrative litigation, the NCUA said.

Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.

CFPB seeks comment on mortgage project consumer surveys

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WASHINGTON (3/29/12)--The Consumer Financial Protection Bureau (CFPB) continues to solicit public comment on its work, officially publishing a trio of comment notices in the Federal Register this week.

One comment request relates to the CFPB's mortgage revision project. The CFPB continues to work toward a final version of its combined Truth in Lending Act (TILA)/Real estate Settlement Procedures Act (RESPA) form, and the agency is planning to contract an outside consumer research firm to conduct quantitative testing once the forms have been finalized. This testing, the CFPB said, will "examine whether the disclosures aid consumers in understanding the terms of the mortgage loan that is the subject of the disclosure," and the results of the testing will help the agency gauge the effectiveness of the mortgage disclosures.

In its request for comments, the CFPB asks commenters whether this type of information collection is needed, and for any suggestions on how the "quality, utility, and clarity of the information to be collected" could be improved.

The CFPB is asking for the same sort of comments regarding planned periodic consumer surveys and tests. The surveys and tests would help the agency determine how effective its financial literacy and public outreach efforts have been, and the results will help the CFPB improve future outreach and education efforts, the CFPB said.

The agency is also planning to commission a yearly consumer research survey "to better understand the attitudes, understanding, and behaviors of American adult consumers around issues of consumer finance." The survey, the CFPB said, will help "assess consumers' awareness of, engagement in, and the ultimate impact of, the Bureau's efforts to educate and empower consumers to improve their financial decision-making skills and outcomes."

The initial survey will be used to measure the general public understanding and awareness of financial services and products, and future surveys "will also measure the effectiveness of the Bureau's efforts to educate and empower consumers," the CFPB said. The agency plans to conduct these surveys through online and telephone-based surveys, but the CFPB said it would also consider other ways to gather survey results.

Commenters can give the CFPB feedback on whether or not they feel this planned yearly survey is needed, and how the information collection process for the survey could be improved.

Comments on all three releases must be received by the CFPB by May 29, 2012.

For the full CFPB releases, as published in the Federal Register, use the resource links.

Compliance Exclusivityrouting rules effective April 1

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WASHINGTON (3/9/12)--The Credit Union National Association's (CUNA) CompBlog in a recent post reminded credit unions that the Federal Reserve's Regulation II's debit card network exclusivity and routing requirements are scheduled to come into effect on April 1.

Regulation II implements the provisions of section 920 of the Electronic Funds Transfer Act that govern debit card interchange fees and network routing and exclusivity limitations. The regulation requires a debit card issuer or payment card network to ensure that debit cards can be processed on at least two unaffiliated networks--one signature and one PIN network--if the card has both signature and PIN capabilities.

Alternatively, an issuer could provide a debit card that can be processed on two or more unaffiliated signature networks, but not on any PIN networks, or that can be processed on two or more unaffiliated PIN networks, but not on any signature networks, CompBlog said.

Regulation II also prohibits issuers and payment card networks from limiting a merchant's ability to choose the network on which a transaction is routed, with respect to those networks on which the debit card is enabled to be used. 

The requirements apply to all debit card issuers, regardless of asset size.

The section was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

CompBlog noted that many credit unions have already been steadily working with their vendors to comply with Regulation II.

For more on Regulation II, see CUNA's CompBlog by clicking on the resource link.

Remittance rule covers disclosures exclusions CUNA

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WASHINGTON (3/29/12)--The Credit Union National Association (CUNA) has released a final rule analysis of new Consumer Financial Protection Bureau (CFPB) protections for consumers who transfer money internationally.

The rule broadly defines these "remittance transfers" to include virtually all cross-border electronic funds transfers initiated by consumers in the U.S. including automated clearinghouse (ACH) and wire transfers, and products such as the World Council of Credit Unions' IRnet.

Under the CFPB remittance rule, remittance transfer providers must disclose the exchange rate and all fees associated with a transfer so consumers know exactly how much money will be received on the other end.

These disclosures must be provided in writing before the transfer is initiated, and must include the exchange rate, fees and taxes, and the amount of currency to be received by the recipient.

A receipt must also be provided after the remittance is transmitted. This receipt must also include information about error resolution, provider and regulator contact information, and the availability of the funds upon receipt. The remittance rule also requires remittance transfer providers to investigate disputes and fix mistakes.

Error resolution rights, standards for resolving errors and recordkeeping rules, and cancellation and refund policies for all remittance transfers, including those with an estimated exchange rate, such as those falling within the partial exemption for federally insured credit unions, are also addressed by the rule.

The rule also allows consumers that are sending the remittances to cancel the transfer, and receive a full refund of the transfer amount and any fees, if the remittance is cancelled within 30 minutes.

There are two exceptions for the actual amount of currency to be received that allow an estimated exchange rate.  Federally-insured credit unions and other institutions, in some situations, will be granted temporary exemptions if they cannot determine certain disclosed amounts for reasons beyond their control.

This exemption is scheduled to expire on July 21, 2015.

Also, remittance providers that cannot determine the amounts to be disclosed because of the laws of, or the method by which transactions are made in a recipient country, will also be granted permanent exceptions. The method by which transactions are made exception is for international ACH transfers that are under the Federal Reserve's FedGlobal ACH program.

Credit unions and financial institutions that provide remittance services to consumers, as well as money transfer organizations such as Western Union or MoneyGram, will be subject to the rule. CUNA recommended that credit unions that work with these groups contact them to determine applicable changes to their contractual or compliance requirements. The final rule does not apply to most transfers involving credit, debit, and prepaid cards.

The CFPB is considering certain changes to the final rule, including setting a threshold that would minimize the impact of the rule on community banks, credit unions, and other companies that do not normally process these transactions.

The CFPB expects to complete any further rulemaking on these issues before the final rule becomes effective on Feb. 7, 2013.

For the full CUNA Final Rule Analysis, use the resource link.

Hearing on student loans set for today

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WASHINGTON (3/28/12)--Student loan debt will be one of the top topics at today's Senate Appropriations subcommittee on financial services and general government hearing, which will feature testimony from Treasury Secretary Tim Geithner.

The hearing is second in roughly a week to feature the topic of student lending. Sen. Richard Durbin (D-Ill.), who heads the subcommittee, last spring introduced legislation that would treat privately issued student loans the same as other privately issued debt in bankruptcy proceedings. The bill, known as the Fairness for Struggling Students Act (S. 1102), "would help address the looming student debt crisis by restoring a pre-2005 provision in the bankruptcy code allowing for discharge of privately-issued student loans – like other forms of private debt, including credit cards--in bankruptcy," according to a Durbin release.

Consumer Financial Protection Bureau (CFPB) student loan ombudsman Rohit Chopra last week said that combined national student loan debt hit the trillion dollar mark several months ago, and noted that students borrowed $117 billion in federal student loans in 2011. Students continue to borrow private student loans, which lack the income-based repayment and deferment options of federal student loans, he added, saying that "if current trends continue, there will be consequences not just for young people, but for all of us." He said one consequence could be a slow housing market recovery.

The CFPB says it is tackling the student debt problem from a number of fronts, such as working with the U.S. Department of Education and launching the "Know Before You Owe" project to help borrowers, including student borrowers, understand debt implications.

The agency has also asked credit unions and other financial institutions, students, the higher education community, and others in the student loan industry to provide information on the role of schools in the private student loan marketplace, student loan underwriting criteria, repayment terms and behavior, loan servicing and loan modification, and financial education and default avoidance. The full results of this study on the private student loan market will be released this summer. (See March 23 News Now story: CFPB ombudsman blogs on 'sobering' student debt)

The number of credit unions offering student loans continues to increase, and CBS MoneyWatch recently recommended that college students seeking additional financial assistance "turn to a credit union." (See March 16 News Now story: CBS Moneywatch: Turn to CUs for student loans).

CFPB files amicus brief in Truth-in-Lending case

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WASHINGTON (3/28/12)--Borrowers that do not receive Truth in Lending Act (TILA) mandated disclosures from mortgage lenders may cancel those loans, provided they inform the lender of their intent to cancel the loan within three years, the Consumer Financial Protection Bureau (CFPB) said in an amicus brief filed this week in Colorado.

The amicus brief was filed in the United States Court of Appeals for the Tenth Circuit in Denver, Colo., and is tied to the case of Jean C. Rosenfield v. HSBC Bank, USA, which is being heard in that court.

Rosenfield in 2006 purchased a home, using Ownit Mortgage Solutions, which eventually sold her mortgage to HSBC. Ownit allegedly violated TILA by failing to notify Rosenfield of her right to rescind the loan and by providing incomplete disclosures regarding the adjustable interest rate. Ownit also inaccurately stated the total finance charge, according to the CFPB filing.

TILA permits borrowers that do not receive these disclosures to cancel their loans within three years, the CFPB noted. Borrowers that cancel mortgage loans due to disclosure errors by their lenders are released from any liens against their home. The borrowers must return the loan he or she received from the lender, according to the CFPB.

The homeowner contacted HSBC in a bid to end the contract, but did not receive a response from the bank, and eventually sued the bank around 37 months after the mortgage was signed, seeking an injunction to bar HSBC from foreclosing on her home. Rosenfield also included a declaratory judgment that she had rescinded the loan, and sought damages, the CFPB wrote.

Rosenfield's suit was dismissed, with the court finding that mortgageholders must notify and sue the lender within three years of the moretgage being signed. This ruling has been appealed, and the CFPB has backed the appeal, calling for the dismissal to be reversed.

The CFPB, which implements and interprets TILA, said in a release that "TILA specifies that consumers can cancel a loan under this provision by notifying their lenders of their cancellation within three years of signing their loan documents.

"If the lender ignores the consumer's timely notice or refuses to cancel the loan, the courts can determine in subsequent litigation whether the consumer's exercise of the right to rescind was valid, even if that litigation starts after the three-year timeframe has expired," the CFPB added.

CFPB Director Richard Cordray said the agency is "committed to making sure that borrowers can exercise their rights to the full extent allowed," and added "the consumer's right to cancel gives lenders a powerful incentive to provide the disclosures that consumers need to make good financial choices."

The CFPB in a release called amicus briefs "an important way for the CFPB to ensure that the statutes it oversees are correctly and consistently interpreted" by courts, and said it "is committed to filing amicus briefs in litigation involving the federal consumer financial protection laws that it oversees and in which the CFPB determines its views will assist the courts in correctly resolving the matters."

For more on the CFPB's brief, use the resource link.

MBL advocacy critical during recess CUNA

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WASHINGTON (3/28/12)--Credit Union National Association (CUNA) President/CEO Bill Cheney Tuesday called on credit unions to continue--and to redouble--their member business lending (MBL) advocacy efforts during an upcoming April Congressional District Work Period.

Cheney emphasized the importance of credit union meetings with federal lawmakers in their home offices, town hall meetings, and other venues available only when the U.S. House and Senate members are working in-district. The two-week April work period begins next week and lawmakers will return to Washington, D.C. the week of April 16.

Mobilizing credit union representatives during a national call to the state credit union leagues Tuesday, Cheney reminded that U.S. Senate Majority Leader Harry Reid (D-Nev.) pledged earlier this month to hold a vote on a bill to increase the MBL cap to 27.5% of assets--up from 12.25%.

While precise timing of that vote is uncertain at this point, Cheney noted that it is likely to occur just after the April recess--making it imperative for credit unions--and small businesses--to ramp up their grass roots efforts now in support of an MBL cap increase.

A strong credit union/small business effort is particularly critical, Cheney noted, in light of the intensity of opposition the MBL measure is facing from the banking industry. He described the bankers as becoming unglued in their fight against credit union member business lending.

CUNA estimates that in the first year after enactment, the MBL legislation would bring an additional $13 billion in credit to the nation's small businesses and create 140,000 new jobs. In fact, the bill in the Senate is informally being called the Credit Union Small Business Jobs bill.

A state and local advocacy push at this time will back up a recent federal-level effort by credit unions to deliver their message to representatives from each of the 535 House and Senate offices as part of the advocacy effort launched in conjunction with the CUNA Governmental Affairs Conference (GAC), which attracted more than 4,100 credit union representatives to Washington last week.

Since the CUNA GAC, Reps. Karen Bass (D-Calif.), Joseph Heck (R-Nev.), Bill Huizenga (R-Mich.), and Anna Eshoo (D-Calif.) have added their names to the House MBL bill, bringing the number of co-sponsors to 127. The Senate bill has 21 co-sponsors.

During the district visits, credit union advocates should be urging their senators to vote for S. 2231, and ask House members to be ready to approve the House version of the bill (H.R. 1418), Cheney said.

"Senators who have been on the fence will have to make up their minds about who they want to support--credit unions and small businesses or banks," Cheney said on the call.

CUNA continues to maintain its MBL Action Alert with talking points and other tools to help credit unions contact federal lawmakers.

See the resource links below.

Inside Washington (03/27/2012)

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  • WASHINGTON (3/28/12)--During the 2012 Credit Union National Association (CUNA) Governmental Affairs Conference (GAC), Minnesota credit union representatives spent an afternoon on Capitol Hill, visiting all the offices of the state's congressional delegation. Of top concern were bills in the House and Senate regarding member business lending (MBL), which propose raising the credit union cap on lending to 27.5% of assets from 12.25%. Increasing the MBL cap would inject $13 billion in new funds into the economy, creating as many as 140,000 new jobs in the first year after enactment, estimates CUNA. Both House and Senate versions of the bill are expected to be voted on during the current session. Sen. Al Franken (D-Minn.) has signed on as a co-sponsor of the Senate bill, and Minnesota's GAC attendees worked to encourage more delegates to sponsor the legislation. They also discussed a bill allowing credit unions access to supplemental capital and financial institution exam reform. In the photo, Lynn Kothe of North Memorial FCU, Robbinsdale, Minn., (left) and Pat Brekken of Richfield-Bloomington CU, Richfield, Minn., (right) were among a group of Minnesota GAC attendees who met with Rep. Keith Ellison (D-5th District). (Photo provided by Minnesota Credit Union Network) …
  • WASHINGTON (3/28/12)--The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corp., and Office of the Comptroller of the Currency are seeking comment on proposed revisions to the interagency leveraged finance guidance issued in 2001. The guidance covers transactions characterized by a borrower with a degree of financial or cash flow leverage that significantly exceeds industry norms as measured by various debt, cash flow, or other ratios. The three agencies said they observed tremendous growth in the volume of leveraged credit leading up to the financial crisis and in the participation of non-regulated investors. While there was a pull-back in leveraged lending during the crisis, volumes have since increased while prudent underwriting practices have deteriorated, the agencies said. As the market has grown, debt agreements frequently have included features that provide relatively limited lender protection, including a lack of maintenance covenants and other features that can affect lenders' recourse if borrowers fail to pay back loans. Capital structures and repayment prospects for some transactions, whether originated to hold or to distribute, have been aggressive, the agencies said. Management information systems at some institutions have not been accurate or timely in aggregating exposures, and many institutions have found themselves holding large pipelines of higher-risk commitments at a time when buyer demand for risky assets diminished significantly …
  • WASHINGTON (3/28/12)--The Federal Deposit Insurance Corp. (FDIC) extended until April 30, the comment period on a proposed rule to require banks with more than $10 billion in consolidated assets to conduct annual stress tests. The FDIC said the scope and complexity of the proposal required the comment period to be extended to allow interested parties more time to analyze the issues and prepare their comments. Originally, comments were due by March 23. The proposed rule, part of the Dodd Frank Act, was approved at the Jan. 17 FDIC Board meeting …

Avoid CU burdens in diversity policy CUNA to NCUA

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WASHINGTON (3/28/12)--The Credit Union National Association (CUNA) has urged the National Credit Union Administration (NCUA) to implement standards for "assessing the diversity policies and practices of entities regulated by the agency," as mandated by the Dodd-Frank Wall Street Reform Act, "in a manner that would minimize the information gathering and reporting burden on credit unions."

Section 342 of the Dodd-Frank Act requires the NCUA and other federal regulators to create work force diversity policies for their regulated institutions. Regulators are still developing these policies and rules on how they will assess compliance with these policies.

The NCUA's Office of Minority and Women Inclusion (OMWI), which began its work last year, will develop the agency's diversity policy.

In a comment letter, CUNA commended the NCUA and OMWI for their efforts to develop the standards, and said it is pleased that CUNA members were invited to participate in NCUA's first roundtable discussion on Feb. 29. CUNA also suggested OMWI carefully consider the challenges credit unions face in complying with any standards that the NCUA may develop under Section 342, especially relating to the difficulties involved in manually gathering diversity related data from employees, contractors and suppliers.

CUNA also asked the agency to limit any Section 342 assessment standards to collecting employment-related data from credit unions that are subject to Equal Employment Opportunity Commission reporting requirements. Credit unions should also be permitted to self-report any data under Section 342 assessments, rather than be subjected to additional examination burdens, CUNA added.

For the full comment letter, use the resource link.

FTC issues how-to guidelines on protecting consumers data

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WASHINGTON (3/27/12)--A Federal Trade Commission (FTC) final report on data security released Monday said companies using and storing consumer information to innovate and deliver better products and services to consumers should not do so at the expense of consumer privacy.

"Protecting Consumer Privacy in an Era of Rapid Change" lays out a framework for businesses to follow in protecting consumers' personal data.

The report's executive summary notes that with the use in "today's world of smart phones, smart grids, and smart cars," there is more information sharing than ever before. The 72-page document then goes on to describe a framework for businesses to follow in protecting consumers' personal data.

The final report expands on a preliminary staff report the FTC issued in December 2010.

It calls on companies handling consumer data to implement recommendations for protecting privacy, including:

Privacy by Design: Companies should build in consumers' privacy protections at every stage in developing their products. These include reasonable security for consumer data, limited collection and retention of such data, and reasonable procedures to promote data accuracy;

Simplified Choice for Businesses and Consumers: Companies should give consumers the option to decide what information is shared about them, and with whom. This should include a Do-Not-Track mechanism that would provide a simple, easy way for consumers to control the tracking of their online activities; and

Greater Transparency: Companies should disclose details about their collection and use of consumers' information, and provide consumers access to the data collected about them.

The FTC report also notes that, over the course of the next year, the commission staff will promote the framework's implementation by focusing its policymaking efforts on five main action items: Do not track; mobile; data brokers; large platform providers; and, promoting enforceable self-regulatory codes.

The commissioners voted 3-1 to approve the report, with Commissioner J. Thomas Rosch dissenting. 

Use the resource link to access the report and to read the dissenting opinion.

HouseSenate hearings lead before April recess

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WASHINGTON (3/27/12)--House and Senate hearings will likely be the highest profile items for credit unions as the U.S. Congress spends it last week in Washington before the two-week April district work period.

Tuesday House Financial Services Committee markups of the FHA Emergency Fiscal Solvency Act of 2012, the RESPA Home Warranty Clarification Act of 2011 (H.R. 2446), the Jurisdiction Certainty Act (H.R. 3283), and the Swap Data Repository and Clearinghouse Indemnification Correction Act of 2012 (H.R. 4325) will lead the week.

The House Financial Services capital markets subcommittee will also be active this week, with a hearing on accounting and auditing oversight scheduled for Wednesday. The House Appropriations financial institutions subcommittee has also scheduled a Wednesday hearing on the U.S. Treasury Department's budget, with Treasury Secretary Tom Geithner scheduled to testify.

Discussion of mobile payments, which took place last week, will continue this week, with a Thursday Senate Banking Committee hearing entitled "Developing the Framework for Safe and Efficient Mobile Payments" on the schedule. Federal Reserve Consumer and Community Affairs Director Sandra Braunstein and Assistant Housing and Urban Development Secretary/Federal Housing Commissioner Brian Montgomery are scheduled to testify during the hearing. A  hearing on the Small Business Administration's budget has also been set for Thursday.

The House also this week is scheduled to consider the Republican budget resolution for fiscal 2013 and other budget proposals, as well as the Senate-passed Jumpstart Our Business Startups (JOBS) Act (H.R. 3606) and the Federal Communications Commission Process Reform Act of 2012 (H.R. 3309).

The Repeal Big Oil Subsidies Act (S. 2204) and the Postal Reform Bill (S. 1789) may be considered by the Senate this week.

A full Senate vote on credit union member business lending legislation will likely have to wait until after the upcoming recess. (See March 26 story: Senate MBL vote likely soon)

CUNA supports HUD seller concession changes

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WASHINGTON (3/27/12)--The Credit Union National Association (CUNA) in a recent comment letter said it supports the Department of Housing and Urban Development's (HUD) revisions to seller concession language.

The HUD proposal would limit the amount of closing costs a seller may pay on behalf of a homebuyer purchasing a home with financing insured by the Federal Housing Administration (FHA). HUD has proposed implementing a cap of $6,000 or 3%, whichever is greater, on the concessions a seller may pay on behalf of a homebuyer in purchasing a home insured by FHA, and CUNA said it supports this cap.

HUD also proposed narrowing of the definition of acceptable concessions to:
  • The borrower's actual costs to close on the loan;
  • The up-front mortgage insurance premium due on the loan; and
  • An interest rate buydown.
CUNA in the comment letter noted that higher seller-paid closing costs, or seller-paid concessions like advance payment of association fees or mortgage interest, generally results in a higher sales price, in which case the borrower will ultimately end up absorbing the cost of the seller-paid concessions.

Narrowing the definition of acceptable concessions to up-front costs could help prevent future delinquencies by preventing borrowers from experiencing payment shock once longer-term concession payments, such as advance payment of homeowner association fees or mortgage interest, become the borrower's responsibility, CUNA added.

For the full comment letter, use the resource link.

Info privacy bill voted by House

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WASHINGTON (3/27/12)--H.R. 4014, a House bill that would ensure that credit unions and other entities or individuals that provide information to the Consumer Financial Protection Bureau (CFPB) would not waive their right to privacy protections, passed the U.S. House by a voice vote yesterday, and similar legislation could soon be considered in the Senate.

The bill would make technical amendments to the Federal Deposit Insurance Act. Rep. Bill Huzienga (R-Mich.) spoke in support of his bill before the voice vote, saying it adds needed oversight to the CFPB and would create more peace of mind for financial institutions while also protecting consumers.

Credit Union National Association (CUNA) Senior Vice President of Legislative Affairs Ryan Donovan said CUNA has been supportive of a legislative fix to clarify that information submitted by credit unions to the CFPB retains any privileged status that it may have. "Because the language of H.R. 4014 amends the Federal Deposit Insurance Act, we have worked closely with the sponsors of the legislation and the committee leadership in both the House and the Senate to ensure that credit union information is protected," Donovan added.

HR 4014 would protect information submitted to the Bureau by "any person". In the Committee Report accompanying H.R. 4014, the Financial Services Committee indicated that they intend for the term "any person" to "include any individual, partnership, company, corporation, association (incorporated or unincorporated), trust, estate, cooperative organization, firm, society, joint stock company, or other entity."

Similar legislation, S. 2099, is backed by Senate Banking Committee Chairman Tim Johnson (D-S.D.) and ranking committee minority member Richard Shelby (R-Ala.).

The types of privacy improvements contained in the bills have also been endorsed by CFPB Director Richard Cordray.

NCUA closes young tiny Shepherds FCU

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ALEXANDRIA, Va. (3/26/12)--Charlotte, N.C.-based Sheperd's FCU has been liquidated, the National Credit Union Administration (NCUA) announced Monday.

The agency said it decided to liquidate the credit union after finding it was insolvent and had no prospect for restoring viable operations.

The NCUA will return funds to current members via check within one week, it said.

Sheperd's FCU served 1,397 members and held $379,000 in assets. The credit union was chartered in 2010 to serve members and employees of Unity, the Way of Holiness Christian Church, based in Charlotte and Clarkton, N.C.

It is the fourth credit union to be liquidated in 2012.

The NCUA was named liquidating agent of Saguache County CU of Moffat, Colo., late last week, and was apppointed by California regulators as conservator for Chatsworth, Calif.-based Telesis Community CU. (See March 26 story: One liquidation, one conservatorship announced by regulators.)

Inside Washington (03/26/2012)

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  • WASHINGTON (3/27/12)--In a recent interview with American Banker (March 26), Consumer Financial Protection Bureau Director Richard Cordray discussed topics of interest to credit unions and all financial institutions. Cordray said he did not anticipate the bureau writing a law or issuing guidance specific to unfair, deceptive or abusive acts or practices. Regarding the creation of a level playing field between small and large institutions, Cordray said the bureau will take a "nuanced" approach. For example, on the CFPB's work to govern remittances, Cordray said the agency is trying to write the rule in a way that considers how many smaller institutions may only do remittance transactions on an irregular basis. The bureau anticipates releasing a qualified-mortgage rule in the first half of the year, Cordray added …
  • WASHINGTON (3/27/12)--Jim Yong Kim, the president of Dartmouth College and a global health expert, has been nominated by President Barack Obama to lead the World Bank. The bank's current president, Robert B. Zoellick, will step down June 30, at the conclusion of his five-year term (The New York Times March 26). Traditionally, the U.S. president selects the head of the World Bank, and Europe chooses the leader of its sister institution, the International Monetary Fund. Kim is an anthropologist and a physician. He co-founded Partners in Health, a nonprofit organization that provides health care for the poor. He also is a former director of the department of HIV/AIDS at the World Health Organization …

NCUA opens second listening session enrollment

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ALEXANDRIA, Va. (3/27/12)--The National Credit Union Administration (NCUA) has opened registration for its May 9 "listening session," which will be held near the agency's offices in Alexandria, Va.

The session is scheduled to be held between 1 and 4 p.m. ET. Registration will be limited to the first 150 reservations.

"We want to hear directly from credit union officials and volunteers about how we can improve our examination process and reduce or streamline our regulations," NCUA Chairman Debbie Matz said. "We're also open to hearing about any other actions we could take to achieve our shared goal of a safe and sound credit union industry," she added.

The NCUA listening sessions will begin on May 2 in Boston, Mass., and are also scheduled for:
  • June 5 in St. Louis, Mo.;
  • June 12 in Orlando, Fla.;
  • July 10 in San Diego, Calif.; and
  • July 31 in Denver, Colo.
For more on the sessions, use the resource link.

One liquidation one conservatorship announced by regulators

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ALEXANDRIA, Va. (3/26/12)--The California Department of Financial Institutions Friday placed Telesis Community CU into conservatorship and immediately appointed the National Credit Union Administration (NCUA) as conservator. Also on Friday, the Colorado Division of Financial Services appointed the NCUA as liquidating agent of Saguache County CU of Moffat, Colo.

The California regulator placed Telesis Community into conservatorship due to a declining financial condition.

In response to a question, the NCUA said no one problem led to the decision to conserve Telesis Community. The conservatorship resulted from "many problems."

The NCUA noted that, as detailed in the credit union's 2011 year-end Call Report, some of these problems relate to a low net worth ratio, negative returns on average assets, high loan delinquencies and charge-offs, high operating expenses, and many foreclosed and repossessed assets. The California economy also affected the credit union.

Under the NCUA's conservatorship, the state-chartered, federally insured credit union headquartered in Chatsworth will be able to continue providing services to members without interruption, and members can continue to conduct normal financial transactions.

The Federal Credit Union Act authorizes the NCUA board to accept appointment as conservator when necessary to conserve the assets of a federally insured credit union, protect members' interests, or protect the National Credit Union Share Insurance Fund. Telesis Community Credit Union is the third federally insured credit union placed into conservatorship during 2012.

Telesis Community was chartered in 1965.  It has more than 37,600 members and assets reported at $318.3 million.

In Colorado, immediately following appointment of the NCUA as liquidating agent of Saguache County, the NCUA entered into an agreement with Aventa CU of Colorado Springs to purchase and assume membership shares and certain assets of Saguache County.

The state regulator decided to liquidate the $17 million-assets and 3,185-member credit union after determining the credit union was insolvent with no prospect for restoring viable operations. Purchasing Aventa has $135 million in assets and 18,100 members.

Chartered in 1996, Saguache County served people living in Saguache County and those who lived in Rio Grande or Alamosa counties and belonged to a cooperative.

Saguache County Credit Union is the third federally insured credit union liquidation in 2012.

NCUA bans one from financial institution work

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ALEXANDRIA, Va. (3/26/12)--The National Credit Union Administration (NCUA) has issued an order prohibiting Mary Carmen Hartley, a former employee of Mutual Diversified Employees FCU, Santa Ana, Calif., from participating in the affairs of any federally insured financial institution.

The NCUA said in a release Friday that Hartley consented to the issuance of the prohibition order to avoid the time, cost and expense of administrative litigation.

Mutual Diversified Employees was liquidated by the NCUA early in 2010 (News Now 3/2/10). The credit unions' members and assets, which totaled 748 and $6.1 million, respectively, as well as its shares, were purchased and assumed by SchoolsFirst FCU, also based in Santa Ana.

Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.

iHuffington Posti covers CUcommunity bank conflict

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WASHINGTON (3/26/12)--In an article that calls credit unions and the Credit Union National Association (CUNA), and community banks, two of the "most quietly influential" Washington, D.C. advocacy groups, The Huffington Post examined the political conflicts between credit unions and community banks.

While some in the general public imagine that Washington that is being run by Wall Street banks, retiring Rep. Barney Frank (D-Mass.) told the Post, "the big banks aren't the most potent lobbyists, because everybody hates them.

"It's the credit unions and the community banks because of their grassroots networks," he added. Frank is the ranking minority member on the House Financial Services Committee.

The story goes on to describe the climate as CUNA works for legislation to increase the credit union member business lending (MBL) cap and the Independent Community Bankers Association (ICBA) works for a bill drafters called the Communities First Act (H.R. 1697).

The article noted a request by House Financial Services Committee Chairman Spencer Bachus (R-Ala.) for the two bodies, CUNA and the ICBA, to meet and discuss the pending bills--in an effort to move things forward. CUNA agreed to the meeting. ICBA did at first, but the bankers then balked and refused to attend. The bankers' move was likened to "cussing out the boss at an office Christmas party."

CUNA Senior Vice President of Legislative Affairs Ryan Donovan was quoted in the article as noting the "very visceral reaction" of the community bankers in this and other cases. "The ICBA would rather have their entire legislative agenda burned than let our small bill pass," he said.

Legislation that would increase the credit union MBL cap from 12.25% to 27.5% of assets remains active in both the House and Senate. CUNA estimates the MBL bill would inject $13 billion into the economy, creating as many as 140,000 new jobs.

The ICBA told The Huffington Post that it will "fight [the MBL legislation] to the death," but the story noted "banks have little to lose from the credit union bill, and large potential profits to gain from their own legislation."

The community bank bill would loosen some community-bank related regulations. The article recalled that Georgetown University Law Professor Adam Levitin in a November hearing called this bill "narrow, special-interest pleading" that "does nothing for communities."

Mark Wolff, CUNA senior vice president of communications, said a misunderstanding of credit unions' nonprofit business model by bankers contributes to the conflict, and Bethpage FCU Senior Vice President Linda Armyn said that the banker objections to credit union growth are "silly.

"If you look at the marketplace, the banks have 95% of the market share. There isn't a whole lot of data that supports we're taking their business," she told the Post. "We all just want to move forward and grow," she added.

Senate MBL vote likely soon

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WASHINGTON (3/26/12)--A full Senate vote on credit union member business lending legislation could now come at any time after a new version of the legislation was introduced late last week.

The bill, the Small Business Lending Enhancement Act, has a new number, S. 2231, but is identical to Sen. Mark Udall's (D-Colo.) S. 509. The new bill has been introduced under Rule 14 of Senate rules, and, as a result, has bypassed the committee process and can be called for a full vote immediately.

It is scheduled to be placed on the Senate calendar this week, but a vote could also be delayed until after the April recess. The Senate is in session this week, then off for two weeks, and back in session the week of April 16.

Increasing the credit union member business lending cap from 12.25% to 27.5% of assets would inject $3 billion in new funds into the economy, creating as many as 140,000 new jobs in the first year after enactment, according to Credit Union National Association (CUNA) estimates.

Udall last week started an online petition to garner support for his bill, and noted the critical role that small businesses play in job creation and growing the American economy in a statement on his official website. "For the past 15 years, small businesses have created two-thirds of all new jobs, but the recession has cut off a lot of their access to capital. As it is, many small-business owners have been forced to resort to credit cards with comparatively high interest rates in order to invest in equipment to grow their businesses or to hire more people. By simply lifting this burdensome federal regulation, credit unions will be in a position to provide small businesses with the small, low-interest loans they need to create new jobs," Udall said.

The Colorado senator spoke at last week's CUNA 2012 Governmental Affairs Conference, telling credit unions to fight for what they believe in on Capitol Hill and help members of the U.S. Congress convince their fellow members to support the legislation. He also encouraged the assembled credit union representatives to ask their senators to cosponsor his legislation, or, at the very least, to agree to vote for the bill. "If there are credit unions with capacity to lend, and small businesses that need loans, why not allow our economy to grow?" he asked.

CFPB FAQ helps consumers speak financial services

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WASHINGTON (3/26/12)--The Consumer Financial Protection Bureau (CFPB) last week introduced "Ask CFPB," a new interactive website to help consumers decode the complicated world of personal finance.

The online tool features clear definitions of financial terms and products, such as credit reports and reverse mortgages, and also explains many of the terms and features of financial products.

Click to view larger image Click for larger view
The tool also provides advice on how consumers can proceed if they are stuck in tricky financial situations, including foreclosures and bankruptcy.

Consumers can type in keywords into a search field on the site, or click through a list of keywords on the top of the page to try to find the answer they are looking for. The database contains more than 350 questions and answers, and the CFPB said the guide is currently "primarily focused on credit cards and mortgages."

The agency plans to build the database going forward, adding more information on student loans, auto loans, prepaid cards, and checking and savings accounts.

The CFPB is also accepting suggestions on how individual definitions and explanations provided in the database can be improved.

For more on the site, use the resource link.

Inside Washington (03/23/2012)

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  • WASHINGTON (3/26/12)--A House Financial Services financial institutions and consumer credit subcommittee hearing on mobile payments held last week revealed the complexity of mobile payment options and the lack of existing regulations to address those options. (American Banker March 23) While one MasterCard representative that testified said that mobile payments with cell phones are more secure than credit or debit cards, the Payment Card Industry Security Standards Council's Troy Leach said a lack of mobile payment security controls, and potential abuse of computer programs and encryption methods, do pose security risks. Members of Congress questioned who would regulate these types of transactions. "Most importantly, we must make sure these payments are safe and secure, at least as safe as using cash, checks or credit cards, and hopefully even more so," subcommittee chair Shelley Moore Capito (R-W.Va.) said. Additional hearings on the topic have been planned…
  • WASHINGTON (3/26/12)--Separate bills that would make it easier for small banks to draw investors and would ban insider trading by members of the U.S. Congress and federal employees passed the Senate last week. The first bill, which would require small financial institutions with 2000 or more investors to register with the Securities and Exchange Commission, passed by a 73 to 26 vote. (American Banker March 23) The current SEC registration threshold is 500 investors. Similar legislation passed the House earlier this month, but the House will need to again consider the bill after the Senate made some changes. The bill is expected to be signed into law if it passes the House. The insider trading legislation, which passed the Senate by unanimous consent, is expected to be signed into law soon. That bill, the STOCK Act, would increase financial-disclosure requirements legislators and their staffers, as well as presidential staff…
  • RALEIGH, N.C. (3/26/12)--A total of 85 North Carolina credit union representatives covered the need for greater member business lending capacity and access to supplemental capital in meetings with legislators last week.
    North Carolina Credit Union League (NCCUL) Senior Vice President of Association Services Dan Schline (left) discussed credit union issues with Sen. Richard Burr (R) during the NCCUL's Capitol Hill visits at CUNA's 20120 Governmental Affairs Conference. (NCCUL Photo)
     The delegation, led by the North Carolina Credit Union League (NCCUL), met with Sens. Richard Burr (R) and Kay Hagan (D), and various N.C. members of the U.S. House of Representatives. The League also hosted a reception for the members of Congress and their staff. "It was a great exchange of information on a variety of topics," said NCCUL Senior Vice President of Association Services Dan Schline, "and our credit unions got to share their concerns on issues of importance. Overall the tone of the meetings was positive and credit union representatives updated their elected leaders about how issues before Congress impact credit unions and their ability to serve members back home," said Schline. "The League really appreciates everyone taking the time to make the trip, and for being so engaged in the political process," NCCUL President/CEO John Radebaugh added. One credit union advocate who made the trip, Allegacy FCU, Winston Salem, N.C., vice president of community relations and government affairs John Williams, did so for the last time. Williams, who has represented credit unions for 34 years, said he plans to retire at the end of April. "I'm getting my last whack at legislators," Williams said during the Capitol Hill visits…

Strength in numbers shows in CUs Hill visits

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WASHINGTON (3/23/12)--Credit unions continued to walk the halls of Congress on Thursday, the last day of the Credit Union National Association's (CUNA) 2012 Governmental Affairs Conference (GAC), ending a week in which credit union representatives from across the country packed into congressional offices.

With about 4,000 credit union advocates attending this year's GAC, some of the Capitol Hill meetings with each of the 535 House and Senate members moved out of offices and into larger meeting rooms.

Click for slide showIowa Senator Tom Harkin (D) discussed member business lending with his visitors. Click for more credit union and league visits to Capitol Hill.
Nearly 100 Ohio credit union representatives traveled to Washington this year. Among their meetings was one with Sen. Sherrod Brown (D), who is a supporter of increasing the member business lending (MBL) cap.

The credit union advocates discussed member business lending and other key issues, including regulatory burdens and the need for access to supplemental capital. Those were also the topics of discussion in a meeting the Ohio group had on the House side, with Rep. Jim Jordan (R), who met with representatives of several credit unions during a breakfast reception.

Credit union support has been strong in New Jersey, with six legislators from that state already co-sponsors of MBL legislation and two more backing the Financial Institution Examination Fairness and Reform Act (H.R. 3461).

Rep. Steve Rothman (D) said he would cosponsor both H.R. 3461 and credit union supplementary capital legislation during his meeting with New Jersey representatives, and New Jersey Credit Union League President/CEO Paul Gentile said the newfound support is "proof-positive of the value of taking time to meet face-to-face with our lawmakers."

"We had positive feedback from more than one office on the two newer pieces of legislation and we expect additional New Jersey cosponsors in the coming weeks," he added.

A delegation of Mississippi credit unions, led by the Mississippi Credit Union Association, met with Rep. Bennie Thompson (D), and during the meeting, Bill Bynum, CEO of $68 million Hope Community CU, Jackson, Miss., said the MBL cap prevents many credit unions from entering the member business lending market. The Mississippi credit union representatives also stressed that member business lending can serve as an important source of capital for African American entrepreneurs.

Among the many other credit union meetings on Capitol Hill, representatives from Louisiana credit unions met with Sen. David Vitter (R) to discuss the benefits of increasing the members business lending cap, and Vitter listened as executives from Louisiana credit unions individually shared their stories about the restrictions the member business lending cap places on their institutions, and the positive work they could do in their communities if the cap increased to 27.5% of assets.

One Louisiana credit union representative told Vitter that many credit unions cease making business loans when they near the 12.25% lending cap for fear of admonishment from National Credit Union Administration examiners.

Also, more than 20 credit union advocates from Vermont met with Sens. Pat Leahy (D) and Bernie Sanders (I), who are both MBL cosponsors. The group thanked the longtime legislators for their support, and asked them to encourage their colleagues to do the same. Association of Vermont Credit Unions President Joe Bergeron said his state's credit unions are stepping up to support "viable small business credit needs that others are turning away."

Access the slideshow to view other credit union advocacy efforts.

CUNA sends CUs off with advocacy advice GAC breakout

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WASHINGTON (3/23/12)--Credit Union National Association (CUNA) Vice President of Political Affairs Trey Hawkins and other panelists discussed how credit unions can engage and motivate their members to elect new credit union champions to Congress in a Credit Union National Association Governmental Affairs Conference (GAC) breakout session.

Trey Hawkins, CUNA vice president of political affairs, said CUNA and credit union leagues find it easier to work with political candidates for the benefit of credit unions when the credit unions they are serving are also active in the political process. Also pictured, from right to left, are: Gwinnett FCU President/CEO R. Marshall Boutwell, Valley CU CEO Jean Wheat-Palm, and Mountain West CU Association President/CEO Scott Earl. (CUNA Photo)
Jean Wheat-Palm, CEO of Salem, Ore.-based Valley CU, and R. Marshall Boutwell, president/CEO of Athens, Ga.-based Gwinnet FCU, joined Hawkins on the breakout session panel, which was moderated by Mountain West Credit Union Association President/CEO Scott Earl.

Overall, Hawkins said, CUNA's strategy is to support credit union supporters.

One such supporter, Rep. Suzanne Bonamici (D-Ore.), met with Wheat-Palm and other Oregon credit union representatives early in her campaign, and the support of credit unions, which came in the form of donations and volunteerism, pushed her on to a special election win earlier this year. Bonamici has continued to support credit unions following her election, making herself a co-sponsor of member business lending cap increase bill (H.R. 1418) within an hour of having been sworn in. Bonamici has continued to communicate with credit unions in her district, Wheat-Palm noted.

If legislators find themselves in competitive races, they will want more support, and credit union advocates can work with those legislators to develop credit union friends out of someone that may have originally been "middle of the road" on credit union issues, Boutwell added.

Some credit unions can be tentative, at first, to become politically involved, due to potential issues with membership, the panelists said, but working with elected officials can be beneficial.

Boutwell cited the positive example of first-term U.S. House member Rob Woodall (R-Ga.), who he said understands credit union issues and has "turned out to be one heck of a credit union friend." Woodall is also a current MBL bill sponsor.

The panelists noted, however, that it takes coordination from all levels, CUNA, state credit union leagues, and individual credit unions, to recognize the full benefit of political advocacy.

CUNA, Leagues and credit unions teamed up this week to take the credit union message to Capitol Hill, as credit union advocates targeted all 535 offices of the House and Senate for meetings. (See related story: Strength in numbers shows in CUs' Hill visits)

Inside Washington (03/22/2012)

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  • WASHINGTON (3/23/12)--The U.S. Treasury Department is asking the Federal Housing Finance Agency to reconsider its strategy not to accept principal reductions on loans purchased by Fannie Mae and Freddie Mac, Treasury Secretary Tim Geithner told lawmakers Wednesday (American Banker March 22). Geithner, who appeared at a hearing with Federal Reserve Board Chairman Ben Bernanke before the House Oversight Committee, said Treasury is trying to convince FHFA Acting Director Ed DeMarco that in some cases an economic case can be made that principal write downs would limit the future losses for the government-sponsored enterprises. Demarco has said other tools such as lower interest rates and longer loan terms would more effectively limit losses. ...
  • WASHINGTON (3/23/12)--Consumer Financial Protection Bureau (CFPB) Director Richard Cordray said Wednesday regulators should consider the differences between financial institutions when drafting rules--rather than drafting separate rules for financial institutions of different sizes, as he had previously said. Cordray's remarks were made in answer to a question posed at a Consumer Bankers Association conference (American Banker March 22). Under the Dodd-Frank Act, the CFPB is responsible for oversight of financial institutions with assets of more than $10 billion. …
  • WASHINGTON (3/23/12)--John Walsh, acting Comptroller of the Currency, told bankers that the Office of the Comptroller of the Currency, along with other federal financial regulators spoke out against the Financial Institutions Examination Fairness and Reform Act Wednesday. (American Banker March 22). The bill would give financial institutions the right to appeal regulatory exams to an independent ombudsman. Walsh said his agency has put in place a process for banks to appeal exams, including an ombudsman. Walsh said the new measure would require the creation of a new federal bureaucracy--a program office under the Federal Financial Institutions Examinations Council that will have to be newly funded and staffed. …

CFPB ombudsman blogs on sobering student debt

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WASHINGTON (3/23/12)--Rohit Chopra, the Consumer Financial Protection Bureau's student loan ombudsman, posted a recent blog entry that called the country's student debt market "too big to fail," and noted that among problems presented by this massive student debt is its effect of slowing the recovery of the housing market.

Noting the bureau's recently launched effort to understand the size of the private student loan market, Chopra called the finding "sobering," and said it appears student loan debt hit the trillion dollar mark several months ago.  That finding, he wrote, is much larger than estimates from other recent reports.

Chopra blogged: "Students borrowed $117 billion in just federal student loans last year. And students continue to borrow private student loans, which lack the income-based repayment and deferment options of federal student loans. If current trends continue, there will be consequences not just for young people, but for all of us."

As noted above, slowing the recovery of the housing market is one such consequence.  "Student loan borrowers are sending big payments every month to their loan servicers, rather than becoming first-time homebuyers. This debt can also put added stress on the borrowing capacity of the household and government sector," the CFPB ombudsman wrote.

The CFPB says it is tackling the student debt problem from a number of fronts, such as working with the U.S. Department of Education and launching the "Know Before You Owe" project to help borrowers, including student borrowers, understand debt implications.

Chopra said the bureau will release the full results of its study on the private student loan market this summer.

Compliance FCUs must tweak Equal Housing Lender notices

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WASHINGTON (3/22/12)--Faithful readers of the Credit Union National Association's (CUNA) CompBlog will have seen already that recent technical changes approved by the National Credit Union Administration (NCUA) at its March meeting earlier this month require federal credit unions that offer mortgages to revise their Equal Housing Lender notices.

Section 701.31 of the NCUA rules was updated to reflect the designation of NCUA's Office of Consumer Protection to hear discrimination complaints under the Equal Credit Opportunity Act and Fair Housing Act. The NCUA's Office of Examination and Insurance was previously assigned this responsibility.

That change prompts the needed change to the notice: credit unions   must remove references to the Office of Examination and Insurance and replace those references with the Office of Consumer Protection. 

According to the NCUA Board Action Bulletin, "credit unions engaging in real estate-related lending will have a reasonable amount of time to post updated Equal Housing Lender signs in public areas."

For the agency bulletin and the Federal Register document of the rule change, use the resource links below.

Targeting all 535 offices CUs launch Hill visits

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WASHINGTON (3/22/12)--Around 4,000 credit union representatives, with an advocacy strategy of visiting each of the 535 U.S. Senate and House offices, descended on Capitol Hill Wednesday during the Credit Union National Association's (CUNA) 2012 Governmental Affairs Conference (GAC).

Member business lending (MBL), supplemental capital, and an credit union regulatory burden are the top advocacy issues credit unions addressed with their lawmakers.

About 30 representatives from credit unions in Oregon and Washington piled into a congressional meeting room to thank newly elected Rep. Suzanne Bonamici (D-Ore.) for her support of increased member business lending (MBL) for credit unions. Bonamici touted an increased MBL cap  as part of her election platform, and signed on as a co-sponsor of House MBL legislation as her first act after she was sworn in.

 
Click to view larger imageRep. Suzanne Bonamici (D-Ore.), who received a standing ovation from the Northwest Credit Union Association-led credit union group, discussed her priorities for credit unions, and how she is handling her new job in the U.S. House, in a Wednesday meeting on Capitol Hill. (CUNA Photo)

Bonamici earlier this year defeated Republican opponent Rob Cornilles in a special election for Oregon First District U.S. House seat, garnering 53.8% of the total vote.

Scott Burgess, president/CEO of Rivermark Community CU, Beaverton, Ore., outlined the benefits of increasing the MBL cap, and Bonamici said increasing the cap is a "priority" for her.

"Increasing the cap truly makes a difference to small businesses," Bonamici said, adding that "small businesses are a huge part of the economy."

 
CUNA economists have estimated that increasing the cap would inject $13 billion in loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers.

South Carolina credit union advocates also met with their lawmakers. In a meeting with Sen. Lindsey Graham (R), South Carolina Credit Union League President/CEO Steve Fowler stressed that the average member business loan is about $219,000, an amount that most banks are not willing to lend.

South Carolina credit union representatives also noted that the 12.25% of assets lending cap is a barrier for many credit unions that want to enter the business lending market. The low cap can make the cost of setting up a program prohibitive.

The South Carolina representatives also met with Sen. Jim DeMint (R) and Reps. Jeff Duncan (R), Tim Scott (R), James Clyburn (D), Trey Gowdy (R), Mick Mulvaney (R) and Joe Wilson (R) during their time on Capitol Hill. 

Maine Sens. Olympia Snowe (R) and Susan Collins (R) and Reps. Michael Michaud (D) and Chellie Pingree (D) met with the Maine Credit Union League earlier in the week, and all four members of Congress, who are co-sponsors of House and Senate MBL cap increase legislation, reiterated their support for the bill.

They also praised credit unions for serving their members, and league President John Murphy thanked them for their continued support.

These credit union visits took place against the backdrop of 1,000 visiting bankers, who earlier in the week urged lawmakers to defeat MBL-cap-increase legislation and stifle other credit union priorities.

News Now will feature more coverage of credit union Hill visits in Friday's News Now.  A slideshow will be featured.

Consumers not seeing interchange savings Tester

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WASHINGTON (3/22/12)--Consumers have yet to see the promised savings that retailers claimed would result from the new debit card interchange rule, Sen. John Tester (D-Mont.) told attendees of the Credit Union National Association's (CUNA) 2012 Governmental Affairs Conference Wednesday.

Click for slide showSen. Jon Tester (D-Mont.) introduced legislation in 2011, along with Sen. Bob Corker (T-Tenn.), that would have delayed implementation of interchange legislation by two years. Shown here addressing a credit union crowd at the CUNA GAC Wednesday, Tester said credit unions do a better job at meeting consumers' needs than do big banks. (CUNA Photo)
Tester sponsored 2011 legislation to postpone implementation of the debit card interchange fee cap. The bill, which was defeated, was supported by CUNA.

"Now we certainly know that the goal of the original interchange amendment wasn't supposed to impact credit unions and community banks with assets of less than $10 billion in assets, but the facts suggest otherwise," Tester said.

The Federal Reserve Board's final rule implementing the interchange law capped large issuer debit interchange fees at 21 cents. An additional five basis points per transaction may be charged to cover fraud losses.

Tester said he receives e-mails from his constituents, who say they have not received the benefits of the new interchange rule.

"Can we say, 'I told you so,'" he said to his credit union audience.

Tester also cited the significance of the relationship between credit unions and small businesses, which he called "the backbone of America."

Citing a report from the National Federation of Independent Business, Tester said it indicated the majority of small businesses access financial services from community financial institutions.

"That's because you do a better job than the big guys in meeting their needs," Tester said.

The Montana senator repeatedly declared his commitment to serve the needs of rural Americans--and credit unions' role within that vision.

"You understand rural America and the many challenges that we face in the heart of this country," Tester said.

Frank leaving Congress not CUs

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WASHINGTON (3/22/12)--While Wednesday was Rep. Barney Frank's (D-Mass.) final Credit Union National Association (CUNA) Governmental Affairs Conference (GAC) appearance as a member of the U.S. Congress, he said it would not be his last work with credit unions.

Frank noted the important role that credit unions have played in this country, and said credit unions have been one of the most important finance industry forces influencing members of Congress due to their deep roots in every community nationwide.

Commenting on the landmark financial reform legislation that bears his name, the Dodd-Frank Wall Street Reform and Consumer Protection Act, Frank said: "If every financial institution had behaved the way credit unions do, I suppose I'd be a lot less famous, because there wouldn't have been a Dodd-Frank bill."

Due to that legislation, he said, unregulated financial institutions such as remittance providers, payday lenders, and other firms are now subject to the same regulations that credit unions follow, and many anti-consumer practices of large banks have been restricted.

Frank said he would feel the legislation has been successful if these changes help credit unions to expand the base of the people they serve.

Frank did oppose debit card interchange fee legislation that was ultimately added to the Dodd-Frank legislation, and noted that addressing interchange fees was irrelevant to the mission of his financial reform legislation and has not helped consumers.

He challenged retailers, who were the main proponents of the interchange fee cap, to show how the change has benefitted consumers.

CUNA GAC sessions wrapped up Wednesday, but the GAC effort continues today with additional visits by credit union representatives with their federal lawmakers on key credit union issues.

Hensarling names economy as top CU issue

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WASHINGTON (3/22/12)--Democracy is a participatory sport and "few participate like those in the credit union movement," Rep. Jeb Hensarling (R-Texas) said on Wednesday.

Hensarling thanked the credit union representatives attending the Credit Union National Association's 2012 Governmental Affairs Conference for having their voices heard in Washington, D.C., and noted credit unions' work to help families and businesses in his district.

He said the top issue for credit unions is the economy, and said that the economy still needs help to improve.

Bureaucratic red tape and tax issues are holding the economy back somewhat, Hensarling said, adding that he will be "on the forefront of fighting for reasonable regulations."

The true cost of excess regulations can come in the form of reduced credit, stifled innovation and product development, and a loss of economic freedom, Hensarling said.

One of his top priorities, he added, is to repeal the Federal Reserve's debit interchange rule, which caps debit interchange fees at 21 cents for issuers with assets of $10 billion or more.

Clyburn touts rural programs in GAC remarks

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WASHINGTON (3/22/12)--Credit unions live by the not-for-profit-but-for-people philosophy. U.S. Rep. James Clyburn (D-S.C.), noting this point Wednesday, urged attendees of the 2012 Credit Union National Association Governmental Affairs Conference to embrace two pieces of related legislation that seek to improve the lives of U.S citizens facing financial challenges.

Clyburn sponsored the Rural Energy Program Act, which seeks to nationalize a program established in South Carolina in which rural energy customers who upgraded their homes' energy efficiency repaid the cost on their monthly utility bills.

Clyburn's Rural Energy Program Act passed the U.S. House but not the Senate. Yet, he said, he has not given up hope on the bill.

"It is the kind of legislation that can do wonders back in your respective communities," he told the audience.

Clyburn also touted a "10-20-30" policy that would direct at least 10% of rural development spending to communities with 20% poverty rates for 30 years.

Clyburn said 474 U.S counties fall into the 10-20-30 category.

"During this recovery we must make sure we do not make the same mistakes that we made last time we were here," Clyburn said. "There are still communities that have not recovered from the Great Depression."

The No. 3 Democrat in the House, Clyburn has represented South Carolina's sixth congressional district since first being elected to the House in November 1992.

Royce Now is the time for CUs to push on MBLs

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WASHINGTON (3/22/12)--Rep. Ed Royce (R-Calif.), a lead sponsor of legislation that would increase the member business lending (MBL) cap to 27.5% of assets, told Credit Union National Association (CUNA) 2012 Governmental Affairs Conference (GAC) attendees "now is the time" to exert extra effort and get MBL legislation passed by the U.S. Congress.

Click for slide showRep. Ed Royce (R-Calif.) (shown here addressing CUNA's 2012 GAC Wednesday) is a lead sponsor of a House bill to raise the credit union member business lending cap and has underscored that the bill would help provide credit to the country's small businesses without increasing government borrowing. (CUNA Photo)
Royce's comments came just hours before about 4,000 credit unions, in town for the CUNA GAC, launched an effort to visit every one of the 535 House and Senate offices on Capitol Hill in support of the MBL bill and other credit union priorities.

With support from both sides of the aisle Royce's bill (H.R. 1418) has 123 co-sponsors. Similar legislation in the Senate (S. 509) is expected to come up for a vote in the coming weeks. Royce said Wednesday he would bring his bill to the House floor following that Senate vote.

Royce said Congress has a chance to put forward legislation that gives credit unions the opportunity to do what they do best: "loan within their own community."

The MBL bills would inject around $13 billion into the economy, creating as many as 140,000 new jobs, according to CUNA estimates.

Royce, a senior member of the House Financial Services Committee, cited in his GAC remarks that U.S. Small Business Administration statistics that show 80% of MBL loans would be to small businesses that have not been able to access to capital in the past.

"These are small businesses that would not get their loan without us passing this legislation," he said. The MBL cap increase legislation would give these businesses the ability to access capital and lines of credit to hire new employees, and expand their businesses, and "that is what is going to be essential to turning this economy around," Royce added.

Royce said he was proud of the work that credit unions have done to convince members of Congress they should sponsor H.R. 1418 and S. 509.

He told the credit union advocates meeting with their legislators this week to take the time to explain what makes credit unions unique, and urged them to continue their advocacy efforts in their home districts.

"People like their banks, but they love their credit unions, and the reason is the job that you do," Royce added.

Maloney urges patience on Dodd-Frank regulations

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WASHINGTON (3/22/12)--Give regulation resulting from the Dodd-Frank Wall Street Reform and Consumer Protection Act an opportunity to increase safety and soundness within the financial system, Rep. Carolyn Maloney (D-N.Y.) urged credit unions to during a speech at the 2012 Credit Union National Association Governmental Affairs Conference.

"I think most people in the industry feared Dodd-Frank," Maloney said Wednesday.  "I think that we have to give it a chance. I think it is going to function in a way that will make our markets function in a better way."  She added that, when the country's markets are healthy, credit unions can be very healthy.

Maloney emphasized that the Dodd-Frank Act was not intended to create an increased regulatory burden for credit unions.

"Dodd-Frank was not passed because of anything credit unions did," Maloney said of the landmark financial reform package spurred by the country's recent economic meltdown.  "If anything they were the stars during this crisis. It was the nonbanks, the over-the-counter derivatives that needed the attention."

Maloney did say there has been inconsistent application of examination standards by regulators since the financial crisis.

Maloney is a co-sponsor--along with Rep. Shelley Moore Capito (R-W.Va.), who addressed the GAC on Tuesday, and 122 other House colleagues--of the Financial Institutions Examination Fairness and Reform Act. The bill would give financial institutions the right to appeal regulatory exams to an independent ombudsman.

"I know the flexibility that regulators have wanted to build into their process has turned into real inconsistency," Maloney said. "And I have been hearing that financial institutions, including credit unions, have been reluctant to raise those concerns because of the powers that the regulators hold."

GAC sessions wrapped up Wednesday, but the GAC effort continues today with additional visits by credit union representatives with their federal lawmakers on key credit union issues.

Fryzel urges CUs to expand their reach

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WASHINGTON (3/22/12)--Credit unions should think big and set a goal of having every family have at least one account at a credit union, National Credit Union Administration (NCUA) board member Michael Fryzel said at Wednesday morning's session of the Credit Union National Association's Governmental Affairs Conference (GAC).

Click for slide showNCUA board member Michael Fryzel tells the CUNA GAC audience that they are the inheritors of credit unions' long tradition of people helping people. He adds, "But you are more than inheritors, you are now the engine itself." (CUNA Photo)
Credit unions should build on their success and the fact that they are the "preeminent example of how people can succeed by cooperating," Fryzel said.

He added that credit unions should expand their efforts to show that "self-help, not-for-profit, democratically run cooperatives are the best means of helping all Americans gain access to high quality, low-cost financial services."

"(If) you believe in your hearts--and I think you do--that not-for-profit, democratically run cooperatives are a model for championing the classic can-do work ethic and achievement that has distinguished America since its founding, then take the reins and lead the way,'' he challenged his credit union audience.

Fryzel, a board member since 2008 and a former NCUA chairman, credited the industry for succeeding during the recent financial crisis.

He noted that the industry repaired the problems caused by the failure of several large corporate credit unions and extended credit at a "record pace,'' while other financial institutions held back. Those successes, Fryzel said, were indicative of the industry's strength.

"You saw some very dark days and you said we have the best financial services system in the nation and we are not about to let it fail our members and the American people,'' he said.

GAC sessions wrapped up Wednesday, but the GAC effort continues today with additional visits by credit union representatives with their federal lawmakers on key credit union issues.

Johnson says CUs interests will be folded into housing reform

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WASHINGTON (3/22/12)--Senate Banking Committee Chairman Tim Johnson said any housing finance reform will keep the 30-year mortgage and include protections for the role of credit unions and community banks.

In a video address to the Credit Union National Association's (CUNA) Governmental Affairs Conference (GAC) Wednesday, he noted his committee has held several hearings on the reform subject and is still sorting out options for making changes in the housing finance system.

The South Dakota Democrat also noted that his panel had held a hearing on legislation to raise the cap on member business loans to 27.5% of assets, up from 12.25% of assets.  He didn't state a position but said discussion will continue on it. Last week, Senate Majority Leader Harry Reid (D-Nev.) promised that there would be a vote on the measure (S.509), which is sponsored by Sen. Mark Udall (D-Colo.)

Johnson also noted in his GAC video address that he had sent letters to the inspectors general of the National Credit Union Administration (NCUA) and other financial regulators requesting information on their examination processes which could form the basis for a discussion on the topic.

Legislation has been introduced in the U.S. House and Senate that would give financial institutions additional avenues of appeal of their examinations. CUNA has testified before a house subcommittee in favor of the Financial Institution Examination Fairness and Reform Act (H.R. 3461), calling it  "a firm step in the right direction toward ensuring the federal financial institution regulatory agencies conduct fair exams, which are consistent with the law and regulation and ensure safety and soundness."  West Virginia Credit Union League President/CEO Ken Watts was CUNA's witness.

Inside Washington (03/21/2012)

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  •  WASHINGTON (3/22/12)--If Sheila Bair were still heading the Federal Deposit Insurance Corp., as she did between 2006 and 2011, more banks would have failed their stress tests for being over-leveraged, according to a recent MarketWatch interview reported in the March 20 issue of American Banker.  Bair told her interviewer that the Federal Reserve Board should have put a heavier focus on limiting leverage as part of the stress tests of 19 large banks. She said the point of the tests was to take a dry run--see how these 19 would perform in a highly stressed environment. In a stressed situation, Bair said, the market cares only about a bank's leverage ratio--described in the article as the ratio that measures an institution's tangible common equity to total assets. The market just doesn't trust risk-adjusted capital, Bair observed. She called it ill-advised that the Fed drove its decision on dividends based on the institutions' risk-based ratios.  She said she did not think any capital distribution should be allowed that would let a bank's holding company--in a stressed time--hit a leveraged ratio below 4% …

CUs a voice of reason balance Mercer says

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WASHINGTON (3/21/12)--Credit unions are a voice of reason and balance in a time of extremes, have gained a reputation of trust among consumers, and are a very attractive financial services option to many people right now, Credit Union National Association (CUNA) Chairman Mike Mercer said in Tuesday remarks at CUNA's 2012 Governmental Affairs Conference (GAC).

Click for slide show CUNA Chairs present and past; incoming Chair Mike Mercer (l) and former Chair Harriet May (r). Click for a slideshow from day two of the 2012 GAC.
Political views and the media are both becoming increasingly polarized, Mercer noted, and Wall Street banks and Washington politicians and government officials are the "poster children" for polarization. As the polarization continues, Mercer suggested credit unions could shift their motto of "Not for profit, not for charity… but for service" to fit the times. "How about… 'Not for Wall Street, Not for Washington… but for Main Street?," he suggested.

And while credit union's role in the overall scheme of things can seem small at times, "our perch in credit union work puts us in close proximity" to people of modest resources, average educations, and big dreams that "are trying to do good things with their lives," Mercer said.

"Fundamentally, credit unions help people afford life," he added.

"Each credit union has the freedom to serve its members in its unique way, but, I believe, each credit union also has a responsibility to protect and enhance the well-being of our cooperative business model," Mercer said.

Credit union unity can also help defend the cooperative business model against the onslaught of bankers and their trade associations that seek to eliminate "credit union uniqueness," troublesome regulations, and other issues.

For the cooperative business model to endure, engagement from credit union leaders and a determination to create a consensus among these leaders is needed.. Credit union advocates will also need to make their voices heard at local town hall meetings and in the halls of Congress, Mercer added.

Going forward, Mercer said, the combined voice of credit unions could be used to speak "with clarity and courage" and to speak up on behalf of the middle class.

Mercer, who is also president/CEO of the Georgia Credit Union Affiliates, was elected chairman of the CUNA board on Monday.

Udall McCarthy back MBL efforts in Senate and House

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WASHINGTON (3/21/12)--Members of the Senate and the U.S. House both touted their support for member business lending legislation (MBL), but told attendees of the Credit Union National Association's (CUNA) Governmental Affairs Conference (GAC) that lawmakers will need credit unions' help to get the legislation passed.

Sen. Mark Udall (D-Colo.), sponsor of MBL bill S. 509, told the GAC crowd that he is committed to his bill, and plans to introduce it as a potential amendment to any legislation that moves on the U.S. Senate floor this year.

Udall calls his bill a common sense way to help small businesses. It has bipartisan support and Udall considered seeking to have it attached as an amendment to a pending small business bill, the Jumpstart Our Business Startups (JOBS) Act. However, he was not able to because of procedural issues. As a result, Senate Majority Leader Harry Reid (D-Nev.) has begun the necessary steps to bring S. 509 to the Senate floor for a vote as a stand-alone bill.

A vote could on the MBL increase could come in the weeks ahead, Udall said, and he noted that S. 509 could not have come this far without the advocacy efforts of credit unions. The bill has bipartisan support.

Udall said he would find a way to get a vote on his bill, which would increase the MBL cap from 12.25% of assets to 27.5% of assets, as soon as possible.

Credit unions need to fight for what they believe in on Capitol Hill, Udall said, to help members of the U.S. Congress convince their fellow members to support the legislation.

He encouraged the assembled credit union representatives to ask their senators to cosponsor S. 509, or, at the very least, to agree to vote for the bill. "If there are credit unions with capacity to lend, and small businesses that need loans, why not allow our economy to grow?" he asked.

Rep. Carolyn McCarthy (D-N.Y.), who is a cosponsor of the House version of MBL legislation (H.R. 1418) said in her own remarks before the GAC that she could "do the groundwork" and tell her colleagues that it is good legislation, but said she also needs the help of credit union supporters to help get votes.

She encouraged credit union advocates that will meet with their elected representatives as part of the GAC effort to "believe in what [they] are doing" and tell their story to members of Congress.

McCarthy noted that she has heard from many small businesses in her home district in Long Island, N.Y., that were rejected by banks but have now received small business loans from credit unions.

"Your job, because you believe in it, I believe in it, has really helped so many people and small businesses," she said. McCarthy added that she has also heard from bankers in her district that oppose credit union interests, and has told them that now is the time "to let the credit unions serve the communities to the capacity they can, and help our small businesses and get the economy going. That's what's important."

CDRLF application period open to CUs

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ALEXANDRIA, Va. (3/21/12)--Eligible credit unions may now submit applications for the 2012 round of the Community Development Revolving Loan Fund (CDRLF) Loan Program, the National Credit Union Administration (NCUA) announced in Tuesday's edition of the Federal Register.

The CDRLF provides loans and technical assistance to federal and state credit unions that are designated as low-income credit unions, as defined by NCUA regulations. Assets in the CDRLF, including interest earned and appropriations, totaled $17.5 million as of Sept. 30, 2011, and the Obama administration has requested an additional $1.19 million in CDRLF funding in its proposed 2013 budget.

The NCUA noted that Congress has not made an appropriation to the CDRLF for loans for Fiscal Years 2012-2013, but said it expects to lend approximately $11 million in this application cycle. The agency expects the maximum loan amount for this cycle to be around $300,000, but said it could exceed that cap in some circumstances.

The agency said it would accept applications from May 22 until Dec. 31, but warned that available funds may be exhausted before the end of the year.

For more on this CDRLF funding round, use the resource link

CUNA versus NCUA View on regulatory burden

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WASHINGTON (3/21/12)--Credit Union National Association (CUNA) Deputy General Counsel Mary Mitchell Dunn and senior National Credit Union Administration (NCUA) Adviser Buddy Gill offered differing perspectives about the regulatory burden on credit unions.

During a Tuesday afternoon breakout session at CUNA's Governmental Affairs Conference, Dunn noted that during the financial crisis credit unions were the institutions that "primarily got it right,'' but they are still facing an increased regulatory burden from the NCUA, the Consumer Financial Protection Bureau and other agencies.

She noted that more regulatory agencies are issuing rules impacting credit unions than ever before and that when Congress wrote the Dodd-Frank Act credit unions were "collateral damage.'' Dunn said regulators often try to write regulations based on mistakes during the previous financial crisis, and while this is an understandable trend it sometimes results in overreaching.

Northwest Credit Union Association CEO John Annaloro, who moderated the session, noted that a study by his group found that during the two years following the financial crisis, there were approximately 18,000 pages of new regulations that impacted credit unions in some way. He said this represents a "crushing regulatory burden'' that is "unsustainable for any credit union of any size.''

Gill replied that many of the NCUA's rules were mandated by Congress and many of the documents issued by the agency aren't new rules but explanations of existing ones while others contain information about agency programs aimed at helping credit unions. He also pointed out that of the regulations and documents cited in the study, less than 13% came from the NCUA, and the vast majority came from the Federal Reserve.

He also noted that the agency has increased opportunities for public input, including a series of public listening sessions that begin next week. In addition, when the agency issues regulations it tries to give credit unions some flexibility and avoid a one size fits all approach. The agency has also expanded its regulatory flexibility program so that all credit unions, not just CAMEL 1s and 2s, can take advantage of it.

However, Gill noted that the agency can't go too far in relaxing regulations because that would be abdicating its responsibility for protecting the safety and soundness of the credit union system. He said that $26 billion in assets of member deposits are in credit unions with CAMEL 4 and 5 ratings.

Dunn said that while the NCUA had made improvements in the regulatory process, many credit unions are still unhappy with the way their examinations are handled. She added that CUNA will continue to work with the NCUA to ensure that the agency is clearer in what it wants from credit unions.

TCCUSGP scheduled to end Dec. 31

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ALEXANDRIA, Va. (3/21/12)--The National Credit Union Administration (NCUA), in letter to credit unions No. 12-CU-03, reminded credit unions that the Temporary Corporate Credit Union Share Guarantee Program (TCCUSGP) will end, as previously scheduled, on Dec. 31.

The TCCUSGP backs up the National Credit Union Share Insurance Fund's (NCUSIF) coverage of all shares--excluding paid-in-capital and membership capital accounts--at corporate credit unions. This insurance extends beyond the customary $250,000 share insurance level.

All qualifying shares, including existing deposits and new qualifying deposits, will remain fully covered under the share guarantee until Dec. 31, according to the NCUA. Once the TCCUSGP expires on Jan. 1, 2013, NCUA coverage on deposits in corporate credit unions will be limited to the standard maximum share insurance amount of $250,000, the agency said.

The NCUA said it released the letter to ensure that credit unions that conduct business with corporates have the time needed to evaluate their current corporate account holdings and determine whether to make any adjustments necessary to meet their individual risk tolerance.

The agency encouraged credit unions to work with their corporate to explore options that best meet the credit union's specific needs.

The agency in the letter noted that the credit union industry is entering the final phase in the successful stabilization of the corporate credit union system, and said that "all products and services offered by conserved corporate credit unions will be seamlessly transitioned to other providers – with no interruption of service to members," by the end of this year.

For the full NCUA letter to credit unions, use the resource link.

Lawmakers discuss the relationship business of politics

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WASHINGTON (3/21/12)--"We're in a relations business when we're in the law making business," Rep. Lynn Jenkins (R-Kan.) told the audience during a breakout session at the Credit Union National Association's (CUNA) 2012 Governmental Affairs Conference (GAC) in Washington Tuesday.

Jenkins and Rep. Ed Perlmutter (D-Colo.) addressed the importance of establishing relationships with state legislators during a panel discussion entitled "From the State House to Capitol Hill: The Critical Nature of State Advocacy."

"It really is the relationships that make this job what it is," Jenkins said. "I know you would like to think that everyone has access to their lawmakers in the state house or here on Capitol Hill, but it is the ones you know by face and name that are going to be the most valuable to you."

Jenkins told how she developed a relationship with Kansas credit unions when she developed a public-private financial literacy initiative with the Kansas Credit Union Association.

"That relationship has carried over, as you would expect, when I came to Congress," Jenkins said. "I have most of those folks on speed dial. If I have a question these people I worked can give me an honest answer. I won't always agree with them, but I have a healthy working relationship with them, and that's all anyone really wants. The easiest place to start that is at the lowest level, even in your city council," she said.

Perlmutter said it's important to "plant a seed" with lawmakers because they have the power to rewrite laws. He developed his relationship with credit unions while working as an attorney before becoming a public official. In that role he represented credit unions, which helped him understand issues unique to credit unions, such as issues surrounding common bond or public deposits.

"You don't know when that seed is going to germinate," Perlmutter said. "You don't know exactly when something you suggested will come up, but when you focus on public officials, we have the chance to erase what is written and you having to deal within the confines of what is written."

Because of the number of members that credit unions have they have a lot of power with lawmakers, said Perlmutter.

"You have lots of families, lots of consumers, lots of business that are part of your group," he said. "It makes a difference to elected officials know that you have that many people. For me it's probably a majority of my voting population."

Both Jenkins and Perlmutter said credit unions should hold no fear of being too repetitive with their message. If an issue is important to you, "you have to keep pressing," Perlmutter said. Reaching consensus can be difficult, Perlmutter said, noting that legislators "are not going to get a touchdown on every play."

Jenkins said Congress is more polarized than ever. She suggested that the last few election cycles have produced nominees--and ultimately, legislators—on the far left and far right.

"When you look at the body today compared to ten years ago, there just isn't a working majority in the middle," Jenkins said. "It's hard to find that common ground. Until they electorate decides to change it, that just the way it is."

Waters pledges to be CUs best friend if she succeeds Frank

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WASHINGTON (12/21/12)--Rep. Maxine Waters (D-Calif.) promised to be "the best friend credit unions ever had" if she replaces the retiring Rep. Barney Frank (D-Mass.) as the top Democrat on the House Financial Services Committee. Waters is currently the No. 2 Democrat on that panel.

Click for slide show Rep. Maxine Waters acknowledged that some credit unions feel burdened by regulations. Click for a slideshow from day two of the 2012 GAC.
Speaking before the Credit Union National Association's (CUNA) 2012 Governmental Affairs Conference on Tuesday, Waters vowed to "fight on" in support of increasing credit unions' member business lending (MBL) cap from 12.25% of assets to 27.5% of assets.

Waters, who identified herself as a member of Congressional FCU, told the audience she was "among friends" and she thanked attendees for their assistance in offering credit union members a hand during the recent financial crisis.

"Unlike the big banks that have received billions in taxpayer funds, credit unions did not contribute to the financial crisis," Waters said. "Credit unions did not prey on the communities they serve.

"Credit unions never used the growth of the secondary mortgage market to justify departing from the age-old edict of know your [member]. That's because credit unions are not motivated to cut corners at their members' expense. You are part of the communities you serve," she added.

Waters acknowledged that some credit unions feel burdened by regulations stemming from the Dodd-Frank Act and oversight provided by the newly created Consumer Financial Protection Bureau (CFPB).

"To that I say unlike the banks that caused our financial crisis you have an extensive history of making safe, sound and sustainable loans to your members," Waters said. "I believe history gives you an advantage in complying with any consumer protection rules that are issued by the CFPB.

"That history should also provide credit unions with an increased responsibility to provide more small business loans," she said.

"I know that in order for you to truly be effective, Congress has to give you the ability to help small businesses in need of credit," Waters said. "It's clear to me that the real legislative response we need to provide for credit unions is to increase the limitation on small business lending that is set at the arbitrary rate of 12.25%."

Waters said that small business serves as economic engines in underserved areas. She cited small businesses as key job creators.

CUNA and credit unions are urging Congress to increase credit unions' MBL cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity to offer MBLs, inject $13 billion in loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said.

The GAC continues through Thursday.

Capito pledges to remember CU burden in Washington

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WASHINGTON (3/21/12)--Rep. Shelley Moore Capito (R-W.Va.) told attendees of the Credit Union National Association's (CUNA) 2012 Governmental Affairs Conference (GAC) that she will remember their best interests in Washington--particularly when it comes to the burdens of regulation.

Capito noted her recent participation, as a member of the House subcommittee on financial institutions and consumer credit, in a Texas field hearing that specifically asked financial institutions to report the impact new financial regulations are having on their ability to extend credit and stimulate job growth.

She also registered her concerns that a provision in the Dodd-Frank Act that was designed to help credit unions and other small debit card issuer was failing to do so. She said the exemption to exempt financial institutions under $10 billion in assets, such as most credit unions, from the debit card interchange fee cap may not work.

"The Federal Reserve did reshape interchange, but it is still out there as an issue," Capito said. "You are not sure exactly what impact it will have on your individual credit unions. It could impact the services you provide…

"My cautionary flag is that we don't want to push people from low-income brackets out of your credit unions because that can't afford services as a result of any fees you were forced to tack on because of interchange."

A trend that Capito said she finds troubling is the financial institution compliance officers are among the fast growing job positions.

"If you're hiring a compliance officer, where are you diverting your resources from? From your members," Moore Capito said. "You're unable to loan more. You're unable to offer more services. You're unable to do more outreach. You have to do less recruitment because you're worried that the regulator will clip your wings. I think that's contributing to our stagnant economy right now."

Moore Capito said during her field hearings one credit union executive told her that it seemed credit unions had been forgotten during the formation of regulatory policy.

"I'm here to pledge to you that we will not forget about credit unions as we move our discussions through Congress," she said.

Moore Capito thanked CUNA for its support of the Financial Institutions Examination Fairness and Reform Act, a bill she is co-sponsoring with Rep. Carolyn Maloney (D-N.Y.), and a bipartisan group of more than 100 lawmakers. The bill would give financial institutions the right to appeal regulatory exams to an independent ombudsman.

Capito said the bill will eliminate the "disconnect" between financial institutions and regulators, and lend more timeliness to the exam process.

"I think it will provide more certainty for financial institution in providing services and making decisions when regulators make their recommendations," she said.

Political analyst Cook predicts a close election year

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WASHINGTON (3/21/12)--Political analyst Charlie Cook said he expects Mitt Romney to win the Republican presidential nomination, and he believes the general election against President Obama will be close.

Cook told an audience at the Credit Union National Association's Governmental Affairs Conference Tuesday that Romney's
Click to view larger imagePolitical analyst Charlie Cook says he expects Mitt Romney to win the Republican presidential nomination, but he believes the general election against President Obama  will be  close. (CUNA Photo)
challenge is that he must move to the right--probably more than he would like to--in order to get the nomination. But historically, victory in presidential elections usually is decided by a more centrist, independent, voting coalition.

"The middle is the place to be, and we will see how long it takes for Romney to move there" he added.

Cook said the 2012 presidential race likely will be determined by future economic numbers such as unemployment statistics and oil prices, which will have a profound impact on President Obama's approval rating.

"So far, we have seen a completely bizarre political year, during which there have been seven different front-runners among Republican candidates," he said.

But Cook pointed out that Romney now has 48% of the 50% of delegates needed to win the nomination, and that it is simply impossible for candidate Rick Santorum to close the gap.

Cook had some suggestions for convention attendees interested in tracking the ups and downs this political year.

"My advice is don t listen to the gas bags on TV," he said. "Do your own research. Stay with the facts and leave the commentary out."

He conceded some TV analysts offer useful appraisals of political trends, but he said the average citizen would do better by resorting to a more personal approach.

Cook is editor and publisher of The Cook Political Report and a political analyst for the National Journal Group and NBC News.

Sherman CUs advantage members like them

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WASHINGTON (3/21/12)--Rep. Brad Sherman (D-Calif.) said he hopes to convince the U.S. Congress that broadening credit unions' access to capital beyond retained earnings, and increasing the limit on member business lending authority will work together to help all consumers.

Click to view larger imageSmall businesses are desperate for capital, Rep. Brad Sherman (D-Calif.) emphasizes during his Tuesday speech at CUNA's GAC. He called capital the "blood supply" that businesses need to stay healthy.  Sherman is a co-sponsor of legislation to increase the credit union member business lending cap. (CUNA Photo)
"Each needs the other to be effective, he said in a speech before the Credit Union National Association's Governmental Affairs Conference Tuesday. It's critical to provide capital, and let interested credit unions broaden business lending for members.

Small business is especially desperate for additional capital, he added, and allowing credit unions to play a larger role in this sector is critical. Sherman said capital was part of the blood supply that small business needed to remain healthy and competitive.

The congressman told the conference attendees that credit unions were the logical option for increased business lending services. You have one big advantage over banks, he added. Your customers actually like you.

Sherman said he hoped to continue serving credit unions in Congress, even though--for the first time in several years--he is facing a formidable challenge to his reelection because of a realignment of his congressional district.

But he said that so far he is ahead in the polls. I look forward to coming back and resuming his close ties with the credit union sector.

Chabot praises CUs expresses concerns about the economy

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WASHINGTON (3/21/120--Credit unions are "near and dear to my heart,'' and have "played an important role in the history of the country,'' Rep. Steven Chabot (R-Ohio) told attendees of the Credit Union National Association's Governmental Affairs Conference (GAC) on Tuesday morning.

He said credit unions have done an excellent job of being a "source of capital to regular people'' and that's why he has supported efforts to expand lending opportunities for credit unions.

He noted that he is a co-sponsor of legislation that would raise the cap on member business loans from 12.25% of assets to 27.5% of assets and has also sponsored legislation that would increase Small Business Administration loan programs in which  credit unions can participate.

While the economy is improving, Chabot said, the crisis in Europe, Iran's buildup of nuclear arms and rising gasoline prices all have the potential to slow down growth. In addition, he noted that while the unemployment rate has been declining, he believes the data are misleading because they don't account for people who have stopped looking for jobs or are underemployed.

The 2012 GAC runs through Thursday.

Hyland defends need for proactive regulations

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WASHINGTON (3/21/12)--The National Credit Union Administration's (NCUA) efforts to beef up the regulation of interest rate risk  and credit union service organizations are needed because the agency has to protect against future losses to the National Credit Union Share Insurance Fund, according to NCUA board member Gigi Hyland.

She was addressing the Tuesday session of the Credit Union National Association's Governmental Affairs Conference here.

Hyland noted that the agency had been criticized by its own inspector general and Congress' Governmental Accountability Office for not having done enough during the lead up to the financial crisis to protect the safety and soundness of credit unions.

The stronger regulations, she said, represent "guard rails on the roads on which credit unions travel.''

Hyland, whose term expired last summer but who is remaining on the board pending the appointment and U.S. Senate confirmation of a successor, noted that many recent comment letters on various regulatory proposals indicate that credit union leaders are concerned about the growing regulatory burden.

Click for slide show NCUA Board member Gigi Hyland discussed stronger regulations in her address. Click for a slideshow from day two of the 2012 GAC.
She emphasized that she understood these concerns, especially as a result of her time as a lawyer for credit unions. However, the agency wouldn't be doing its job if it didn't force credit unions to prepare for potentially negative developments in the future.

When interest rates rise again, it will have a considerable impact on the balance sheets of credit unions and that is why the agency mandated that most credit unions develop an interest rate risk policy, which includes stress tests, she noted.

She said that credit unions will be especially impacted by higher rates as a result of having increased the number of real estate loans they have made and because they are keeping a lot of first-time, fixed-rate mortgages on their books.

She pointed out that in 1990 65% of credit unions had no first mortgage real estate exposure, 60% have such exposure today.

"Growing real estate and growing deposit bases create opportunities for growth, but must be managed particularly in today's very unusual interest rate environment.

"Put more bluntly, we know interest rates will rise; it's just a matter of time when they will rise.

"And, when rates rise, will credit unions have the mechanisms in place to manage the possible outflow of these interest rate sensitive accounts, given the large portfolio of fixed rate real estate loans?'' she asked.

Hyland also noted that she had traveled extensively during her tenure on the board, which began in 2005, including visits to 39 states and all of the agency's regional offices. This has given her extensive opportunities to find out what are the concerns of industry officials and this has shaped her decision making as a board member, she added.

Woodall praises work of CUs encourages activism

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WASHINGTON (3/21/12)--Because credit unions invest in their communities  they are key to the country's economic growth and credit union executives should remind lawmakers of their  hard work.

That was the message Rep. Rob Woodall (R-Ga.) conveyed in his speech at Tuesday morning's session of the Credit Union National Association's Governmental Affairs Conference.

Woodall also said politicians and credit unions have something in common.

"I'm in the customer service business, all day, every day, just like you,'' noted Woodall, a freshman who represents a district in the suburbs of Atlanta.

And he pointed out that "your members are the drivers of the good things that happen in this economy.''

He noted that surveys show that credit unions and rural electric cooperatives are among the institutions that enjoy the highest degree of respect among consumers, and urged credit unions to use their popularity to try to influence lawmakers.

Woodall, whose candidacy for the U.S. Congress was assisted by efforts of national and local credit union groups, said that the freshmen lawmakers are more concerned about doing the right thing than in getting re-elected.

"They don't care if they get re-elected and feel that they don't have to necessarily put together the best campaign or put out the best press release. But if they do the right thing today, tomorrow and Thursday, the election will turn out well,'' he said.

Inside Washington (03/20/2012)

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  • WASHINGTON (3/21/12)--Federal Housing Finance Agency General Counsel Alfred Pollard said in written testimony for a Brooklyn field hearing before the House Oversight Committee that state and local governments that have approved laws intended to protect consumers threatened by foreclosure are gumming up the foreclosure process, slowing it down to the detriment of all parties involved (America Banker March 20). Pollard said states and localities should pause in their passage of such rules that, he said, build roadblocks to a smooth foreclosure process and find a balance between protections for homeowners and a foreclosure process that works.  Among the localities with new rules he finds troublesome: Washington, D.C. with a mediation law that can extend the foreclosure timeframe by up to 132 days; Worcester, Mass., with an ordinance requiring a $5,000 bond at the time of foreclosure to ensure maintenance of the property involved; and, in Nevada, a law that makes owners of foreclosed properties pay legal fees of homeowners associations that want any unpaid dues …
  • WASHINGTON (3/21/12)--The Federal Deposit Insurance Corp. (FDIC) Tuesday approved two Notices of Proposed Rulemaking (NPR).  One would make limited clarifications and definitional changes to the deposit insurance assessment system for FDIC-insured depository institutions with more than $10 billion of assets.  The proposed rule, according to the FDIC, would fine tune the large-bank assessment system by amending the definitions of leveraged loans and subprime loans used to identify concentrations in higher-risk assets.  The agency noted there were 107 institutions with more than $10 billion in assets, as of Dec. 31, 2011. The other FDIC action would implement a section of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which allows the FDIC, as receiver for a failed systemically important financial institution to enforce and prevent termination of contracts of the institution's subsidiaries or affiliates …

Legislation hearings on tap as CUs visit Hill

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WASHINGTON (3/20/12)--Washington will be packed this week, with credit union advocates taking their message to Washington legislators as part of the Credit Union National Association's (CUNA) 2012 Governmental Affairs Conference, and business will proceed as usual on Capitol Hill, with both the U.S. House and Senate in session.

The top item this week will likely be the release of the House Republican Budget, which is expected to happen today, but the House is also expected to consider bills under suspension of the rules early in the week, and will take up the Protecting Access to Healthcare (PATH) Act (H.R. 5) later in the week.

The Senate will continue to review the Jumpstart Our Business Startups (JOBS) Act (H.R. 3660), and may move on to other domestic violence prevention legislation later in the week.

CUNA staff will also track several hearings this morning, including:

  • A Senate Judiciary subcommittee hearing on student debt;
  • A Senate Banking Committee confirmation hearing for Federal Reserve Board of Governors nominees Jerome Powell and Jeremy Stein, Federal Deposit Insurance Corporation Board of Directors nominee Jeremiah Norton, Office of Financial Research Director nominee Richard Berner, and Troubled Asset Relief Program special inspector general nominee Christy Romero; and
  • A House Financial Services Committee hearing on the state of the international finance system, which will feature testimony from Treasury Secretary Timothy Geithner.
The Senate Banking Committee securities and insurance subcommittee will address investor risks in crowdfunding on Wednesday morning, and a House Small Business Committee hearing on how entrepreneurs can lead economic recovery is scheduled for early Wednesday afternoon. The House Judiciary courts and administrative law subcommittee is also scheduled to discuss federal regulations and regulatory reform under the Obama Administration that afternoon. Small Business Administrator Karen Mills is also scheduled to testify at a Wednesday afternoon House Appropriations subcommittee on financial services hearing on the Small Business Administration's budget for fiscal year 2013.

A Thursday morning House Financial Services financial institutions and consumer credit subcommittee hearing entitled "The Future of Money: How Mobile Payments Could Change Financial Services" has also been scheduled.

Around 1000 bankers will also be in town for this week's American Bankers Association Government Relations Summit, discussing, among other things, how to "out hustle and outmuscle" credit unions, and those bankers are also planning to visit with members of Congress this week, CUNA Senior Vice President of Legislative Affairs Ryan Donovan noted.

Former Sec. of State Rice addresses CUNAs GAC

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WASHINGTON (3/20/12)--Former Secretary of State Condoleezza Rice says China's seemingly booming economy is beginning to show some stresses and strains, which could be attributable to the country's authoritarian management.

Click to view larger image Former Secretary of State Condoleeza Rice, a 30-year member of Stanford FCU, discussed U.S. and international politics, and the ongoing Republican primary, at CUNA's Governmental Affairs Conference  Monday. (CUNA Photo)
She said, during a speech Monday afternoon at the Credit Union National Association's (CUNA) Governmental Affairs Conference (GAC), that China's support has been built on continued prosperity, which sooner or later will begin to slow. She said one indication that China lacks a "confident leadership" is its preoccupation with surfing the Internet to weed out alleged dissidents.

Rice served as Secretary of State under President George W. Bush. At the end of Bush's term, she returned to her position as a Stanford University Political Science Professor.

She began her speech before the CUNA audience by pointing out that she has been a member of Palo Alto, Calif.-based Stanford FCU for 30 years.

During the presentation and question period, Rice covered a number of international, political and governmental issues. In response to one question, Rice said she was not concerned about the current combative nature of the Republican presidential primary. In fact, she said, it might be a constructive.

"During primaries, there is always lots of turbulence. Actually we are having a proxy on what the role of the federal government should be--particularly how big it should be.

"Once we get past this, we will unite in how to change the government's role on health care and other life style issues," she said.

GAC attendees offered advocacy advice

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WASHINGTON (3/20/12)--Attendees of the Credit Union National Association's (CUNA) 2012 Governmental Affairs Conference (GAC) received their advocacy marching orders on Monday, with CUNA staff and a guest speaker briefing a packed conference hall on the latest legislative and political issues, and how best to convey the credit union point of view on these matters.

As around 4,000 credit union advocates are preparing to meet with their federal legislators this week, Ryan Donovan, CUNA senior vice president of legislative affairs, said a top issue for credit unions will be working to increase the member business lending (MBL) cap. Bills that would increase the cap to 27.5% of assets, up from 12.25%, are active in both the U.S. House and Senate, and Senate Majority Leader Harry Reid (D-Nev.) last week said he was working to bring Sen. Mark Udall's (D-Colo.) MBL bill, S. 509, up for a Senate vote.

Credit union advocates should remind legislators during their visits that credit unions stood by small businesses during the financial crisis, and they should be sure to emphasize that increasing the MBL cap is all about allowing credit unions to help small businesses, Donovan said. Capitol Hill visitors need to tout the safety of MBLs, which have the lowest charge-off and delinquency rates of any loans provided by credit unions, he added.

The only thing standing in the way of an increased MBL cap at this point is opposition from the banking industry that was bailed out during the economic crisis and now all-but refuses to lend to small business owners, Donovan said.

Credit union representatives can also take this opportunity to educate their members of Congress on how statutory restrictions on supplemental capital impact credit unions, and how allowing greater access to capital can help them to help their members, Donovan added. Housing finance reform, ATM fees, cyber security issues and the benefits that the credit union tax status could also be discussed during meetings, he said.

The personal stories of credit union members are vital to any credit union advocacy efforts. "If we don't speak up for credit unions, nobody else is going to do it, and their are plenty who will speak against us," Donovan said.

Brad Fitch, president/CEO of the Congressional Management Foundation and former Capitol Hill staffer, said personal stories involving constituents can truly reach legislators, and help communicate why a legislator should support or oppose an issue.

"I have easily been involved in a thousand decisions that Congress has made and I am telling you that constituents matter more than they think," Fitch said.

"You have the most powerful information that legislators need: how it impacts their constituents," he said, adding that that information is "more important than any congressional research report, and more valuable to them."

Fitch recommended that visiting credit union representatives know what committees their legislators serve on, know what legislation they've introduced, and even know when their picture appears appear in the local newspaper.

"They're really normal people and they like to do a chit chat at the beginning of the meeting," he said. He also suggested advocates communicate frequently with lawmakers to build a relationship.

These advocacy efforts will be even more important as November's federal and state elections approach, and Richard Gose, CUNA's senior vice president of political affairs, said credit unions have a chance to impact races this November, and develop relationships with up and coming legislators that will listen to credit union concerns once they reach office.

Gose added that the loyalty of credit union members can go a long way when credit unions seek support in Congress.

This type of political advocacy can be just as effective on the state level, Pat Sowick, CUNA senior vice president of league relations, said. The relationships that credit unions can develop now, while legislators are in state governmental positions, can reap benefits for years to come as some state legislators move on to federal office, she added.

Cheney says CUs on the rise in GAC opening remarks

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WASHINGTON (3/20/12)--Credit Union National Association (CUNA) President/CEO Bill Cheney said credit unions are "on the rise" and offered attendees of CUNA's Governmental Affairs Conference (GAC) plenty of reason for optimism during his opening remarks on Monday.

CUNA's GAC runs through Thursday.

Cheney noted that overall credit union net worth--which never dipped below "well capitalized"--has rebounded, after bottoming out in 2009. At the end of 2011, credit unions had reached 10.2% net worth, nearly $100 billion--a 41.2% increase over the previous year. CUNA economists predict credit union net worth ratio will reach 10.6% in 2012.

"That's a testament to sound management by credit unions--making the tough decisions for their institutions," Cheney said.

Loan growth is also on the rise again, he said. In 2012 loan growth is expected to by 4% over 2011--and by 6% next year. Later this year credit unions will reach more than $1 trillion in total assets, Cheney added.

"More and more consumers are looking to credit unions as their best option in financial services," he said. "They are looking for ways to beat the high fees and costs of banks. And those that own businesses are looking for a ready source of credit, which the banks aren't giving them."

In fact, credit unions added more than 1.3 million members last year before and after "Bank Transfer Day," Nov. 5. Cheney also introduced Bank Transfer Day founder Kristen Christian, who stressed the importance of passing member business lending cap increase legislation.

Christian encouraged legislators to "think of our communities, and raise the member business lending cap so we can build a brighter tomorrow by working together today."

CUNA's Cheney reiterated that, despite challenges, credit unions are in a position of strength.

"We're stronger financially, have incredible public support, arguably the best press coverage that we've ever had, a new, bolder approach on Capitol Hill--and strong, determined champions in Congress," he said.

"Plus, we have the dedication and commitment of credit union staff and volunteers across the nation. With all of that going for us, there can only be success--and the best times for our movement--ahead of us," Cheney said.

Follow along with CUNA blogs instant GAC coverage

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WASHINGTON (3/20/12)--The freshest news and notes from the Credit Union National Association's (CUNA) 2012 Governmental Affairs Conference (GAC), and up-to-the-minute coverage of key GAC speakers and sessions, will be available on its GAC news blog, CUNA NewsWire.

Readers can access NewsWire via a linking button on News Now's headlines page. More than 4,000 credit union representatives are in town for CUNA's premier conference featuring addresses by top policymakers, and more.

CUNA Editorial Communications Vice President Lisa McCue, Web Assistant Editor Ron Jooss, and Communications Specialist Darryl Tait will provide the latest news from GAC sessions, including key breakout sessions. For full coverage, read CUNA's daily online news service News Now, keep up with NewsWire, and follow News Now's twitter feed, NewsNowLiveWire. CUNA News Now, and others, will be using the hashtag #CUNAGAC12 on their tweets.

Find all these news resources on the News Now headlines page at www.cuna.org. Use the resource link below to access the GAC Blog.

Also, the League of Southeastern Credit Unions is presenting video reports during the GAC through Thursday. Use the link to access those reports. And CUBE TV, the official video portal of the Michigan Credit Union League & Affiliates, will provide a daily wrap-up of highlights and visits with Michigan's congressional delegation.

May Cheney reflect on pivotal year at CUNA annual meeting

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WASHINGTON (3/20/12)--Credit Union National Association (CUNA) President CEO/Bill Cheney and outgoing board chairman Harriet May, CEO of GECU, El Paso, Texas, reflected on a "pivotal' year for credit unions and told 2012 CUNA Governmental Affairs Conference attendees they had an opportunity to be a "big voice" in Washington this week.

The CUNA GAC runs through Wednesday, with additional Hill visits to federal lawmakers scheduled for Thursday.

Cheney noted how credit unions added significant numbers of new members this year, reasserted themselves through grassroots power, and won unprecedented press coverage, in part through the momentum surrounding Bank Transfer Day (BTD), held on Nov. 5.

Kristen Christian, the young BTD organizer who reported spending 20 hours a day meeting commitments related to the event in the days leading up to Nov. 5, was greeted enthusiastically when she took the CUNA GAC stage prior to Cheney's remarks.

Cheney also hailed credit unions for efforts to attack the regulatory burden they face. One in three comment letters delivered to the National Credit Union Administration urged the agency to dial down regulations, Cheney said. CUNA developed the Credit Union Exam Bill of Rights and the Examination Reporting Form--tools for credit unions to use to illustrate the impact of burdensome regulation.

Click for slide showExiting CUNA Board Chairman Harriet May addresses the 2012 CUNA GAC. (CUNA Photo)
In her comments, exiting CUNA Board Chairman May said CUNA's top regulatory issue is to relieve the regulatory burden of its members.

"It's a burden we need a relief from," May said.

CUNA helped credit unions generate more than half of the 11,000 comments the Federal Reserve Board ultimately received on its proposed debit card interchange rule, imposed under the Dodd-Frank financial reforms, pointing out key issues and needed changes for credit unions in the proposal, Cheney said.

In four months, CUNA and state credit union leagues helped to generate more than 70% of 600,000 credit union contacts with Congress in support of "stop, study, start over" on debit interchange legislation.

In addition to regulation and interchange, CUNA testified eight times before U.S. Senate and House committees, and filed nearly 70 letters with senators and representatives on issues such as data and cyber-security, non-resident alien deposits, patent reform, flood insurance, regulatory oversight reform, Cheney reported to the credit union audience.

CUNA also helped credit unions save money, Cheney noted. Through CUNA Strategic Services, owned jointly by CUNA and the leagues, credit unions saved $30 million through alliance relationships. As a result, CSS contributed nearly $3.2 million back to CUNA and the credit union system, offsetting dues and providing more resources to advocate for credit unions.

May will retire as CEO of GECU March 31.

"It has been a pleasure serving you," she said. "Go forward and fight for credit unions."

NCUA sets meetings to hear CU concerns

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WASHINGTON (3/21/12)--The National Credit Union Administration (NCUA) will host a series of "listening sessions" to gather credit union comment between May and July, NCUA Chairman Debbie Matz announced at the Credit Union National Association (CUNA) 2012 Governmental Affairs Conference (GAC) on Monday.

Click for slide showNCUA Chairman Debbie Matz. Click for slideshow of day one at the 2012 GAC.
The sessions, which will begin on May 2 in Boston, Mass., will center on how NCUA examination processes can be improved and how the agency can reduce or streamline existing regulations. (Bill Myers, director of the NCUA's Office of Small Credit Union Initiatives, addressing a crowd of small credit union representatives Sunday at the GAC, said the NCUA is considering streamlining the examination process for small credit unions. See News Now March 19)

Matz encouraged GAC attendees, "What you have to say is important, and sometimes it helps to discuss issues face-to-face."

The agency has also scheduled a May 9 session in Alexandria, Va.; a June 5 session in St. Louis, Mo.; a June 12 session in Orlando, Fla.; a July 10 session in San Diego, Calif.; and a July 31 session in Denver, Colo. All meetings are planned to begin at 1 p.m. and end at 4 p.m.

Matz in her remarks also asked what credit unions would look like in 2034, the 100th anniversary of the Federal Credit Union Act, and outlined future success for credit unions.

For the credit union system to continue to grow, the NCUA must do its part to ensure the credit union system prospers by adhering to its mission of safety and soundness while imposing the lightest possible regulatory burden, Matz said.

As the credit union system continues to stabilize from the pressures of the country's economic meltdown, credit unions must look beyond the short term and take the long-term view to capitalize on the strengths of the system, she added.

Credit unions must take actions necessary to keep them strong, including exercising due diligence, ensuring their board members are properly trained, and focusing on strategic planning, Matz said.

Noting that the average age of a credit union member is now 47, Matz urged credit unions to work harder to woo younger membership, for the good of their own institutions and the credit union system as a whole.

Young people expect services like mobile banking and online bill-paying, immediate service around the clock, and to open accounts and get approved for loans online. "If you don't offer what they expect, they're going to take their business elsewhere. That's why it's absolutely essential that you use all the tools at your disposal to win over the next generation," she said.

It is also vital for credit unions and the NCUA to work together to support beneficial legislation, Matz said, noting the promise that increasing the member business lending cap and allowing greater access to supplemental capital hold for credit unions.

"If we, together, find common understanding on our distinct roles, as well as our shared goals, I believe that in 2034, credit unions celebrating their centennial will look back at all the progress we have made together, and see it for what it is: a new beginning," Matz said.

Cordray says CFPB will help level playing field for CUs

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WASHINGTON (3/20/12)--Consumer Financial Protection Bureau Director Richard Cordray noted Monday that credit unions provide "high quality products and services" to their members.

He said that the not-for-profit model makes credit unions unique and especially pro consumer. He praised credit unions for their efforts on financial literacy, including the mortgage classes that many of them hold.

Click for slide showCFPB Director Richard Cordray. Click for slideshow from day one at the 2012 GAC.
"Your model is just as sound today as it ever was,'' Cordray said during a speech at Monday afternoon's session of the Credit Union National Association's (CUNA) Governmental Affairs Conference (GAC).

CUNA's GAC runs through Thursday.

Hoyer praises CUs for helping people realize their dreams

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WASHINGTON (3/20/12)--House Minority Whip Steny Hoyer (D-Md.) praised credit unions for the "remarkable'' role they have played in helping make the middle class's "lives and dreams possible.''

Hoyer noted that his mother had been an employee of a credit union and that he had been taught about the importance of credit unions at a young age. Those lessons, combined with the good work of credit unions, have been the key reasons he has always been a supporter of the credit union movement, Hoyer explained.

Click for slide showRep. Steny Hoyer. Click for slideshow from day one at the 2012 GAC.
He made his comments during a speech at Monday afternoon's session of the Credit Union National Association's Governmental Affairs Conference.

"People live in a more stable and prosperous country because of the work you do,'' he said. "The services you provide make a real difference in the lives of the 90 million people who are your members.''

Hoyer, the second-ranking member of the Democratic leadership, said legislation--currently being considered by the U.S.  Congress and aimed at encouraging more business expansion and greater access to capital--would help the economic recovery, which is just now taking off. Some of the proposals are intended to create more manufacturing jobs and if this happens it will create a more prosperous workforce since those jobs tend to be higher paying, he noted.

In addition, he said there needs to be changes in the tax code and regulations to create a more favorable business environment.

Hoyer praised the efforts of Congress to strengthen the policing of financial service providers whose actions caused the financial crisis. He said that the Dodd-Frank Act, which Congress passed in 2010, was aimed primarily at ensuring that the big banks never again took undue risks that required government bailouts.

He noted that "credit unions have never needed a bailout.''

He also said that it is incumbent upon Congress to make progress to contain the growth of the debt and deficit. He said there must be reductions in both mandatory and discretionary spending because bequeathing this level of debt to the next generation is "immoral.''

Woodward and Bernstein What if it happened now

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WASHINGTON (3/20/12)--Journalists Bob Woodward and Carl Bernstein, whose reporting helped uncover the Watergate scandal, suggested the stories they published back then might not have the same historic impact today.

The bombshell revelations of the time helped trigger a chain of events that eventually ended in the resignation of President Richard Nixon, and the arrest and conviction of former White House staff members, and other government officials.

But the two journalists, in an appearance before the Credit Union National Association's Governmental Affairs Conference here in t
Click to view larger image Journalists Bob Woodward (background) and Carl Bernstein (foreground), whose reporting helped uncover the Watergate scandal, suggested the scandal, which helped trigger a chain of events that eventually ended in the resignation of President Richard Nixon, may not have had the same impact on Congress, the media, or the average citizen, if it happened today. (CUNA Photo)

he Washington Convention Center, said they are not convinced that today the present Congress, the media, and the average citizen would react the same way.

"Back then, the system worked," Woodward said.  "People did everything in a systematic way."  He noted the congressional Judiciary Committees at the time voted unanimously to investigate the alleged misconduct detailed in their stories.  "Today, you see the Judiciary Committees totally polarized," he added.

"Also, there is a totally different media atmosphere today," Bernstein told the CUNA group. "There are not as many people of conscience. It's harder to find someone who will step out of the mold." Bernstein suggested the media may simply be reflecting its audience.

He said today most of those using the many platforms of information, such as the Internet, appear to be seeking data intended to reinforce their own interests and views.

Both Woodward and Bernstein emphasized they could not have written those celebrated news stories back then without the support of their newspaper, The Washington Post. They especially emphasized the role of publisher Katherine Graham. "She was totally intellectually engaged," Bernstein said.

"She knew what we were doing, but she was not telling us what to do."

He said this was true even though the two now-renowned journalists were at the time members of the newspaper's less prestigious city staff, rather than its elite  political reporting  group.

Inside Washington (03/19/2012)

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  • WASHINGTON (3/20/12)--The U.S. Treasury Department's Community Development Financial Institutions Fund (CDFI Fund) is accepting public comment on its CDFI Program application. Commenters can give their opinion on whether targeting CDFI funds into highly distressed communities an appropriate use of CDFI Program funds. The Fund is also asking if their application should be modified to ease paperwork burdens, and whether the application asks the appropriate questions to determine an applicant's health and viability. Potential CDFI Program applicants, community and economic development trade groups, and members of the general public can comment, the CDFI Fund said. The CDFI Fund will accept comment until May 18 …
  • WASHINGTON (3/20/12)--Richard Cordray, director of the Consumer Financial Protection Bureau (CFPB) was challenged by reporters last week at the Society of American Business Editors and Writers 49th annual conference in Indianapolis who asked Cordray if the nascent bureau has enough power to be effective in its policymaking (American Banker March 19). Cordray told the press crowd that the bureau already has come far in its efforts to regulate the consumer side of the financial services industry. Cordray said that while the federal financial regulators continue to regulate the financial institutions under their respective jurisdictions, the CFPB has authority over those institutions in terms of how they treat consumers.  He said no agency can comprehensively regulate the entire national banking industry, and the CFPB is part of the comprehensive regulatory structure. Credit unions with less than $10 billion in assets are exempt from CFPB oversight …
  • WASHINGTON (3/20/12)--Borrowers have a new route to file suit against mortgage servicers that balk at providing modifications for troubled mortgage loans. An appellate court decision that came down earlier this month may inspire some new lawsuits which could, in turn, bog down the Home Affordable Modification Program (HAMP) through drawn-out litigation. Judge Kenneth Ripple wrote in his opinion on March 7 that the U.S. Treasury Department, charged with overseeing HAMP, was notably absent in the mortgage servicers case and added that adjudicating the matter would have been assisted greatly had the U.S. entered the case, even as a "friend of the court" via an amicus brief ...

Collaboration is key to small CU survival panelists say

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WASHINGTON (3/19/12)--Collaboration was the theme at Sunday's small credit union roundtable, as Drew Egan of the Michigan Credit Union League & Affiliates and CU Corp and credit union CEO Jon Hernandez shared their own methods for boosting credit union cooperation in their states at the Credit Union National Association's (CUNA's) 2012 Governmental Affairs Conference (GAC).

Click to view larger image Click for larger view

Jon Hernandez (left) describes how southern California credit unions have banded together to reduce costs and improve their own operations (CUNA Photo)
Also, Bill Myers, director of the National Credit Union Administration's (NCUA) Office of Small Credit Union Initiatives, told the session's attendees that the OSCUI itself is looking for ways to foster greater collaboration among small credit unions.

He said the agency is looking into devising a less burdensome examination format for smaller credit unions, and focusing more closely on the types of risks that are more prevalent at small credit unions. Examinations for smaller credit unions could ultimately be separate and far simpler than examinations for larger credit unions, he said.

The Michigan league's Egan detailed the league's shared branding initiative, which aims to bring credit unions of all sizes in that state under shared branding and cooperative advertising to create greater value for Michigan credit unions. The goal is to help increase awareness of the credit union brand, with a particular emphasis on reaching out to potential members between 18 and 35 years of age.

Noting that credit unions "have always known that [they] are better when [they] work together," Egan said the collaborative project will also help with product development, and develop ways to enhance the member experience across the credit union landscape. The initiative also aims to improve back-office collaboration for credit unions, and Egan said greater back-office collaboration could ultimately serve as an alternative to mergers for smaller credit unions.

Egan said the league plans to begin working on the integrated marketing approach with 70 credit unions within the next few months, and will work to gradually spread the program throughout the state. Egan said the program will also work with credit unions that initially sign on for the joint-marketing project to determine if they are interested in deepening their collaborative work.

The model used in Michigan can be used across the country, he said.

Hernandez, CEO of three credit unions in Southern California (Mattel FCU, CalCom FCU and City of Downey FCU), discussed the Southern California Credit Union Alliance (SCCUA)--a forum for collaboration and cooperation focused on helping small credit unions thrive by reducing operating costs and sharing best practices. The SCCUA is comprised of more than 60 member credit unions with a combined 115 branches and combined assets of around $7 billion. The SCCUA credit unions serve a combined 716,000 members.

The SCCUA has held events as varied as strategic planning sessions, staff training sessions, and a "credit union Olympics" to boost collaboration. These collaborative efforts bring together not only credit union executives but credit union staff as well. SCCUA members have shared offices, ATMs, and even employees, with four of the member credit unions banding together to hire a shared compliance officer, Hernandez said.

This type of employee sharing can create substantial salary and benefit savings, and member credit unions are also considering sharing investment, business loan, and mortgage officers, as well as marketing and business development staff and other positions, he said. Data processing, call center, and collections personnel could also be shared, and Hernandez also cited an example of shared branching between South Carolina Postal CU and City of Downey CU as a mutually beneficial situation that has been developed through his SCCUA work. Both Egan and Hernandez said collaboration between small credit unions is vital for survival.

CUNA senior staff Kathy Thompson and Ryan Donovan also addressed the session on compliance and legislative issues, respectively, and CUNA President/CEO Bill Cheney welcomed all at the roundtable to the GAC. Allied CU President/CEO Frank Michael and Robert Hoel, professor emeritus for the College of Business at Colorado State University, also appeared at the roundtable. The session was moderated by CUNA Vice President of Economics and Statistics Mike Schenk.

2012 CUNA GAC kicks off today

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WASHINGTON (3/19/12)--The 2012 edition of the Credit Union National Association's (CUNA) Governmental Affairs Conference (GAC), which will give over 4,000 credit union representatives from across the country access to high profile government speakers and information on the latest credit union issues, officially kicks off today.

CUNA CEO Bill Cheney will welcome attendees to the conference today, and National Credit Union Administration (NCUA) Chairman Debbie Matz, journalistic duo Bob Woodward and Carl Bernstein, House Minority Whip Steny Hoyer (D-Md.), Consumer Financial Protection Bureau (CFPB) Director Richard Cordray, and former Secretary of State Condoleezza Rice are also scheduled to speak.

 
CUNA will also hold its 78th Annual General Meeting, the association's yearly business meeting, on Monday.

GAC speakers include 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.), retiring Rep. Barney Frank (D-Mass.), and Reps. Jeb Hensarling (R-Texas), Steve Chabot (R-Ohio), Brad Sherman (D-Calif.), Ed Royce (R-Calif.), Ron Woodall (R-Ga.), Shelly Moore Capito (R-W. Va.), Carolyn Maloney (D-N.Y.), Carolyn McCarthy (D-N.Y.) and Maxine Waters (D-Calif.). Sens. Jon Tester (D-Mont.), Mark Udall (D-Colo.) and Rand Paul (R-Ky.) are also scheduled to speak.

The GAC's Tuesday program will feature political discussion from pundit Charlie Cook and remarks from NCUA Board Member Gigi Hyland, and breakout sessions on credit union advocacy, examination issues, the 2012 economic forecast, the upcoming 2012 elections, and what the CFPB means to credit unions.

Reps. Ed Perlmutter (D-Colo.) and Lynn Jenkins (R-Kan.) will also discuss the relevance of legislative advocacy at the state level at a Tuesday breakout session discussion entitled: From the State House to Capitol Hill--The Critical Nature of State Advocacy. Ron McDaniel, president/CEO of Glendale-based California CU, will moderate the discussion.

Many of the legislators listed above, and NCUA Board Member Michael Fryzel, will speak on Wednesday before credit union representatives Hike the Hill and discuss credit union issues with all 534 congressional offices.

The weather in Washington is expected to be warmer than usual, with highs in the 70s expected for much of the week. And while Washington's annual Cherry Blossom Festival will officially start well after the GAC has concluded, the cherry blossom trees around the tidal basin were expected to begin blooming Sunday, when the GAC is in full swing.

The 2012 GAC will be at the Washington Convention Center, its fifth year there since the conference outgrew its long-time locale at the Hilton Washington.

Use the resource link below for more GAC information.

CUNA blog offers instant coverage of GAC

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WASHINGTON (3/19/12)--The freshest news and notes from the Credit Union National Association's (CUNA) 2012 Governmental Affairs Conference (GAC), and up-to-the-minute coverage of key GAC speakers and sessions, will be available on its GAC news blog, CUNA NewsWire.

Readers can access NewsWire via a linking button on News Now's headlines page. More than 4,000 credit union representatives are in town for CUNA's premier conference featuring addresses by top policymakers, and more.

CUNA Editorial Communications Vice President Lisa McCue, Web Assistant Editor Ron Jooss, and Communications Specialist Darryl Tait will provide the latest news from GAC sessions, including key breakout sessions. For full coverage, read CUNA's daily online news service News Now, keep up with NewsWire, and follow News Now's twitter feed, NewsNowLiveWire. CUNA News Now, and others, will be using the hashtag #CUNAGAC12 on their tweets. 

Find all these news resources on the News Now headlines page at www.cuna.org. Use the resource link below to access the GAC Blog.

Also, the League of Southeastern Credit Unions is presenting video reports during the GAC through Thursday. Use the link to access those reports. And CUBE TV, the official video portal of the Michigan Credit Union League & Affiliates, will provide a daily wrap-up of highlights and visits with Michigan's congressional delegation.

Inside Washington (03/16/2012)

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  • WASHINGTON (3/19/12)--UnionBanCal Corp., a subsidiary of Bank of Tokyo-Mitsubishi UFJ, agreed to buy Pacific Capital--one of the banks the Treasury Department invested in through the Troubled Asset Relief Program (TARP)--for $1.5 billion in cash last week. The Treasury invested $180 million in Pacific Capital in 2008, and would get about $165 million in exchange for its 11% stake if the deal is finalized (American Banker March 16). That equates to about a 90 cents on the dollar return on the Treasury's TARP investment. In 2010, the Treasury agreed to take its stake in preferred shares, which it converted to common equity at a 63% discount as a condition of a $500 million recapitalization plan. In agreeing to discounts on recapitalizations and acquisitions, Treasury attempted to avoid more bank failures, the Banker said. As of January, 13 banks that received TARP funds had failed, squandering $600 million of investments, according to a report to Congress from the TARP special inspector general …
  • WASHINGTON (3/19/12)--Fannie Mae has issued new guidelines that prohibit servicers from billing the government-sponsored enterprise for the cost of administering force-placed insurance programs or paying themselves commissions (American Banker March 16). "Fannie Mae is clarifying its requirement for reasonable reimbursable expenses for lender-placed insurance, the guidelines said. "Any servicer request for reimbursement of lender-placed insurance premiums must exclude: any lender-placed insurance commission earned on that policy by the servicer or any related entity, costs associated with insurance tracking or administration, or any other costs beyond the actual cost of the lender-placed insurance policy premium." Fannie previously said it will request proposals from major force-placed insurers to directly provide their insurance to Fannie. The two developments indicate that Fannie will no longer bear some of the costs traditionally associated with force-placed insurance …
  • WASHINGTON (3/19/12)--Senate Democrats pressed their case for the use of principal write-downs for troubled homeowners during a hearing of the Senate housing subcommittee Thursday. Democratic Sen. Robert Menendez (D-N.J.) said while private-sector firms use principal reduction in some cases, the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, has refused to do so (American Banker March 16). Last month FHFA Acting Director Edward DeMarco told the Senate Banking Committee that the agency believes principal reduction would be more costly to U.S. taxpayers than principal forbearance. Private banks are taking principal reductions on about 20% of their own portfolio loans, are finding it more profitable than other types of mortgage modifications, Menendez said …

FinCEN releases 2012-2016 strategic plan

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WASHINGTON (3/16/12)--Promoting stronger anti-money laundering (AML) and counter-terrorist financing (CFT) policies and programs worldwide are among the many goals that the Financial Crimes Enforcement Network (FinCEN) set in its 2012-2016 strategic plan.

FinCEN said it would work with its global partners to develop new AML/CFT policy and best practices, enhance bilateral and multilateral engagement with foreign regulators on AML/CFT regulation and compliance, and promote stronger global AML/CFT regimes.

FinCEN Director James Freis added the agency will work closely with law enforcement, federal and state regulators, and foreign counterparts to keep financial systems transparent and crime resistant. The agency also noted the importance of analyzing and sharing information to help detect and deter financial crime, and ensuring that data the agency collects remains useful in its strategic plan for the 2012-2016 fiscal years.

Another emphasis will be promoting "constructive dialogue" on how financial institutions can better focus their efforts on serving customers, not criminals, Freis added.

For the full FinCEN release, use the resource link.

CUs INatl JournalI to help kids hospitals at RNC DNC

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WASHINGTON (3/16/12)--The Credit Union National Association (CUNA) and National Journal Group will team up to honor the Republican and Democratic National Conventions by restoring, refreshing and revitalizing therapeutic playgrounds at All Children's Hospital and Levine Children's Hospital in St. Petersburg, Fla., and Charlotte, N.C., respectively.

CUNA, credit unions and the National Journal will work to make much-needed improvements to outdoor play areas at each of these hospitals in the months before this summer's national political conventions. The effort represents credit unions' tradition of honoring each national political convention city with a "leave-behind" project that will serve the local communities long after the conventions have left town.

At Levine Children's Hospital in Charlotte, the project will convert existing outdoor rooftop space on the hospital's 12th floor into a dynamic play space that will include a touch-activated light and color "bubble wall," outdoor play equipment, and much needed environmental improvements.  At All Children's Hospital in St. Petersburg, an existing playground will be retrofitted with special equipment designed to assist in the rehabilitation of children suffering from a variety of illnesses and accidents.

CUNA President/CEO Bill Cheney said credit unions "are at their core about people helping people," and noted there could be no better way to help the communities in these two convention cities "than to give the children and their families at these hospitals a place to play and heal."

National Journal Group president Andy Sareyan said his organization is proud to take part in these projects.

The two projects will cost an estimated $600,000, and the cost of the renovations will be paid for with funds raised by credit unions nationwide. The Carolinas Credit Union Foundation, representing credit unions belonging to the North Carolina Credit Union League and the South Carolina Credit Union League, and the Southeastern Credit Union Foundation, and affiliate of the League of Southeastern Credit Unions, are spearheading the fundraising efforts for Levine Children's and All Children's respectively.  CUNA Mutual Group, an insurance and financial services provider for credit union members, is also providing support for the undertaking.

CUNA will officially kick off the projects and begin fundraising efforts at next week's Governmental Affairs Conference in Washington, D.C.

Diversity plan approved at NCUA meeting

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ALEXANDRIA, Va. (3/16/12)--The agency's diversity and inclusion strategic plan and technical changes were both approved at Thursday's brief National Credit Union Administration (NCUA) open board meeting.

The NCUA Diversity and Inclusion Strategic Plan, which was unanimously approved by the board, "will add more momentum toward building and sustaining a diverse NCUA work force" and brings the agency's efforts "to advance equal opportunity, diversity, and inclusion within NCUA" into sharper focus, NCUA Chairman Debbie Matz said.

The plan focuses on the agency's requirements for its own work force and use of vendors, but the NCUA and other regulators will also soon begin reviewing diversity policies and practices of the institutions they regulate. The agency has discussed how to approach these reviews with the Credit Union National Association, the National Association of State Credit Union Supervisors, credit unions and state credit union leagues, and others. CUNA and the leagues have stressed that NCUA must do all it can to minimize any new reporting or compliance requirements under this authority as well as the agency's undue interference in credit union operations.

The NCUA-approved technical changes came in the form of a final rule that immediately affects Parts 701, 760, and 790 of NCUA regulations, which address non-discrimination requirements, flood insurance and the agency's structure.

The final rule shifted responsibility for discrimination complaints that are received under the Fair Housing and Equal Credit Opportunity Acts to the NCUA's Office of Consumer Protection. Those complaints previously were sent to the NCUA's Office of Examination and Insurance. The NCUA also approved non-substantive changes to standard flood hazard determination forms, replacing the Federal Emergency Management Administration address listed on the form with that agency's website, fema.gov.

The agency also released its first quarterly financial report of 2012. (See related News Now story: NCUA report shows CU system improvement)

For more on the NCUA meeting, use the resource link.

NCUA report shows CU system improvement

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ALEXANDRIA, Va. (3/16/12)--The latest report on the financial status of the credit union system, which was released at Thursday's National Credit Union Administration (NCUA) open board meeting, reflects the positive trends the credit union system is experiencing, with the agency reporting a National Credit Union Share Insurance Fund (NCUSIF) equity ratio of 1.30% as of Dec. 31.

NCUA Chief Financial Officer Mary Ann Woodson reported that as of year-end 2011, there were 409 low-rated CAMEL 4 and 5 credit unions, representing 3.31% of total insured shares and accounting for approximately $26.3 billion of total credit union system member shares. There were 1,741 CAMEL 3 credit unions, representing 15.9% of insured shares, or $126.5 billion, the NCUA added. In total, the amount of insured shares held in CAMEL Code 3, 4, and 5 credit unions decreased by 4.2 percentage points from 2010's end-of-year total of 23.5%.

There were 16 credit union failures in 2011, down from 28 in 2010, the NCUA report added.

NCUA Chairman Debbie Matz highlighted a decrease in the NCUSIF's reserves, which fell to $606.6 million, well down from the $1.2 billion total set aside at the beginning of 2011. The reduction was almost entirely due to a decrease in future expected failure costs rather than from actual losses due to resolutions of failed credit unions, and Matz said the agency would use the year-end reallocation from the NCUSIF to lower corporate stabilization fund assessments.

For more on the NCUA board meeting, use the resource link.

Senate majority leader Reid pledges vote on MBL

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WASHINGTON (3/16/12)--U.S. Senate majority leader Harry Reid (D-Nev.) and Sen. Mark Udall (D-Colo.) both spoke in the Senate floor Thursday in favor of legislation to increase the credit union member business lending (MBL) cap.

Reid indicated that he has been working with Udall to attach the MBL bill to a pending small business bill, the Jumpstart Our Business Startups (JOBS) Act. (See News Now March 15.) Under the process to which the Senate has agreed for consideration of the jobs bill, the Udall amendment can only be added by unanimous consent and indications are that effort would not likely be successful.

However, leader Reid indicated to the Senate body that he has begun procedural steps to bring the Udall bill (S. 509) to the floor as a stand-alone bill.  No timetable was given, but Reid pledged there would be a vote on the bill, which would increase the MBL cap to 27.5% of a credit union's assets, up from 12.25%.

Udall, Wednesday night and again Thursday morning to his Senate colleagues on behalf of the MBL bill, blamed what he said could only be called a "strange" government MBL cap with keeping needed credit away from the country's small businesses.

He said that credit unions stand ready and able to provide additional credit to their small business members, but that hundreds of the financial cooperatives are currently impeded by the low statutory cap.

The Senate floor discussion occurred just days before more than 4,000 credit union representatives are scheduled to hit Washington, D.C. to attend the Credit Union National Association's (CUNA's) Governmental Affairs Conference. A standard feature of the GAC is that the representatives meet with their delegations of federal lawmakers to discuss key issues, such as the pending House and Senate bills that would increase the MBL cap.  This year, credit unions will visit each of the 535 House and Senate offices to drive home the MBL message and discuss other key topics.

CUNA President/CEO Bill Cheney said after the senators' floor statements, "I cannot stress enough how critical next week's meetings will be to credit unions' success on this issue." He encouraged credit unions, in advance of those meetings, to continue to reach out to all senators to encourage them to support the Udall bill.

CUNA coalition seek dismissal of merchant interchange suit

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WASHINGTON (3/16/12)--The Credit Union National Association (CUNA) Thursday joined a broad coalition of trade associations representing thousands of small and large financial institutions to file an amicus brief in a lawsuit brought by merchants against the Federal Reserve Board's rule that sets a debit interchange fee cap.

The joint brief describes how small and large financial institutions are harmed by the Fed's tight fee ceiling. It underscores that consumers have not seen any pricing benefits for products and services promised by the merchants when they were fighting for a government-set cap on what card issuers may charge for their services.

While the merchants' suit charges that the Fed cap is too high, the amicus brief counters that it is, instead, too low and does not allow debit card issuers to cover their costs and a reasonable rate of return on their investments. An amicus brief can be filed in a court case by interested parties not named in a lawsuit. The court can accept or reject the brief as part of the case record.

The Fed was charged with setting the debit fee limit under provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Fed's final rule, which became effective in October, caps debit interchange fees for issuers with assets of $10 billion or more at 21 cents.

The regulation also allows card issuers to charge an additional five basis points of the value of the transaction to cover fraud losses. An extra penny may also be charged by financial institutions that are in compliance with the Fed's fraud-prevention standards.

The Fed rule is not meant to apply to issuers with less than $10 billion in assets, which means nearly all credit unions are exempt. However, the brief notes that there is serious doubt whether this exemption will work in practice, because merchants will have an incentive to steer transactions toward lower-fee debit cards from the bigger issuers.

The CUNA joint brief asks the U.S. District Court for the District of Columbia to reject the merchants' suit.

"They're correct that the final rule is flawed--but not for any of the reasons they claim," the brief says. It goes on to argue the rule sets "draconian price caps" that don't allow card issuers to pursue their "statutory and constitutional right to a reasonable rate of return on their investments."

On the other hand, CUNA and its partners argue, industry data cited on the Electronic Payments Coalition website indicate that retailers have saved $825 million since the interchange cap came into effect, and Bloomberg Government has estimated that retailers will bring in an additional $8 billion in revenues per year as a result of the interchange changes.

"Not content with the annual $6 billion-$8 billion in extra profits they have secured, giant retailers are now suing to increase their windfall," the brief charges.

The coalition filing the amicus brief also includes the Independent Community Bankers of America,  National Association of Federal Credit Unions,  Midsize Bank Coalition of America, Consumer Bankers Association, National Bankers Association, The Clearing House Association, American Bankers Association, The Clearing House Payments Company,  and The Financial Services Roundtable.

Inside Washington (03/15/2012)

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  • WASHINGTON (3/16/12)--Revised Americans with Disabilities Act (ADA) rules issued last July by the Department of Justice went into effect Thursday. The area receiving the most attention from credit unions is Section 707, which requires, among other things, that ATMs be speech-enabled for use by the visually impaired. This means operating instructions, visible transaction prompts, user-input verification, error messages, and any other displayed information for full use of the machine must be accessible to, and independently usable by, individuals with vision impairments. Speech must be recorded or digitized human, or synthesized, and delivered through a mechanism that is readily available to all ATM users, such as through a telephone handset or a headset plugged into an audio jack. Section 220 of the accessibility guidelines states that where ATMs are provided, at least one accessible machine must be provided at each location to comply with the ATM standards in Section 707. In general, if a credit union provides both interior and exterior ATMs, they will be considered separate locations …
  • WASHINGTON (3/16/12)--It's official: the National Federation of Community Development Credit Unions confirmed that its departing leader of 32 years, Clifford N. Rosenthal, will move to the Consumer Financial Protection Bureau on May 7 to become the bureau's assistant director of its Office of Financial Empowerment. The federation announced Thursday that its leadership--both Rosenthal and board chairman Lynda Milton--will conduct a press conference during the Credit Union National Association's Governmental Affairs Conference next week to discuss the organization's plans for transition. The press conference is set for Tuesday at 7:30 a.m. (ET) …

NEW Senate leader Reid promises MBL vote

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WASHINGTON (UPDATED 3/15/12 1:00 p.m. ET)--Within minutes of one another this morning on the floor of the U.S. Senate, Majority Leader Harry Reid (D-Nev.) and Sen. Mark Udall (D-Colo.) spoke in favor of legislation to increase the credit union member business lending (MBL) cap.

Reid indicated that he has been working with Udall to attach the MBL bill to a pending small business bill, the Jumpstart Our Business Startups (JOBS) Act. (See News Now March 15) Under the process to which the Senate has agreed for consideration of the jobs bill, the Udall amendment can only be added by unanimous consent and indications are that effort would not likely be successful.

However, leader Reid indicated to the Senate body that he has begun procedural steps to bring the Udall bill (S. 509) to the floor as a stand-alone bill.  No timetable was given, but Reid pledged there would be a vote on the bill, which would increase the MBL cap to 27.5% of a credit union's assets, up from 12.25%.

Udall, speaking last night and again this morning to his Senate colleagues on behalf of the MBL bill, blamed what he said could only be called a "strange" government MBL cap with keeping needed credit away from the country's small businesses.

He said that credit unions stand ready and able to provide additional credit to their small business members, but that hundreds of the financial cooperatives are currently impeded by the low statutory cap.

The Senate floor discussion occurred just days before more than 4,000 credit union representatives are scheduled to hit Washington, D.C. to attend the Credit Union National Association's (CUNA's) Governmental Affairs Conference. A standard feature of the GAC is that the representatives meet with their delegations of federal lawmakers to discuss key issues, such as the pending House and Senate bills that would increase the MBL cap.  This year, credit unions will visit each of the 535 House and Senate offices to drive home the MBL message and discuss other key topics.

CUNA President/CEO Bill Cheney said after the senators' floor statements, "I cannot stress enough how critical next week's meetings will be to credit unions' success on this issue." He encouraged credit unions, in advance of those meetings, to continue to reach out to all senators to encourage them to support the Udall bill.

NEW CUNA coalition seek rejection of merchants interchange suit

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WASHINGTON (UPDATED 3/15/12, 11:00 p.m. ET)--The Credit Union National Association (CUNA) today joined a broad coalition of trade associations representing thousands of small and large financial institutions to file an amicus brief in a lawsuit brought by merchants against the Federal Reserve Board's rule that sets a debit interchange fee cap.

The joint brief describes how small and large financial institutions are harmed by the Fed's tight fee ceiling. It underscores that consumers have not seen any pricing benefits for products and services promised by the merchants when they were fighting for a government-set cap on what card issuers may charge for their services.

While the merchants' suit charges that the Fed cap is too high, the amicus brief counters that it is, instead,  too low and does not allow debit card issuers to cover their costs and a reasonable rate of return on their investments. An amicus brief can be filed in a court case by interested parties not named in a lawsuit. The court can accept or reject the brief as part of the case record.

The Fed was charged with setting the debit fee limit under provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  The Fed's final rule, which became effective in October, caps debit interchange fees for issuers with assets of $10 billion or more at 21 cents.

The regulation also allows card issuers to charge an additional five basis points of the value of the transaction to cover fraud losses. An extra penny may also be charged by financial institutions that are in compliance with the Fed's fraud-prevention standards.

The Fed rule is not meant to apply to issuers with less than $10 billion in assets, which means nearly all credit unions are exempt. However, the brief notes that there is serious doubt whether this exemption will work in practice, because merchants will have an incentive to steer transactions toward lower-fee debit cards from the bigger issuers.

The CUNA joint brief asks the U.S. District Court for the District of Columbia to reject the merchants' suit.

"They're correct that the final rule is flawed--but not for any of the reasons they claim," the brief says and goes on to argue the rule sets "draconian price caps" that don't allow  card issuers to pursue their "statutory and constitutional right to a reasonable rate of return on their investments."

On the other hand, CUNA and its partners argue, industry data cited on the Electronic Payments Coalition website indicates that retailers have saved $825 million since the interchange cap came into effect, and Bloomberg Government has estimated that retailers will bring in an additional $8 billion in revenues per year as a result of the interchange changes.

"Not content with the annual $6-$8 billion in extra profits they have secured, giant retailers are now suing to increase their windfall," the brief charges.

The coalition filing the amicus brief also includes the Independent Community Bankers of America,  National Association of Federal Credit Unions,  Midsize Bank Coalition of America, Consumer Bankers Association, National Bankers Association, The Clearing House Association, American Bankers Association, The Clearing House Payments Company,  and The Financial Services Roundtable.

Udall endorses MBLs as JOBS Act amendment

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WASHINGTON (3/15/12)--Sen. Mark Udall (D-Colo.) made an appeal to his colleagues in the U.S. Senate yesterday urging them to include a member business lending (MBL) amendment in legislation currently under consideration, the Jumpstart Our Business Startups (JOBS) Act.  However, it has been indicated that Senate leadership will severely restrict amendments to the bill.

Udall is the sponsor of a Senate bill that, like its House counterpart, would increase credit union business lending authority to 27.5% of assets, up from the current limit of 12.25%.

On the Senate floor during debate on the JOBS Act, Udall urged his Senate colleagues to allow credit unions to do more to help small businesses grow and create jobs through increased MBL authority.

He noted the stories of Coloradoans who were turned away by banks when they sought additional capital for their small businesses, but who were offered the needed bridge loans by their credit unions to subsequently grow and add new jobs to their communities.

Noting bankers' opposition to an increase in MBL authority for credit unions, Udall said, "This isn't about banks or credit unions.  This is about small businesses."

Udall said the problem with the JOBS Act is that Congress is "leaving the little guy behind."  He added that his MBL amendment would be the only piece of the JOBS Act that would help small businesses and create jobs. He underscored that credit unions stand ready and able to help small businesses grow and are being hindered by the government cap on loans.

The JOBS bill, which was passed by the House last week, would, in large part, allow companies to raise capital from larger pools of small investors, and lift Securities and Exchange Commission restrictions on advertising for news investors.

It was widely reported that House Minority Leader Nancy Pelosi (D-Calif.), who voted for the package, called it "so meager."

Credit Union National Association Executive Vice President John Magill Wednesday night lauded Udall's effort to attach MBLs to the JOBS Act. But, he added, there will be other, must-pass  bills throughout the year that could lend themselves as an MBL vehicle if needed.

The Senate vote on the JOBS Act is expected as early as today. However, as The National Journal reported this morning,  the bill received strong cricism from some Democratic senators during late debate last night casting some doubt over the future of a vote. The bill was criticised for removing what its critics called important investor protections.

CUs have packed Hill agenda during CUNAs GAC

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WASHINGTON (3/15/12)--More than 4,000 credit union advocates from across the country are preparing to bring the credit union message to Washington during next week's Credit Union National Association (CUNA) Governmental Affairs Conference (GAC), and the usual Hike the Hill visits, which are a key element of the GAC, will be more important than ever with around 1,000 bankers also lobbying members of Congress that week.

Credit union advocates will meet with legislators and staff at all 535 offices of the U.S. Congress during the week, and key credit union issues, including the need for an increased credit union member business lending cap and greater access to supplemental capital, are on the agenda for these meetings. The regulatory burden faced by credit unions, which has become worse for credit unions through the financial crisis, will also be addressed, Ryan Donovan, CUNA senior vice president of legislative affairs, said.



Housing finance reform and cyber security issues are also high on the list of congressional priorities at the moment, and credit unions will have the chance to ensure they remain part of these conversations going forward by advocating their positions in their meetings next week.

While this year's GAC is later than the usual February dates, Donovan said the timing will be prefect for credit unions, as Congress enters the last significant work period before the 2012 elections begin.

Congress remains gridlocked on several issues, but the direct advocacy opportunity provided by the GAC gives credit unions a chance to break through the gridlock and ensure their voices are still heard by their elected representatives, Donovan added.

Credit union advocacy issues will be addressed in a Monday GAC briefing by CUNA staff, and Donovan also discussed CUNA's GAC plans in a recent CUbroadcast.com interview.

For more on the GAC, use the resource link.

Texas CUs testify on top issues

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SAN ANTONIO, Texas (3/15/12)--The current 12.25% of assets credit union member business lending cap "is obstructing a crucial source of capital to small businesses at a time that it's desperately needed," Maria Martinez, president/CEO of Border FCU, Del Rio, Texas, told members of the House Financial Services financial institutions and consumer credit subcommittee on Wednesday.

Martinez appeared at a San Antonio, Texas field hearing on the challenges facing small financial institutions in Texas. She was joined by Robert Glenn, president/CEO of Air Force FCU, of San Antonio, will testify alongside other finance industry representatives.

Martinez in prepared testimony said the MBL cap prevents her credit union from offering business loans to members, as the $100 million in assets credit union would be extremely limited in the number of MBLs it could offer, and would not have the capacity to retain the employees it needs to continue offering MBLs for the long-term.

Legislation that would increase the 12.25% of assets MBL cap to 27.5% is active in both the U.S. House and Senate. Martinez said lifting the cap would be beneficial to both her credit union and communities throughout Texas and across the country, and added legislators "can have confidence that credit unions would lend the estimated $13 billion in the first year because credit unions loaned to their members in the darkest hours of the financial crisis; they have the capacity and experience to stay with them in the recovery, if Congress gives them permission." Business leaders joined the Credit Union National Association (CUNA) to seek Senate MBL support this week, (See related story: Small biz groups, CUNA call for Senate MBL action)

Regulatory burdens and examination issues also create problems for Border FCU, Martinez said, and these sorts of issues were also cited by Glenn in his testimony.

Glenn said his credit union, Air Force FCU, has been harmed by expensive regulations that provide limited benefit to consumers, including debit card interchange fee cap regulations. While some of these rules will not be applicable to credit unions that are similar in size to Air Force FCU, the cost of the regulation will be felt by consumers in some way, he said. Glenn also commented on the CFPB and National Credit Union Administration (NCUA) examinations.

For more on Wednesday's hearing, use the resource links.

Credit union concerns will also be aired in a Las Vegas, Nevada-based subcommittee hearing on potential private sector solutions to foreclosure issues. Sue Longson of El Monte, California-based SCE FCU, will testify at that hearing, which is scheduled to take place today.

Bachus Bonner win Alabama primaries

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WASHINGTON (3/15/12)--House Financial Services Committee Chairman Spencer Bachus (R-Ala.), who was supported in part by credit union sponsored radio advertisements, easily won his U.S. House district Republican primary this week and will now run for reelection to his House seat this November.

Bachus, who has served in the House since 1993, gained 59% of the vote. His nearest challenger, state Sen. Scott Beason, received 27% of the vote. Bachus would have had to face his nearest challenger if he did not win 50% of the primary vote.

Rep. Bachus is heavily favored to win the general election in his conservative district this fall. The Alabama congressman faced a tough Republican primary fight, and the Credit Union National Association's (CUNA) Credit Union Legislative Action Council (CULAC) backed Bachus by running rush-hour radio ads in the days leading up to Tuesday's primary. The ads ran in Alabama's sixth congressional district, which includes Birmingham, Tuscaloosa and a portion of the state capitol, Montgomery. (See March 14 News Now story: CUNA backs Bachus in tough primary fight)

Another Alabama congressman, Rep. Jo Bonner, also won his respective Republican primary yesterday with 56% of the vote, according to the Mobile Press-Register. CULAC and the League of Southeastern Credit Unions also supported Bonner, who will run unopposed in November.

Small biz groups back CUNAs call for MBL action

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WASHINGTON (3/15/12)--A coalition of business groups have joined the Credit Union National Association (CUNA) to urge Senate leaders Harry Reid (D-Nev.) and Mitch McConnell (R-Ky.) to include the Small Business Lending Enhancement Act (S. 509) as part of the jobs legislation the Senate is expected to consider soon.

CUNA and various small business partners in a letter noted that S. 509 would increase the current 12.25% of assets credit union member business lending cap to 27.5% of assets, allowing credit unions to lend $13 billion to small businesses. This extra capital would help create over 140,000 new jobs, at no cost to taxpayers, the letter adds.

It is critically important that small businesses have the access to credit needed to take part in the continuing economic recovery, the letter said, adding that S. 509 and a similar bill, H.R. 1418, enjoy bipartisan support and are "precisely the type[s] of legislation that Congress should enact to encourage greater business lending in communities across the country."

The letter is co-signed by the National Council of Textile Organizations, the American Small Business Chamber of Commerce, the National Farmers Union, the National Association of Realtors, the Realtors Land Institute, the Small Business Majority, the Society of Industrial and Office Realtors, the CCIM Institute, Americans for Tax Reform, the American Consumer Institute, the Hardwood Federation, the Institute of Real Estate Management, NCB Capital Impact MultiFunding, the National Association of Home Builders, the National Association of Professional Insurance Agents, AMT--The Association for Manufacturing Technology, the U.S. Women's Chamber of Commerce, and the Heartland Institute.

This letter was sent days before 4,000-plus credit union advocates from across the country are expected to travel to Washington, D.C. for CUNA's 2012 Governmental Affairs Conference. These credit union representatives will be making trips to every federal lawmakers' office to discuss credit union legislative priorities, including MBLs, increasing access to supplemental capital, and regulatory burdens.

Cheney highlights CU growth in iHuffPosti

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WASHINGTON (3/15/12)--New government figures on credit union membership growth are even more impressive when you dig below the surface, Credit Union National Association (CUNA)  President/ CEO Bill Cheney explains in a column posted on the Huffington Post's website. The membership gains, he said, "are strong evidence that consumers are fed up with high bank fees and leaving in large numbers for credit unions."

Cheney noted the National Credit Union Administration's fourth-quarter data released this month showed 1.3 million people joined credit unions in 2011, more than double the previous year's growth.

CUs saw a net gain of nearly 400,000 in the fourth quarter, a period that encompassed Bank Transfer Day. But the fourth quarter is also a time when many dormant accounts are closed at credit unions.  So much so, he said, that it's not unusual for credit union membership to actually go down in the fourth quarter, as closed accounts exceed those opened by new members.

"We've seen that occur five times in the seven years prior to 2011. The 400,000 net gain in new members in the fourth quarter of 2011 was actually 530,000 greater than the average change in members over the same period during the preceding seven years," Cheney noted.

The CUNA leader added that an additional and perhaps better measure of membership activity at credit unions comes from looking not only at new people who joined, but at new checking accounts opened, since Bank Transfer Day was triggered in large part by big banks' debit card fee increases.

"When you look at the change in new checking accounts, credit unions saw a net increase of about 737,000 in the fourth quarter -- that's nearly three times the average fourth-quarter growth of these accounts in the past seven years," Cheney wrote.  "By establishing checking accounts, these new and existing members alike are apt to make their credit union their primary financial institution."

Cheney's column pointed to recent findings from CUNA's 2012 National Voter Survey as an indication of what is likely driving consumers to credit unions:
  •  Banks received a favorability rating of 69%—the lowest since CUNA began doing the survey 14 years ago;
  •  More than eight in ten consumers said banks today charge too much in fees;
  •  For the first time since CUNA started the survey, as many people (43%) viewed credit unions as the best place to keep their day-to-day checking and savings as they did banks; and
  •  About three out of four (74%) said credit unions "look out for the little guy," compared to 18% who felt that way about banks.
"Taken together," Cheney said," NCUA's data and CUNA's survey results "offer compelling evidence that high banking fees and all the attention surrounding Bank Transfer Day motivated people to move to credit unions."

Inside Washington (03/14/2012)

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  • WASHINGTON (3/15/12)--The Financial Crimes Enforcement Network (FinCEN) has released the new Registration of Money Services Business (RMSB), FinCEN Report 107, through the BSA E-Filing System. The report will replace the most recent FinCEN Form 107. The new report, for all money services businesses (MSBs), facilitates registration by foreign-located MSBs and providers of prepaid access. It is only available electronically. The legacy FinCEN Form 107 does not accommodate electronic filings by foreign-located money service businesses and providers of prepaid access. With the availability of the new report, foreign-located MSBs and providers of prepaid access must file the new RMSB electronically within the compliance deadlines. All other MSBs may continue to file the legacy FinCEN Form 107 as required by FinCEN until March 31, 2013. The issuance of the new RMSB does not change any underlying registration requirements or timing for renewals of a registration …
  • WASHINGTON (3/15/12)--Small Business Person of the Year winners from 50 states, the District of Columbia, Puerto Rico, and Guam will converge on Washington, D.C. in May, when one will be selected as National Small Business Person of the Year during the U.S. Small Business Administration's (SBA) celebration of National Small Business Week, May 20-26. While in D.C., the winners will meet with administration officials, congressional representatives and national business leaders. National Small Business Week is cosponsored by the SCORE Association as well as numerous corporate and trade sponsors to be announced, said SBA. Participants also will be recognized for their involvement in disaster recovery and government contracting, and their support for small businesses and entrepreneurship. Awards will be presented to SBA partners in financial and entrepreneurial development, including the year's top SCORE Chapter, Small Business Development Center and Women's Business Center …
  • WASHINGTON (3/15/12)--The Federal Reserve Board on Wednesday launched its official Twitter channel--@federalreserve--with the aim of increasing the accessibility and availability of Federal Reserve Board news. The Fed's website will remain the board's primary channel of communication. Selected announcements will be tweeted after they are posted on the website. To start, tweets will include items such as press releases, speeches, testimony, reports to Congress, the Monthly Report on Credit and Liquidity Programs and the Balance Sheet, and the Federal Reserve's weekly balance sheet. The Fed also will tweet about educational frequently asked questions and board video links ...

Inside Washington (03/13/2012)

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  • WASHINGTON (3/14/12)--The Department of Housing and Urban Development's inspector general on Tuesday released five reports about foreclosure-handling practices at five major U.S. banks after the banks filed court documents Monday settling allegations they violated state and federal foreclosure laws and overcharged customers (American Banker March 13). The reports were used by federal officials as evidence of violations and served as leverage for the government during the settlement negotiations. The reports revealed that managers at Bank of America Corp. and Wells Fargo & Co. pressured staff to speed up handling of documents used to process foreclosures without a proper review. Citigroup's mortgage unit employees regularly signed foreclosure documents when not in the presence of a notary public, as required by law, according to the reports. An audit of 36 foreclosure cases found four in which JP Morgan Chase & Co. documented the amount owed. In three out of the four cases, the amount was inaccurate. An employee of Ally Financial routinely signed 400 foreclosure disclosure documents per day and 10,000 a month, without reviewing the supporting documentation, the report said …
  • WASHINGTON (3/14/12)--Ally Financial Inc., Citigroup Inc. and SunTrust had insufficient capital ratios under stress test scenarios run by the Federal Reserve to evaluate whether banks have enough reserves to withstand another economic downturn 2008 (MarketWatch March 13). The three banks had less than a 5% stressed ratio of Tier 1 common capital through the fourth quarter of 2013, according to the Fed. A fourth bank also failed to meet required capital levels, but the name of the firm was not released. The results of the stress tests were released Tuesday--two days earlier than previously announced. Reflecting the severity of the stress scenario--which includes a peak unemployment rate of 13%, a 50% drop in equity prices, and a 21% decline in housing prices--losses at the 19 bank holding companies were estimated to total $534 billion during the nine quarters of the hypothetical stress scenario. The aggregate Tier 1 common capital ratio, which compares high-quality capital to risk-weighted assets, fell from 10.1% in the third quarter of 2011 to 6.3% in the fourth quarter of 2013 in the hypothetical stress scenario. That number incorporates the banks' proposals for dividends, share buybacks, and share issuance …

House bill proposes SBA tweaks for CUs

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WASHINGTON (3/14/12)--Legislation that could increase credit union participation in the U.S. Small Business Administration's (SBA) 7(a) lending program by simplifying some aspects of the application process and increasing coordination between the SBA and the National Credit Union Administration has been introduced in the U.S. House.

staff met this week with SBA representatives to discuss the SBA loan programs credit unions are eligible to participate in, and how CUNA and the SBA can best ensure that credit inions are aware of those options.

The SBA backed $30.5 billion in loans to small businesses and start-ups in fiscal 2011, setting a yearly record. Eligible credit unions are currently able to participate in the SBAs Small Loan Advantage and Community Advantage programs, which are aimed at increasing the number of lower-dollar SBA 7(a) loans going to small businesses and entrepreneurs in underserved communities.

The guaranteed portion of SBA loans does not count toward the credit union member business lending (MBL) cap.

The MBL cap is currently 12.25% of a credit union's total assets, but legislation that would increase this cap to 27.5% of assets is active in both the House and Senate.

CUNA and credit union efforts are focused on adding the Senate version of that legislation, S. 509, to a Senate jobs bill. CUNA and credit union leagues have encouraged supporters to contact their legislators through a credit union action call, notes Ryan Donovan, CUNA senior vice president of legislative affairs.

CUNA has estimated that increasing the MBL cap to 27.5% of assets would inject $13 billion in new funds into the economy, creating as many as 140,000 new jobs, at no cost to taxpayers.

CFPB extends reg streamlining comment deadline

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WASHINGTON (3/14/12)--The Consumer Financial Protection Bureau (CFPB) has extended its deadline to June 4 for comment replies to first-round comments on its regulatory streamlining project.

The CFPB last year announced it would accept public comment on how best to streamline the 14 rules that it inherited from the National Credit Union Administration, the Federal Reserve, the Department of Housing and Urban Development, the Federal Deposit Insurance Corporation, the Federal Trade Commission, the Office of Comptroller of the Currency and the Office of Thrift Supervision.

The revisions are meant "to make it easier for banks, credit unions and others to follow the rules" and ensure that regulations work better for consumers and the firms that serve them.

Initial comments on the revisions were due March 5, and the CFPB planned to allow public responses to those initial comments to be filed for a 30-day period ending April 3. It is that deadline that has been extended.

The extension, the CFPB explained, is due to the anticipated number and complexity of the comments submitted in the first round of public comment gathering. The extension will also allow interested parties more time to consider and craft their responses.

The Credit Union National Association (CUNA) recently commented to the CFPB on this issue, urging the agency not to contribute to credit union's regulatory burdens and instead, to help minimize them.

CUNA also urged the agency to consider how it can exempt credit unions from future regulatory requirements, and said the CFPB should focus on examining how the mortgage lending process could be improved for consumers and lenders alike.

The CFPB should conduct similar regulatory streamlining reviews on an annual basis, publishing a list of rules it plans to review before the start of each year, CUNA said. If the agency decides to review rules on an individual basis, the Truth-in-Lending and Real Estate Settlement Procedure Acts "should be at the top of the list for review and improvements," CUNA added.

Leon-Decker withdraws her name from NCUA consideration

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WASHINGTON (3/13/12)--Carla Leon-Decker requested that her nomination to the National Credit Union Administration board be withdrawn and that request was honored by the White House Monday.

Leon-Decker had been named as the White House candidate for a term on the NCUA that would expire Aug. 2, 2017.

León-Decker would have taken an NCUA board spot vacated by the pending departure of Gigi Hyland, whose six-year term on the NCUA board ended in August. Hyland is still serving as an NCUA board member.

León-Decker is the current president/CEO of D.C. Government Employees FCU and has also served as operations manager and president/CEO of PAHO/WHO FCU and branch manager of Transportation FCU.

She is also a credit union development educator and director of the Network of Latino Credit Unions & Professionals.

CUNA backs Bachus in tough primary fight

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WASHINGTON (3/13/12)--House Financial Services Chairman Spencer Bachus (R-Ala.) is facing a tough Republican primary fight ahead of this fall's general election, and the Credit Union National Association (CUNA) has stepped in to help the chairman ahead of today's primary vote.

CUNA is supporting the chairman with rush-hour radio ads in Alabama's sixth congressional district, which includes Birmingham, Tuscaloosa and a portion of the state capitol, Montgomery.

The radio ads, an independent expenditure financed by the Credit Union Legislative Action Council (CULAC), CUNA's federal political action committee, began on Sunday and will run through the close of polls on Tuesday. Independent expenditures are campaign communications directed at voters that are conducted independently of the candidate or candidate's campaign they are intended to support.

"CUNA is backing Chairman Bachus in this early contest, and we will continue to support other friends of credit unions ahead of this fall's races," Richard Gose, CUNA's senior vice president of political affairs, said.

Bachus's main challenger is state Sen. Scott Beason (R). Two others, David Standridge and Al Mickle, are also challenging for the congressional seat. To win, a candidate must secure more than 50% of the primary vote.  If no candidate does so, the two highest vote getters will face one another in a runoff.

Bachus, who joined the House of Representatives in 1993 and has led the Financial Services Committee since early 2011, has called credit unions "an integral part of our financial system" and has praised credit unions for their pro-consumer work and their straightforward credit practices.

He also has fought against predatory lending practices, and authored legislation that lifted the federal deposit insurance level for credit unions and banks to $250,000.

Overall, CUNA plans to spend more than $3 million on 2012 congressional races.

FI info could be protected under CFPB plan

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WASHINGTON (3/13/12)--Protections for private information that financial institutions and others submit to the Consumer Financial Protection Bureau (CFPB) could be codified under a new CFPB proposal.

The proposal would ensure that groups or individuals that supply information to the CFPB would not waive their right to privacy protections, and clarify that these protections would remain intact when privileged information is transferred from the CFPB to other federal or state agencies.

CFPB Director Richard Cordray called the proposal "a common sense rule" that is consistent with the CFPB's practice of guarding the confidentiality of supervised institutions' information. "This rule will allow us to further protect consumers by facilitating the flow of information between the Bureau and its supervised entities," he added.

The proposed rule will be open for public comment for 30 days after it is published in the Federal Register.

Bills that would provide these same types of privacy protections have been offered in the House and Senate, and CUNA has said it appreciates the intent of these bills. CUNA has worked closely with legislators and the National Credit Union Administration to ensure that both bills sufficiently protect credit unions.

CUs cover challenges in Texas field hearing

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WASHINGTON (3/13/12)--Credit union concerns will be heard at a Wednesday House Financial Services financial institutions and consumer credit subcommittee field hearing on the challenges facing small financial institutions in Texas.

This hearing will be held in San Antonio, Texas.  Maria Martinez, president/CEO of Border FCU, Del Rio, Texas and Robert Glenn, president/CEO of Air Force FCU, of San Antonio, will testify alongside other finance industry representatives.

The subcommittee has also scheduled a Thursday Las Vegas, Nevada-based hearing on potential private sector solutions to foreclosure issues, and Sue Longson of El Monte, California-based SCE FCU will testify at that hearing.

The following hearings have also been scheduled:
  • A Wednesday Senate Banking financial institutions subcommittee hearing on pre-paid card issues; and
  • A Thursday Senate Banking housing, transportation and community development subcommittee hearing on how to strengthen the housing market while minimizing taxpayer losses.
The House is on recess this week, but the Senate continues to consider its transportation bill.

The Senate's developing jobs bill could also be released this week, and CUNA is working to include Sen. Mark Udall's member business lending legislation (S. 509) as part of that bill. S. 509 would increase the MBL cap from 12.25% to 27.5% of assets. CUNA has estimated that increasing the MBL cap to 27.5% of assets would inject $13 billion in new funds into the economy, creating as many as 140,000 new jobs, at no cost to taxpayers.

CUNA and credit union leagues have encouraged supporters to contact their legislators and urge them to support S. 509.

To join CUNA's MBL call to action, use the resource link.

HSBC NCUA settle on corporate CU losses

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ALEXANDRIA, Va. (3/13/12)--HSBC has agreed to pay the National Credit Union Administration (NCUA) $5.25 million to settle potential claims relating to the sale of residential mortgage-backed securities to five failed corporate credit unions, the agency reported Monday.

The NCUA said HSBC did not admit fault on their part.

NCUA Chairman Debbie Matz said the agency appreciates HSBC's efforts to resolve potential claims and avoid the expense and delay of litigation. "This settlement furthers our goal to minimize losses and thereby reduce the assessments that all credit unions will have to pay. NCUA will continue to fulfill our statutory responsibility to secure maximum recoveries for credit unions and ensure that consumers remain protected," she added.

The agency is using proceeds from this and other settlements to reduce assessments that are charged to credit unions to cover corporate credit union losses.

The NCUA also collected $165.5 million in funds after it settled with Citigroup and Deutsche Bank Securities last year.

The NCUA is seeking to recover an additional $2 billion from the Royal Bank of Scotland, RBS Securities, JP Morgan Securities, and Goldman Sachs in suits it has filed against these entities. There may be additional recoveries from other firms that sold residential mortgage-backed securities to corporate credit unions that contributed to their losses.

For the full NCUA release, use the resource link.

CUNA comments on HUD loan appeal changes

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WASHINGTON (3/13/12)--The Credit Union National Association (CUNA) has suggested the Department of Housing and Urban Development (HUD) give greater consideration to its proposal to eliminate the process for requesting alternative Federal Housing Administration (FHA) maximum mortgage amounts before it moves forward.

HUD currently limits the maximum principal obligation on FHA-insured single-family mortgages to either 115% of the median house price for a single-family home in a surrounding metropolitan area, or 65% of the national conforming limit. However, HUD allows this cap to be challenged through an appeals process if any party involved in the mortgage "believes that a mortgage limit established by the [HUD Secretary] does not accurately reflect the median house prices in the area."

HUD recently said this appeals process was outdated and creates unneeded costs, and said removing the appeals regulation would not have any impact on the calculation of area loan limits.

HUD in 2008 began collecting home price data through data collection firm CoreLogic, and the accurate data gathered in these collections has resulted in fewer appeals. Under current HUD rules, appeals can only be made in ten of the 3,234 counties in the U.S. and related territories, and HUD saw appeals decline to zero in 2010. However, CUNA suggested in its comment letter that the FHFA monitor the number of appeals lodged over a longer period of time to determine whether the appeals process should be abandoned.

"We do not believe one year is enough time to conclude with certainty that the appeals process is altogether obsolete--especially given the lackluster state of the current mortgage market," CUNA said.

CUNA pointed out that eliminating the appeals process altogether would penalize the ten counties for which HUD does not have sufficient direct or indirect data to accurately determine a loan limit.

CUNA said HUD should maintain an adequate process by which parties in these counties may request alternative loan limits, at least until HUD has sufficient direct or indirect data to accurately calculate an appropriate loan limit for those counties.

For the full comment letter, use the resource link.

NEW Carla Leon-Deckers NCUA nomination has been withdrawn

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WASHINGTON (UPDATED 3/12/12 5:48 p.m. ET)--The White House has announced the nomination of Carla Leon-Decker to be a member of the National Credit Union Administration (NCUA) has been withdrawn.

Leon-Decker had been named as the candidate for a term on the NCUA that would expire Aug. 2, 2017.

León-Decker is the current president/CEO of D.C. Government Employees FCU and has also served as operations manager and president/CEO of PAHO/WHO FCU and branch manager of Transportation FCU.

She is also a credit union development educator and director of the Network of Latino Credit Unions & Professionals. León-Decker would have taken an NCUA board spot vacated by the pending departure of Gigi Hyland, whose six-year term on the NCUA board ended in August. Hyland is still serving as an NCUA board member.

Inside Washington (03/12/2012)

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  • WASHINGTON (3/13/12)--The Federal Reserve on Thursday will release the results of if its latest stress tests for the 19 largest banks, including many financial institutions that were at the heart of the financial crisis. The tests evaluate whether firms would have sufficient capital in times of severe economic and financial stress to continue to lend to households and businesses. The Federal Reserve estimated revenue and losses under the stress scenario based on detailed data provided by the firms and verified by supervisors. The supervisory stress scenario depicts a severe recession in the U.S., including a peak unemployment rate of 13%, a 50% drop in equity prices, and a 21% decline in housing prices. The supervisory stress scenario is not the Federal Reserve's forecast for the economy, but was designed to represent an outcome that, while unlikely, may occur if the U.S economy were to experience a deep recession at the same time that economic activity in other major economies contracted significantly. Strong capital levels are critical to ensuring that banking organizations have the ability to lend and to continue to meet their financial obligations, even in times of economic difficulty. U.S. firms have built up their capital levels under the Federal Reserve's leadership since government stress tests were conducted in early 2009. The 19 banks that participated in those tests have increased their common capital levels to $759 billion in the fourth quarter of 2011 from $420 billion in the first quarter of 2009. The tier 1 common ratio for these firms, which compares high-quality capital to risk-weighted assets, has increased to a weighted average of 10.4% from 5.4% …
  • WASHINGTON (3/13/12)--William S. Haraf, commissioner of the California Department of Financial Institutions announced his resignation Monday, which will be effective Friday. Haraf joined the California Department of Financial Institutions in 2008 after a long career in commercial and investment banking, the investment branch of federal government, and academia. In his capacity as the state commissioner of financial institutions, Haraf serves as the sole state bank regulator representative on the Financial Stability Oversight Council established by the Dodd-Frank Act. He also is chairman-elect of the board of the Conference of State Bank Supervisors …
  • WASHINGTON (3/13/12)--The Consumer Financial Protection Burea (CFPB) has added auto loans and installment loans, which are typically taken out for appliances and other more expensive items, to the list of financial products it accepts public complaints on. The CFPB will forward complaints to the institutions providing the loan. While the CFPB will resolve issues involving large financial institutions, it said it would forward complaints tied to smaller institutions to their prudential regulators.

NEW HSBC NCUA settle on corporate CU losses

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ALEXANDRIA, Va. (UPDATED: 11:00 A.M. ET)--HSBC has agreed to pay the National Credit Union Administration (NCUA) $5.25 million to settle potential claims relating to the sale of residential mortgage-backed securities to five failed corporate credit unions, the agency reported today.

The NCUA said HSBC did not admit fault on their part.

NCUA Chairman Debbie Matz said the agency appreciates HSBC's efforts to resolve potential claims and avoid the expense and delay of litigation. "This settlement furthers our goal to minimize losses and thereby reduce the assessments that all credit unions will have to pay. NCUA will continue to fulfill our statutory responsibility to secure maximum recoveries for credit unions and ensure that consumers remain protected," she added.

The agency is using proceeds from this and other settlements to reduce assessments that are charged to credit unions to cover corporate credit union losses.

The agency also collected $165.5 million in funds after it settled with Citigroup and Deutsche Bank Securities last year.

The NCUA is seeking to recover an additional $2 billion from the Royal Bank of Scotland, RBS Securities, JP Morgan Securities, and Goldman Sachs in suits it has filed against these entities. There may be additional recoveries from other firms that sold residential mortgage-backed securities to corporate credit unions that contributed to their losses.

Diversity discussion slated for NCUA meeting

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ALEXANDRIA, Va. (3/12/12)—Technical changes and the agency's diversity and inclusion strategic plan will lead the day at the National Credit Union Administration's (NCUA) March 15 open board meeting.

The technical changes will be addressed in a final rule on Parts 701, 760 and 790 of the NCUA's Rules and Regulations. Part 701 of NCUA regulations addresses federal credit union organization and operations, and Part 760 applies to loans in special flood hazard areas. Part 790 covers requests for NCUA action.

The agenda did not give many details on the diversity and inclusion plan discussion, but the NCUA in its strategic plan for the years 2011-2016 highlighted increased diversity as one of many goals it hoped to address. The agency earlier this year established the Office of Minority and Women Inclusion, an office that will, among other things, address issues related to diversity in management, employment, and business activities.

Quarterly reports on the status of the National Credit Union Share Insurance Fund and the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) will also be presented during the meeting. The agency last year said it would scale back the once-per-month reports to a quarterly basis, citing the increasing stability of the credit union system.

This will be the second NCUA open board meeting of 2012. The agency cancelled its February board meeting.

A creditor claim appeal and supervisory activities are on the closed board meeting agenda. The closed meeting will follow the open board meeting, which is scheduled to begin at 10:00 a.m. ET.

FHFA decreasing Fannie Freddie exec pay

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WASHINGTON (3/12/12)--The Federal Housing Finance Agency (FHFA) last week said it will reduce executive pay at government sponsored enterprises Fannie Mae and Freddie Mac by 75% when compared to their pre-conservatorship levels, eliminate bonuses, and establish a pay target of $500,000 for newly hired CEOs.

Freddie Mac CEO Charles Haldeman and Fannie Mae CEO Michael Williams plan to depart once their replacements have been identified. Both CEOs could earn as much as $5.4 million in compensation this year.

FHFA Acting Director Edward DeMarco said the new compensation program "strikes the balance between prudent executive pay" and protecting taxpayers. DeMarco said more drastic cuts could create safety and soundness concerns.

The FHFA also released a 2012 Conservatorship Scorecard, which will track the FHFA's progress as it works to build a new infrastructure for the secondary mortgage market, gradually contract Fannie Mae and Freddie Mac's dominant presence in the marketplace while simplifying and shrinking their operations, and maintain foreclosure prevention activities and credit availability for new and refinanced mortgages.

The Obama administration is considering a range of options for mortgage market reform, 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. Administration officials have said that each of these proposals would shrink the government's role in the mortgage market.

For the full FHFA release, use the resource link.

CUNA strongly supports Senate exam improvements bill

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WASHINGTON (3/12/12)--S. 2160, the Financial Institution Examination Fairness and Reform Act would enhance safety and soundness by increasing the consistency and fairness of the examionation system and would in no way weaken the federal examination system, the Credit Union National Association (CUNA) said in a letter to Congress last week.

The letter was sent to bill co-sponsors Sen. Jerry Moran (R-Kan.) and Sen. Joe Manchin (D-W. Va.) following the introduction of the bill last week. CUNA expressed itsstrong support of the legislation, thanked the legislators for their leadership, and encouraged them to consider additional enhancements to S. 2160 as the bill moves through the legislative process.

The bill would establish a new inter-agency ombudsman to investigate complaints about examinations and look at examination quality assurance, require regulators to provide clear and consistent loan treatment guidelines, and prevent regulators from retaliating against institutions that challenge their determinations.

The legislation is similar to the Financial Institutions Examination Fairness and Reform Act (H.R. 3461), which was introduced in the House last November.

CUNA has praised both bills as firm steps in the right direction "toward ensuring the federal financial institution regulatory agencies conduct fair exams, which are consistent with the law and regulation and ensure safety and soundness."

H.R. 3461, which is co-sponsored by House Financial Services subcommittee on financial institutions chair Rep. Shelly Moore Capito (R-W.Va.) and ranking member Rep. Carolyn Maloney (D-N.Y.), has 107 cosponsors.

CUNA continues push for MBLs in Senate

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WASHINGTON (3/12/12)--A Wall Street Journal story last Friday took note of credit unions' push for member business lending (MBL) legislation on the Senate side of Capitol Hill, and the Credit Union National Association (CUNA) continues to call on legislators to take MBL action.

CUNA and credit union efforts are focused on the Senate, and working with legislators to add MBL language to an upcoming Senate jobs bill. CUNA and credit union leagues have encouraged supporters to contact their legislators through a credit union action call, notes Ryan Donovan, CUNA senior vice president of legislative affairs. 

The U.S. House last week passed the Jumpstart Our Business Startups (JOBS) Act, and while MBL legislation was not a part of that final bill, Donovan explained that the structure of that House jobs bill prevented legislators from adding many amendments. CUNA, credit union leagues and credit unions continue to press in the Senate.

S. 509, which would increase the MBL cap from 12.25% to 27.5% of assets, remains active in the Senate, and has 22 cosponsors. A similar bill, H.R. 1418, has 122 cosponsors.

CUNA has estimated that increasing the MBL cap to 27.5% of assets would inject $13 billion in new funds into the economy, creating as many as 140,000 new jobs, at no cost to taxpayers.

Also on the MBL front, and in light of passage of the House jobs bill,  the Progressive  Policy Institute (PPI) is recirculating  to federal lawmakers  its December paper entitled "The Credit Gap: Easing the Squeeze on the Smallest Businesses,"  which backs  an MBL increase as a bipartisan plan that could enhance any jobs bills.

To join CUNA's MBL call to action, use the resource link.

NCUA outlines elements of effective MBL program

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ALEXANDRIA, Va. (3/12/12)--Member demand has sparked an increase in the number of credit unions offering member business loans (MBL) and by the end of 2011 federally insured credit unions had a combined MBL portfolio of $39.1 billion, the National Credit Union Administration (NCUA) noted in its monthly NCUA Report.

That total portfolio represents an MBL jump of more than 5% for the year, the agency monthly newsletter noted in an article that went on to outline areas that need specific attention when offering an MBL program. In part, the article said:

  • Mission statement: The mission statement of new MBL programs should reflect a desire for a well-diversified portfolio of borrowers with proven cash flows, in low-risk industries.
  • Personnel and Compensation: Credit union personnel with approval authority over MBLs should have adequate credit administration and underwriting experience. Relationships, sales, and business development experience does not count. Incentives should be tied to credit quality as much as it is to volume
  • Third-Party Originator: Credit unions looking to boost loan volume often look to outside third-party underwriters to analyze loans. The credit union must review the third-party underwriting, confirm all analyses, and reach an independent conclusion about whether the proposed loans match credit union policy and risk appetite
  • Underwriting: The underwriting document or credit presentation should capture all pertinent aspects of an MBL. The credit presentation for a commercial loan should include the following analysis: sources and uses of funds; existing and projected cash flow; leverage and liquidity; and, secondary sources of repayment to include collateral and guarantor support. Other elements include: financial reporting and credit monitoring requirements; required adherence with financial covenants; risks and mitigating factors; and, a risk-rating justification for the proposed credit structure. Risk
  • Rating Justification: While many credit unions earn high marks for properly analyzing borrowers, there are also many who assign risk ratings by using a subjective or arbitrary methodology. The outcome is a mismatch between the assigned risk ratings and concerns identified within the credit presentation. The credit union's MBL policy should clearly articulate credit characteristics specific to each risk rating category, and include tangible metrics (cash flow coverage, leverage and liquidity) and corresponding thresholds for these categories.
  •  Financial Reporting and Portfolio: Monitoring the underwriting, approval, and disbursement processes represent the first steps for administrating an MBL loan. Credit unions need to clearly identify within the credit presentation (and loan documentation) the frequency and quality of financial reporting as a function of risk rating, credit exposure, and borrower sophistication. Employees need to follow through with obtaining and analyzing updated financial information on a timely basis and maintain a tickler system for following up on outstanding financials. This is particularly critical with purchased participations where the credit union does not have ready access to the borrower.
  • Financial Covenants: The purpose of financial covenants is to provide an expectation for commercial borrowers to operate within a financial framework that does not expose the lender to excessive risk. Breach of a financial covenant provides an early warning to the lender and the ability to call a loan into default. As credit unions bring in sophisticated commercial borrowers, they should look to protect themselves via cash flow, leverage and liquidity covenants.
  • Due Diligence on Collateral: Credit unions need to complete adequate due diligence on collateral securing loans through inspection, commercial appraisal, environmental assessment, or other method to confirm valuation and salability of collateral should the need occur. The extent of due diligence is a function of credit exposure, collateral type, and likelihood that collateral will need to be relied upon. The advance rates on collateral should be a function of the secondary market for securing collateral.
  • Cash Is King: A fundamental difference between a financial institution and an asset-based lender is the expectation and requirement that an MBL will be repaid with cash generated from operations, rather than secondary sources of repayment like collateral liquidation or a call on guarantors. With the possible exception of unencumbered guarantor liquidity and readily marketable securities serving as collateral, there are few alternatives to proven cash flow. Cash flow coverage (also known as debt-service coverage) is usually calculated as the annualized sum of net income, interest expense, and non-cash expenses divided by the sum of existing and proposed principal and interest payments for the applicable year.
  • Portfolio Controls: Credit unions with new MBL departments are often pressured to generate sufficient volume to justify the initial investment in MBL personnel and infrastructure. However, absent experience in administrating these loans, a rapidly growing MBL portfolio has the potential to alter the credit risk profile of a credit union. Management needs to carefully choose the initial MBLs to build their portfolio while reasonable growth targets should be set.


Use the resource link below to click through to the NCUA Report and read what the article describes as "bad signs" in each program category.

Inside Washington (03/09/2012)

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  • WASHINGTON (3/12/12)--The Senate Thursday passed an amendment to combat offshore tax havens and help reduce the deficit. The amendment, which the Senate adopted as part of the surface transportation bill now under consideration, will allow the Treasury Department to implement a range of measures against foreign governments and financial institutions that significantly impede U.S. tax enforcement. Under Section 311 of the Patriot Act, the Treasury Department can take measures against foreign governments or financial institutions that engage in money laundering. The amendment, sponsored by Sens. Carl Levin (D-Mich.), Kent Conrad (D-N.D.) and Sheldon Whitehouse (D-R.I.) gives Treasury the same tools to combat foreign governments or financial institutions that impede U.S. tax enforcement. For example, Treasury could prohibit U.S. banks from accepting wire transfers or honoring credit cards from banks found to have significantly hampered U.S. tax enforcement efforts …
  • WASHINGTON (3/12/12)--The House on Thursday passed legislation that eases regulations on small businesses and makes capital formation easier. The Jumpstart Our Business Startups, or JOBS, Act passed 390 to 23 (American Banker March 9). The bill contained a measure that allows small community banks to grow and raise capital without submitting to costly Securities and Exchange Commission regulations. House Majority Leader Eric Cantor (R-Va.) called for the Senate to pass the House bill as it is. The JOBS Act will get small businesses and entrepreneurs back in the game by removing costly regulations and making it easier for them to access capital," Cantor said. "This legislation also paves the way for more startups and small businesses to go public, which will attract new investors and allow the small businesses to grow and create jobs" …
  • WASHINGTON (3/12/12)--A group of business associations, including the U.S. Chamber of Commerce, sent a letter Thursday requesting regulators to hold a hearing on plans to designate non-bank financial institutions as systemically important (American Banker March 9). Those firms would be supervised by the Federal Reserve Board under criteria described in the Dodd-Frank Act. Among the factors to be considered are size, interconnectedness and complexity. In the letter, organizations such as the American Council of Life Insurers, Business Roundtable and Competitive Enterprise Institutes said they have a number of concerns to address that were raised in previous comment letters. A public comment period ended Dec. 19 …
  • WASHINGTON (3/12/12)--The Consumer Financial Protection Bureau (CFPB) has issued Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) exam procedures, and while CFPB examiners will not oversee the majority of credit unions, the Credit Union National Association has suggested that all credit unions that offer mortgage loans review the procedures. The interagency procedures lay out the background and requirements of the SAFE Act and Regulation G concerning federal registration. The SAFE Act procedures will serve as a guide for CFPB examiners to use in overseeing depository institutions with more than $10 billion in assets and their affiliates, and non-depository consumer financial service companies…

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 …

CUNA survey shows CU political clout

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WASHINGTON (3/8/12)—The growing political clout of credit unions was illustrated in the Credit Union National Association's (CUNA) National Voter Survey, as 55% of respondents said they would favor credit unions if a disagreement over legislation broke out in the U.S. Congress or state legislature between credit unions and banks.

Support for credit unions in a credit union versus bank conflict has grown 12 percentage points since 2004, and has been above 50% since 2010. Meanwhile, public political support for banks has fallen from a high of 48% that was recorded in 2007. A total of 34% said they would favor banks in the 2012 Voter Survey.

The CUNA survey drew responses from 1,000 randomly selected registered voters in locations nationwide. CUNA has conducted an annual voter survey since 1999.

This newest survey showed credit unions also enjoyed support on specific political issues. For instance, 68% approved of the federal credit union tax status, and 58% said they would oppose revoking credit unions' federal tax exemption in a bid to help balance the budget.

The 68% total is a significant increase from the 46% that said they approved of credit unions' tax status in 2009 and has remained steady since 2011. Also, just one in four respondents to this year's survey said they did not support the credit union tax exemption.

In a separate question, 72% of respondents said they agreed that credit unions' tax status is justified by their member-owned structure and their practice of returning earnings to their members through dividends and lower loan interest rates. Only one-quarter of respondents agreed with the banker point of view on this issue.

Survey takers also opined on other hot credit union issues, including the current 12.25% of assets credit union member business lending (MBL) cap.

Legislation that would increase this cap to 27.5% of assets is active in both the House and Senate, and 59% of respondents agreed that credit unions should be allowed to help small businesses and the larger economy by providing more MBLs. Support for an increased MBL cap has remained steady since 2009. Only 29% of this year's respondents said that the cap should remain in place.

"The bottom line is that voters, regardless of party, back credit union issue positions,"  said Richard Gose, CUNA's Senior Vice President of Political Affairs. "This strong voter sentiment in favor of credit unions puts the wind to our back as we go to Capitol Hill on issues like taxation and MBLs."

The survey results have shown that consumer trust in credit unions continues to grow, and that many voters view credit unions favorably. This is the final News Now story on the survey results.

For previous coverage of the survey, use the resource links.

Senate exam improvements bill introduced

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WASHINGTON (3/8/12)--Legislation intended to strengthen the safety and soundness of the financial system by increasing the consistency and fairness of financial institution examinations has been introduced in the Senate.

Bill co-sponsors Sen. Jerry Moran (R-Kan.) and Sen. Joe Manchin (D-W. Va.) in a release said the legislation would establish a "more transparent approach" to financial institution examinations and allow for a "more robust appeals process for times when there is a legitimate disagreement" between a regulator and the regulated.

The bill would establish a new inter-agency ombudsman to investigate complaints about examinations and look at examination quality assurance, require regulators to provide clear and consistent loan treatment guidelines, and prevent regulators from retaliating against institutions that challenge their determinations.

The legislation is similar to the Financial Institutions Examination Fairness and Reform Act (H.R. 3461), which was introduced in the House last November.

The Credit Union National Association (CUNA) supports examination fairness legislation and said of the House bill, "It is a firm step in the right direction toward ensuring the federal financial institution regulatory agencies conduct fair exams, which are consistent with the law and regulation and ensure safety and soundness."

H.R. 3461, which is co-sponsored by House Financial Services subcommittee on financial institutions chair Rep. Shelly Moore Capito (R-W.Va.) and ranking member Rep. Carolyn Maloney (D-N.Y.), has 107 cosponsors.

Minimize CU burdens as rules emerge CUNA to CFPB

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WASHINGTON (3/8/12)--The Credit Union National Association (CUNA) in a comment letter urged the Consumer Financial Protection Bureau (CFPB) to minimize any and all new regulatory requirements for credit unions, and said the agency's regulatory streamlining review should result in "lasting and meaningful regulatory relief" for credit unions "that already serve consumers and small businesses well."

The CFPB last year announced it would accept public comment on how best to streamline the 14 rules that it inherited from the National Credit Union Administration, the Federal Reserve, the Department of Housing and Urban Development, the Federal Deposit Insurance Corporation, the Federal Trade Commission, the Office of Comptroller of the Currency and the Office of Thrift Supervision.

The revisions are meant "to make it easier for banks, credit unions and others to follow the rules" and ensure that regulations work better for consumers and the firms that serve them.

CUNA's Deputy General Counsel Mary Dunn urged the bureau not to contribute to credit union's regulatory burdens and instead, to help minimize them.

"The number one regulatory advocacy priority for CUNA is to minimize the number and complexity of costly regulatory requirements that divert  credit unions' time and economic resources from member service," Dunn wrote. CUNA also urged the agency to consider how it can exempt credit unions from future regulatory requirements.

"Credit unions simply do not need, and will have increasing difficulties assimilating, additional regulatory burdens if they are to fulfill their purpose of responding to their members' financial needs," the letter added.

Dunn said that CUNA does not think that credit unions are a direct target of CFPB regulatory efforts. But, "there is also a concern that credit unions may suffer collateral damage as a result of the agency's efforts to direct rules toward others," she added.

The CUNA comment letter cited the recent remittance final rule and concerns about the CFPB's announced intention to investigate overdraft protection programs. "We urge the agency to approach the review of overdraft protection with reasonableness and allow financial institutions to structure overdraft programs and other check payment accommodations with flexibility, consistent with legal requirements and fairness," Dunn wrote.

In terms of regulatory relief areas, she urged the agency to focus first on the mortgage lending process to improve it for consumers and lenders alike. If the agency decides to review rules on an individual basis, the Truth-in-Lending and Real Estate Settlement Procedure Acts "should be at the top of the list for review and improvements," CUNA said.

The CFPB plans to consider simplifying some regulations, standardizing some common terms across regulations, updating outdated or unneeded regulations, and removing unnecessary restrictions on consumer choice or business innovation.

CUNA said the bureau should conduct similar regulatory streamlining reviews on an annual basis, publishing a list of rules it plans to review before the start of each year. CUNA suggested the list of rules be open for public comment for 120 days.

The regulatory transfers were mandated by the Dodd Frank Act. CUNA has commented on almost all rules that have been transferred to the bureau that have been published for comment and that affect credit unions.

For the full CUNA comment letter, use the resource link.

NCUA video offers free advice to small CUs

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ALEXANDRIA, Va. (3/8/12)--The National Credit Union Administration (NCUA) has highlighted the Office of Small Credit Union Initiatives' (OSCUI) Direct Assistance program in its latest YouTube training video.

NCUA board member Michael Fryzel in the video explains the purpose of the OSCUI, and how the office helps the NCUA achieve its mission and goals.



The video, which is the second in a series, also details how the agency's Economic Development Specialists (EDS) help small credit unions overcome challenges by providing them with free expert consulting services. Credit union officials also share their experiences with EDS consultants in the video.

Ohio primary results of note for CUs

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WASHINGTON (3/8/12)--Looking past the Super Tuesday presidential primaries, credit unions will find there were other interesting results in the Ohio congressional primaries.

Of note to credit unions:

  • Rep. Jean Schmidt (R) lost her primary race to Brad Wenstrup, an Iraq War veteran and surgeon. Credit Union National Association (CUNA) Vice President of Political Affairs Trey Hawkins said Wednesday Schmidt had been largely neutral with regard to credit union issues, neither hostile nor strongly supportive, and CUNA and the Ohio league were not involved in the primary.  However, Hawkins added, CUNA and the league will be working to build a positive relationship with the ultimate victor in Ohio's second district.
  • In Ohio's third district, former Rep. Mary Jo Kilroy (D) very narrowly lost the Democratic primary in a new heavily Democratic Columbus seat to state legislator Joyce Beatty. CUNA was not involved in the primary, but successfully supported Kilroy's opponent, now-Rep. Steve Stivers (R), in 2010. Kilroy, a former member of the House Financial Services Committee, was on the conference committee for the Dodd-Frank Wall Street Reform and Consumer Protection Act, and was a vocal proponent of the Durbin Amendment that imposed limits on debit card interchange fees.
  • In an unusual primary that pitted one incumbent House member against another and, coincidentally, one credit union ally against another because of congressional redistricting, Rep. Marcy Kaptur of Ohio's ninth district won in a 60%-36% landslide against Rep. Dennis Kucinich, formerly of the tenth district.
Kaptur has co-sponsored the CUNA-backed member business lending (MBL) bill both is this session of Congress and the last.

She supported credit unions in the contentious Dodd-Frank interchange debate--and signed the "dear colleague" letter on this issue circulated by Rep. Debbie Wasserman Schultz (D-Fla.) in 2010.

Kaptur also signed on as co-sponsor of the Credit Union Regulatory Improvements Act (CURIA) each of the three times it was introduced in Congress.  CUNA and the league supported Kaptur in the primary.

Hawkins said that, ultimately, Kaptur has been a good friend to credit unions and she understands credit unions' challenges.  "CUNA looks forward to the opportunity to continue working with her."

Inside Washington (03/07/2012)

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  • WASHINGTON (3/8/12)--Within the next year the Consumer Financial Protection Bureau (CFPB) will issue new mortgage-servicing rules concerning better information disclosure for consumers, force-placed insurance and hybrid, adjustable-rate mortgages, CFPB Director Richard Cordray said Tuesday. The CFPB will issue rules to prevent servicers from charging for force-placed insurance unless there is a reasonable basis to believe that borrowers have failed to maintain their own insurance, Cordray said in a speech at the National Association of Attorneys General annual meeting. Consumers will be notified months ahead of their first interest-rate adjustment, and they will receive a disclosure of their new monthly payment, along with any available options to head off the higher rate, such as refinancing and renegotiation of loan terms, he said. "By comprehensively assessing large collectors, as well as many of the bank creditors who originate the debt, supervision would allow us to understand and address the systemic problems posing risks to consumers," Cordray said. "By proactive coordination among federal and state law enforcement, we can help Americans dig themselves out of the residue of this financial crisis, without being plagued by the indignity of illegal debt collection tactics" …

CFPB small biz review panel discussed disclosures more

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WASHINGTON (3/7/12)--The Consumer Financial Protection Bureau (CFPB) conducted the first meeting of its small business review panel to discuss the bureau's recent work to integrate the Truth in Lending and Real Estate Settlement Procedures Act (RESPA) mortgage disclosure requirements.

The Small Business Regulatory Enforcement Fairness Act (SBREFA) panel, required by the Dodd-Frank Wall Street Reform and Consumer Protection Act,  is charged with seeking input directly from credit unions and other small financial service providers for any proposed rule that may have a significant economic impact on a substantial number of small providers.

The panel is comprised of representatives from the CFPB, the U.S. Small Business Administration (SBA), and the Office of Management and Budget. Representing credit unions during the forum were Lori Thompson, president of Premier FCU, Greensboro, N.C., Bernie Winne, CEO of Boston Firefighters CU, Boston, Mass., and Jeanne Kucey of JetStream FCU, Miami Lakes, Fla.

The panel discussion Tuesday involved topics including the prototype loan estimate and settlement disclosures developed by the CFPB through its Know Before You Owe mortgage disclosure project.

The review panel also discussed:
  • The definition of an "application" under RESPA to determine when a good-faith estimate under current rules is required to be generated and given to a consumer;
  • Certain re-disclosure requirements concerning loan-cost estimates,
  • Proposed recordkeeping and data collection requirements for lenders, and
  • The composition of annual percentage rate calculations under consideration by the bureau.
The bureau intends to issue a proposed combined mortgage disclosure rule in July.

OIG issues material loss review on Vensure

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ALEXANDRIA, Va. (3/7/12)--Although the National Credit Union Administration's (NCUA's) Office of Inspector General (OIG) noted that the low level of anticipated losses from the failure of Vensure FCU doesn't meet the threshold to require an OIG material loss review (MLR), circumstances surrounding the NCUA's conservatorship of the small credit union were sufficiently "unusual in nature" to prompt such a review.

The NCUA last July closed the Mesa, Ariz., Region V credit union, which had started out as a New York, Region I, credit union. At the time of liquidation, Vensure had 140 members and $8.1 million in assets. The OIG report noted an estimated $39,000 loss to the National Credit Union Share Insurance Fund.

The credit union had been taken into conservatorship by the NCUA on April 15, with the agency claiming that the credit union failed to properly diversify its business.

It was, in fact, that lack of diversity and the NCUA's notation of it and supervision of it that, in part, spurred the OIG report

.

"We determined Region I examiners failed to readily identify or adequately pursue the nature of Vensure's primary source of income, ACH-related fee activity, which was later determined to be tied to a criminal violation of the (Unlawful Internet Gambling Enforcement Act) UIGEA.

"This occurred despite Region I examiners conducting an on-site, risk-focused supervisory contact specifically focused on Vensure's FedWire controls and ACH activities and procedures," the MLR (OIG-12-05), dated Feb. 29, said.

The OIG report said examiners explained they did not identify the nature and scope of Vensure's fee activity because their primary focus was getting the credit union "back on track" through the identification of issues such as appropriate record keeping, written policies, a business plan, and appropriate operating procedures.

"As a result, we believe Region I examiners not only missed uncovering what turned out to be an elaborate money laundering scheme tied to illegal internet gambling involving several Vensure members, but also could have prevented or mitigated the current and potential loss to the NCUSIF," the report said.

In September 2011, the U.S. Department of Justice charged the owners and executives of an online gambling site, which deposited funds into Vensure, with paying themselves $444 million since 2007 while defrauding players in what the government alleged was a massive Ponzi scheme.

Vensure was one of 16 financial institutions that allegedly held funds tied to online gambling sites under investigation by the Federal Bureau of Investigation. The credit union challenged the NCUA's conservatorship, but the challenge was rejected in federal court.

Include MBLs in jobs bill CUNA urges key senators

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WASHINGTON (3/7/12)--The Credit Union National Association (CUNA) has urged Senate Banking Committee leaders in a letter to include provisions to expand authority for credit union member business lending (MBL) in any new jobs and capital formation legislation they will be considering--and to reject banker pleas to keep the credit union legislation out of the package.

CUNA also has launched an Action Alert to encourage and assist credit unions in contacting their senators to seek lawmakers' support for adding an MBL cap increase to any Senate small-jobs package as a "common sense" way to boost the economy by helping small businesses and creating jobs.  

In the letter to Senate Banking Committee Chairman Tim Johnson (D-S.D.) and ranking member Richard Shelby (R-Ala.), CUNA President/CEO Bill Cheney noted that the only opposition to the credit union member business lending bill (S. 509 ) comes from organizations representing the banks that pulled back access to credit from their small business customers during the financial crisis.

Cheney also reminded the committee leaders that the banks that oppose S. 509 are "the same banks Congress bailed out in 2008 with TARP, the same banks to which Congress made available $30 billion of taxpayer money to lend to small businesses, the same banks that took only a fraction of that money and used most of what they took to refinance their TARP obligations."

The CUNA leader added that, today, these banks are asking Congress for reduced regulatory burden with a promise that the changes they seek will benefit small businesses. "At the same time, the American Bankers Association says it would rather see this committee's effort fail than to see S. 509 enacted into law," Cheney wrote.

"After devastating the housing market, retreating from the small business market, receiving taxpayer bailout after taxpayer bailout, being begged by the government to lend to small businesses and refusing that call, America's banks now come to Congress with the message: they will oppose their own regulatory relief legislation if Congress allows the credit unions to provide more assistance to small businesses," the CUNA president wrote.

CUNA estimates show that during the first year after enactment of legislation to increase the MBL cap to 27.5%, up from the current 12.25%, small businesses would see a $13 billion infusion of new credit and the general economy would witness the creation of 140,000 new jobs--all at no cost to taxpayers.

"It is clear: the banks are not interested in spurring growth through capital formation. They would rather see their legislation wither on the vine than see well-capitalized and experienced credit unions increase their lending to small businesses."  The CUNA letter was sent as the Senate's banking panel convened Tuesday to discuss initiatives that could create job growth during the second of a series of hearing entitled "Spurring Job Growth Through Capital Formation While Protecting Investors."

Use the resource links to read the complete text of Cheney's letter, view CUNA's comprehensive response to banker assertions about credit union business lending, and access CUNA's Action Alert.

Inside Washington (03/06/2012)

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  • WASHINGTON (3/7/12)--The Dodd-Frank Act appears to have created a disconnect in efforts to synchronize financial reform between U.S. financial institutions and other countries, according to participants at an Institute of International Bankers conference. Dodd-Frank created a mandate for U.S. regulators to rewrite financial regulation following the financial crisis of 2008 (American Banker March 6). Those changes have created a stronger possibility of divergent views among international regulators, said Jill Sommers, a board member on the Commodity Futures Trading Commission. Karen Shaw Petrou, managing partner at Federal Financial Analytics Inc., said that despite efforts by the Basel committee to harmonize rules, every country must largely set its own regulatory agenda. Petrou said the gap between attempts to end "too big to fail" in the U.S. compared with its preservation in other nations is as wide as the Grand Canyon …
  • WASHINGTON (3/7/12)--As many as 27% of the 37 million U.S. student loan borrowers have past-due balances of 30 days or more, according to a report released Monday by the Federal Reserve Bank of New York. "In sum, student loan debt is not just a concern for the young," the report said. "Parents and the federal government shoulder a substantial part of the postsecondary education bill." From the second to the third quarter of 2011, the total outstanding student loan balance grew 2.1%, to $870 billion from $852 billion. Over the same period, other types of consumer debt declined or remained flat. Of the 241 million people in the U.S. who have a credit report with Equifax--which provided the data for the study—about 37 million (15.4%) hold outstanding student loan debt. Of the 37 million borrowers who have outstanding student loan balances as of third quarter 2011, roughly 14.4%, or about 5.4 million borrowers, have at least one past due student loan account. Together, these past due balances sum to $85 billion, or roughly 10% of the total outstanding student loan balance …
  • WASHINGTON (3/7/12)--The Obama administration said Tuesday it will reduce fees for certain borrowers who are refinancing mortgaged backed by the Federal Housing Administration (FHA) streamlined program (The New York Times March 6). Under that program, mortgages must already be FHA insured and cannot be delinquent. The refinancing must result in a lowering of the borrower's monthly principal and interest payments, and no cash may be taken out on mortgages refinanced using the streamline refinance process. The White House said the FHA's upfront mortgage insurance premium will drop to 0.01% of the loan balance from 1% for loans that were originated before June 1, 2009 …

Small CU roundtable featured at CUNAs GAC

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WASHINGTON (3/7/12)--Small credit unions will have the opportunity to discuss critical issues during the second annual, free, half-day Roundtable meeting at the beginning of the Credit Union National Association's (CUNA's) 2012 Governmental Affairs Conference (GAC).

The Roundtable will be held at the Washington Convention Center on the first day of this year's GAC, Sunday, March 18, from 3-5 p.m. (ET).

The small credit union session is scheduled to include several presentations, as well as group discussion on a variety of issues of concern to the nation's smaller credit unions. Wide-ranging discussion topics will include: small credit union collaboration initiatives; the National Credit Union Administration (NCUA); regulations and regulatory burden; and the transitioning of corporate credit union services, among other topics.

The collaboration discussion will feature Drew Egan and Jon Hernandez. Egan, of the Michigan Credit Union League & Affiliates and CU Corp, will speak about the Michigan league's shared branding initiative --a project that aims to create a strong brand for credit unions of all sizes.  Hernandez, CEO of three credit unions in Southern California (Mattel FCU, CalCom FCU and City of Downey FCU), will discuss the Southern California Credit Union Alliance--a forum for collaboration and cooperation focused on helping small credit unions thrive by reducing operating costs and sharing best practices.

Bill Myers, director of the NCUA's Office of Small Credit Union Initiatives (OSCUI), also will speak to attendees.  Myers is on the agenda to outline the agency's efforts to assist small credit unions through one-on-one help, loans and grants, partnerships and training provided by OSCUI.

CUNA senior staff Kathy Thompson and Ryan Donovan will be on hand during the session to weigh in on compliance issues and to brief attendees on the credit union legislative front.

Also on Sunday at the GAC, the Exhibit Hall Grand Opening Reception will take place from 7-9 p.m. (ET) and the opening concert, featuring Taylor Hicks, is scheduled for 9-10:30 p.m. at the Convention Center.

Small credit unions that register for the GAC can register for the Roundtable at the same time.  Credit unions that do not plan to attend the GAC must register for the Roundtable separately.  These credit unions can register by calling CUNA 800-356-9655 x5700 or by using the resource link below.

CFPB collecting student loan complaints

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WASHINGTON (3/6/12)--Private student lenders, loan servicers, and associated debt collectors have been added to the list of financial service providers that the Consumer Financial Protection Bureau (CFPB) now accepts consumer complaints on, the agency announced on Monday.

"Borrowing for college should be the best investment you'll make, but for many Americans, paying off those student loans is a real challenge," Rohit Chopra, CFPB student loan ombudsman, said.

Chopra in a blog post said that the agency would work with student lenders and servicers to resolve consumer issues.

And to current and former students with loan debt, Chopra said, "While we certainly can't make your debt disappear, we can help bring your concern to your financial institution's attention."

The CFPB plans to have comment systems set up for comments and complaints on all consumer financial products and services by the end of 2012. The bureau last week announced it would start accepting consumer complaints regarding checking and savings accounts, and it also accepts complaints related to credit cards, mortgages, and other home loans. (See March 2 News Now story: CFPB accepting more consumer complaints)

The agency recently asked credit unions and other financial institutions, students, the higher education community, and others in the student loan industry to provide information on the role of schools in the private student loan marketplace, student loan underwriting criteria, repayment terms and behavior, loan servicing and loan modification, and financial education and default avoidance. The collected responses will be used to develop a comprehensive report on the private student lending market, and the CFPB is scheduled to deliver that report in the summer of 2012.

For the CFPB release, use the resource link.

TDR plan moves in right direction CUNA

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WASHINGTON (3/6/12)--The National Credit Union Administration's (NCUA's) Troubled Debt Restructuring (TDR) proposal would provide regulatory relief, and is "an important step forward in terms of guidance and reporting requirements for TDRs," the Credit Union National Association said in a comment letter.

TDR loans, which have very specific accounting and reporting requirements, include certain loan modifications where a credit union or other lender grants a concession—often involving modification to the terms of a loan—to a borrower that it would not have otherwise provided based on the borrower's financial situation. The financial statement and call report  treatment of  TDRs are also unique.

Current TDR reporting requirements force credit unions to segregate TDRs and report TDR payments as delinquent until the member has made timely and consecutive payments for six months after the modification. These requirements have generally resulted in credit unions having to manually track such payments.

CUNA noted that many credit unions want to work with homeowners that cannot pay their mortgages due to financial difficulties but have struggled to meet regulatory and reporting requirements that have been imposed on TDRs.

The NCUA's TDR proposal would allow credit unions to modify TDR loans without having to immediately classify those loans as delinquent. Credit unions would no longer be forced to track each TDR loan's performance manually for six months. The proposal would also set consistent standards for the management of loan workout arrangements that assist borrowers, and eliminate confusion between TDRs and other loan modifications.

However, Deputy General Counsel Mary Dunn, in CUNA's  comment letter, noted that the TDR proposal's different treatment of member business loans (MBLs) could create issues for credit unions with certain processing systems, forcing those credit unions to manually track MBLs that have been modified.

The NCUA proposed making the TDR rules effective 120 days after the final version of the rule is published in the Federal Register. While the rule should become effective "as soon as possible" for credit unions that are able to comply with the changes, CUNA encouraged the NCUA to give small credit unions more time to comply with the TDR changes.

CUNA had urged NCUA to improve reporting and regulatory treatment for TDRS for some time and leagues also had weighed in to urge the agency to move forward with improvements in this area.

CUNA's letter was developed with its Examination and Supervision and Accounting Subcommittee, as well as with the American Association of Credit Union Leagues' Regulatory Advocacy Advisory Committee.

For the full CUNA comment letter, use the resource link.

NCUA others observe National Consumer Protection Week

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WASHINGTON (3/6/12)--The 14th annual National Consumer Protection Week (NCPW) began on Sunday and continues through March 10, and the National Credit Union Administration (NCUA) and Consumer Financial Protection Bureau (CFPB) are joining several federal, state and local governmental agencies and consumer protection organizations as participants.

This year's NCPW will focus on helping consumers manage credit and debt, avoid identity theft, fight scams and fraud, understand technology and how to use it safely, and more, NCPW director David Vladeck said. The NCPW.gov website provides resources from more than 30 federal agencies and national organizations, and contains sample letters and news releases and social media materials.

The NCUA encouraged credit union members and others to use MyCreditUnion.gov during this week, and other times, to access financial tools and calculators, learn about home loans and car loans, or understand federal share insurance at credit unions. "Credit unions can also link their members to this valuable resource via their own websites," NCUA Chairman Debbie Matz said.

The Consumer Financial Protection Bureau noted that this is the second year that the agency has taken part in the NCPW, and that agency reported on the pro-consumer work it has completed so far, including accepting consumer complaints, launching new supervision programs, and adopting new rules to protect consumers.

The National Foundation for Credit Counseling (NFCC) has also challenged consumers this week to "add a layer of security to their financial future" by using caution when engaging with social media sites, learning about how to avoid phishing scams, and taking precautions when shopping online.The Federal Deposit Insurance Corporation has also issued its own guide to help consumers understand the differences between debit, credit and prepaid cards.

Credit unions, libraries, schools, colleges, city halls, and senior centers across the U.S. are also participating in NCPW. Check out the event page on the NCPW website to find consumer protection fairs, shredathons or workshops in your area.

Use the resource link to visit CUNA's aSmarterChoice.org, a consumer website launched a year ago to help consumers find a credit union they can join. In 2011, consumers saved $6.5 billion through better rates and lower fees using not-for-profit credit unions rather than banks.

For more information, use the resource links.

Senate panel considers jobs CUNA urges MBLs

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WASHINGTON (3/6/12)--With the Senate Banking Committee scheduled to discuss initiatives that could create job growth during a hearing this morning, the Credit Union National Association (CUNA) continues to advocate for increasing the 12.25%-of-assets credit union member business lending (MBL) cap as a good, immediate way to spur the economy and create new jobs--all at no cost to the U.S. taxpayer.

Increasing the MBL cap to 27.5% of total assets could inject $13 billion of credit for small businesses into the economy in the first year after enactment, and help small businesses create 140,000 new jobs, CUNA has estimated.

Separate bills in the U.S. House and Senate that would increase the MBL cap have bipartisan support. CUNA Senior Vice President of Legislative Affairs Ryan Donovan noted Monday that both have been vetted by the U.S. Congress, and added that opposing arguments introduced by bankers have been "debunked."

For instance, in February CUNA coordinated a small business Hike the Hill event, during which small business owners underscored their unmet need for credit and their support of increased MBL authority for credit unions.  During a congressional hearing, banking witnesses had claimed that there is no unmet demand for credit by the country's small businesses.

The Senate version of MBL cap increase legislation (S. 509) had 22 cosponsors and the House version (H.R. 1418) has 122 cosponsors.

Also of interest to credit unions this week in Congress:

  • The House Financial Services Committee is scheduled today to markup that panel's budget views and estimates for fiscal year 2013;
  • On Wednesday, the Senate Judiciary Committee has scheduled a hearing on "Examining Lending Discrimination Practices and Foreclosure Abuse."  Assistant Attorney General Thomas Perez of the Civil Rights Division is expected to testify during that hearing; and
  • The Senate Homeland Security and Government Affairs Committee has scheduled a hearing on President Barack Obama's government reorganization plan on Wednesday.


The Senate will remain in session next week, but the House will be on recess until March 19.

Inside Washington (03/05/2012)

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  • WASHINGTON (3/6/12)--The Federal Reserve Board Friday issued guidance to ensure that supervisors apply consistent standards as they evaluate whether banks with $10 billion or less in assets are eligible for upgrades of supervisory ratings. The guidance is being issued to ensure that upgrades made addressed any supervisory concerns that had prompted lower ratings. To be eligible for an upgrade, banks must demonstrate improvement in financial condition and risk management in areas such as capital levels, core earnings asset quality, liquidity and interest-rate positions. Banks also must demonstrate their risk-management capabilities have improved to address weaknesses that contributed to prior ratings, and policies and they have implemented policies and practices that focus on sustainability commensurate with the bank's risk profile …
  • WASHINGTON (3/6/12)--The Federal Reserve Board Friday extended until April 30 the comment period on a proposed rule that would include new capital and liquidity requirements for banks with more than $50 billion in assets, as required by the Dodd Frank Act. The proposal also includes single counterparty credit limits, stress testing, risk management and early remediation requirements. "In recognition of the complexities of the issues addressed and the variety of considerations involved with implementation of the proposal, the Board requested that commenters respond to numerous questions," the Fed said in a press release. Comments previously were due March 31 …

Prohibition order for former Western Corp. FCU employee

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ALEXANDRIA, Va. (3/6/12)--The National Credit Union Administration (NCUA) has issued an order prohibiting Timothy T. Sidley, a former employee of Western Corporate FCU (WesCorp), San Dimas, Calif., from participating in the affairs of any federally insured financial institution.

Sidley consented to the order, without admitting liability or fault, to avoid administrative litigation and further court proceedings, the NCUA said. 

Sidley was the chief risk officer at WesCorp, and was one of five officials the NCUA sued as a result of the collapse of Western Corporate FCU.

The NCUA and Sidley on Friday filed a settlement agreement with a federal court in Los Angeles to dismiss the case, according to a stipulation filed Friday. (News Now March 5) The proposed order stipulates that dismissal of the case would be "with prejudice of all claims and counterclaims" between NCUA and Sidley.

It would not apply to the NCUA's claim against any other defendant in the WesCorp case--Robert Siravo, CEO; Thomas Swedberg, head of human resources; Robert Burrell, chief investment officer; and Todd Lane, chief financial officer. The case stems from the conservatorship and eventual liquidation of that corporate credit union.

The NCUA said the prohibition order against Sidley was one of the terms of the confidential settlement agreement.

Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.

Use the resource link to view NCUA enforcement orders online.

Mortgage-fraud SARs increase in 2011 3Q

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WASHINGTON (3/6/12)--The Financial Crimes Enforcement Network (FinCEN) Monday reported that the 19,934 Mortgage Loan Fraud (MLF) suspicious activity reports (SAR) filed during the third quarter of 2011 represented a 20% increase above 2010's third quarter total. MLF SARs accounted for 10% of all SARs filed during the quarter, according to FinCEN.

The FinCEN update also reported that 5,728 of the MLF SARs filed in the third quarter--29% of the total--reported activity that occurred between October 2009 and September 2011. Some of the types of suspicious activity reported included: some form of loan workout or debt elimination attempt, questionable refinance or loan modification attempts by borrowers or others targeting distressed homeowners, and Social Security number discrepancies submitted in the original loan application and the workout request.

FinCEN Director James Freis said "criminals persist in their efforts to prey on struggling homeowners" and financial institutions continue to uncover apparent fraud as they work through their portfolios of earlier mortgages now in default."

More than 85% of the mortgage-related reports involved sums under $500,000. Hawaii, California, Nevada, Florida, and Delaware had the highest amounts of SAR filings, per capita.

For the full FinCEN report, use the resource link.

Comment Call asks for derivatives investment details

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WASHINGTON (3/5/12)--The National Credit Union Administration (NCUA) is considering allowing more credit unions to hedge interest rate risks (IRR) by using limited types of derivatives, and the Credit Union National Association (CUNA) is asking credit unions to comment on the issue in a new comment call.

The NCUA currently allows a limited number of federal credit unions to engage in derivatives through an investment pilot program, and the agency could permit more credit unions to independently use derivatives to hedge IRR. The agency in an advanced notice of proposed rulemaking has suggested that credit unions that demonstrate a relevant, material IRR exposure, have demonstrated the ability to manage derivatives, and have the net worth and financial health needed to manage derivatives could be allowed to invest in interest rate swaps and interest rate caps.

CUNA has asked if additional limits should be established to ensure that federal credit unions do not engage in derivatives that are greater than their IRR exposure

The comment call also asks for comment on how the NCUA could improve the process of hedging IRRs, and recommendations on how best to account for and report derivatives.

Comments on the ANPR are due to the NCUA by April 3. CUNA will accept comments until March 16.

For the full comment call, use the resource link.

NCUA releases CU Locator smartphone app

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ALEXANDRIA, Va. (3/5/12)--The National Credit Union Administration (NCUA) has released a new CU Locator app to help members on the go find their nearest credit union.

Click to view larger image Click for larger view


The app is available for Apple iPhones and Android phones, and can be downloaded in both the iTunes and Android online stores.

The app shows the nearest credit union locations and ATMs on a map or in a list, and app users can also map a route to their choice of credit unions using google maps. The app also provides basic contact information and branch hours, and access to the NCUA's homepage and the agency's social media sites. Users can also subscribe to the agency's email alert system, NCUA Express.

"More and more consumers, and especially younger people, are increasingly getting their information from social media outlets and demanding mobile banking services. The CU Locator app is just the latest example of how NCUA is connecting credit unions with younger audiences," NCUA Chairman Debbie Matz said. "I encourage all credit unions to link to NCUA's CU Locator to help consumers get access to credit union information when on the run," she added.

Countdown continues to iGo Directi deadline

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WASHINGTON (3/5/12)--U.S. Treasurer Rosie Rios began the official countdown to March 1, 2013, the date by which all federal benefit recipients must receive their Social Security and other federal benefit payments electronically through direct deposit, by starting a "countdown clock" last Thursday.

The U.S. Treasury Department in a release said about 90% of Social Security and Supplemental Security Income (SSI) payments are being made electronically at the moment, and Rios said the Treasury is "urging the remaining 10% of federal benefit recipients who still receive a paper check to make the switch to electronic payments as soon as possible."

The Treasury officially ended the use of paper checks for the payment of newly filed Social Security and other federal benefit payments on May 1, 2011.

Rios said the switch to electronic payments "is a win-win" for benefit recipients and taxpayers, and would save $1 billion over ten years. "The sooner everyone makes the switch, the sooner we'll realize those benefits," she added.

The Treasury is also promoting the benefits of direct deposit through the Go Direct program. The Treasury included an insert on the Go Direct program in its March social security checks, and Go Direct has also released sample news copy, fliers and posters for financial institutions and community organizations to inform citizens of the benefits of switching to direct deposit.

The Credit Union National Association is a Go Direct national partner and supports the check-safety and cost-savings goals for the program.

Credit Union Magazine has also advised readers on how best to prepare their members for the coming change.

For more information on the Go Direct program and the Credit Union Magazine article, use the resource links.

GAC will showcase CU strength Cheney interview

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WASHINGTON (3/5/12)--With more than 4,000 attendees expected at the Credit Union National Association's (CUNA) 2012 Governmental Affairs Conference (GAC), credit unions will have a valuable chance to drown out the banks' competing voices and show the strength of their movement to Washington, CUNA President/CEO Bill Cheney noted in an interview with CO-OP Financial Service's THINK magazine.

Cheney noted that bankers are also holding a conference at the same time as the GAC, and are expecting as many as 1,000 attendees. "Wouldn't it be great if credit unions outnumbered the banks by a margin of four to one — or more?"

The 2012 GAC will take place March 18-22 at the Washington Convention Center in Washington, D.C.

"As an industry, we face more and more regulation, with higher and higher costs for compliance. It's as important as ever to be heard," he said. CUNA is working to address these issues by developing coordinated advocacy strategies with state credit union leagues. "What we want is one approach to federal governmental affairs and a coordinated strategy for approaching advocacy at the state level… by giving credit unions a stronger, more unified voice with the government, we think we can be more effective as an industry," he said.

The CUNA CEO said that increasing the 12.25% of assets credit union member business lending cap, protecting the credit union difference, and pushing back against over-regulation will be key priorities in 2012.

Cheney also stressed the importance of ensuring legislators understand key differences between credit unions and banks.  "Our not for profit status is at risk.  Especially in the budget-cutting environment that we are facing, credit unions need to speak out about the importance of maintaining this difference," he said.  "Credit unions were created to give consumers a choice.  It's very clear—now more than ever—why credit unions are necessary."

That difference, as not-for-profit cooperatives, also helped credit unions weather the financial crisis with far fewer problems than banks, Cheney added.  "Credit unions have been through a lot, but if you look back at how everyone fared after the crisis hit, it's startling how much better credit unions did than banks," he said. "Credit unions are, by several orders of magnitude, better than banks."

For the full interview and more on the 2012 GAC, use the resource links.

Inside Washington (03/02/2012)

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  • WASHINGTON (3/5/12)--Sen. Richard Durbin (D-Ill.) Thursday criticized Bank of America after a Wall Street Journal article reported that BofA is considering new checking account fees. BofA would charge checking account holders who do not bank online, maintain a certain minimum balance or buy other products, according to the article (American Banker March 2). In 2011, BofA considered charging a $5 monthly fee on checking account holders who did not maintain a specified balance. That plan was shelved following consumer outcry, including the grassroots creation of Bank Transfer Day Nov. 5. "I call on Bank of America--and all of the nation's banks--to immediately adopt a clear, simple and upfront checking account fee disclosure form so consumers know exactly what fees are associated with each account," Durbin said in a press release. "With effective transparency and competition, we can ensure that consumers on Main Street do not get nickled and dimed while trying to access their own money" …
  • WASHINGTON (3/5/12)--Federal Reserve Board Chairman Ben Bernanke said Thursday that U.S. regulators are carefully considering criticism from foreign banks and governments on how their sovereign debt will be handled in a proposed ban on proprietary trading by banks (American Banker March 2). The plan, also known as the Volcker Rule, also would limit bank investments in private-equity and hedge funds. The plan exempts U.S. Treasury securities, but not the sovereign debt of governments in other countries, such as those belonging to European Union, Canada and Japan. The governments of those countries have questioned the fairness of the proposal. In testimony before the Senate Banking Committee Thursday, Bernanke said U.S. regulators are taking comments from foreign governments "very seriously" and are in discussions with them …
  • WESTBROOK, Maine (3/5/12)--Maine Credit Union League President John Murphy offered his appreciation for the service to credit unions provided by Sen. Olympia Snowe (R-Maine), who announced last week she has decided to not seek re-election to the Senate (Weekly Update March 2). "During her more than three decades of serving the people of Maine, Sen. Snowe has proven to be a great friend of credit unions," Murphy said. "Sen. Snowe was a true public servant and we will miss her leadership and support to the people of Maine on many of our important issues" …

FinCEN confidentiality advisory reminds of penalties

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VIENNA, Va. (3/5/12)--The Financial Crimes Enforcement Network (FinCEN) expressed concern that an increasing number of private parties, who are not authorized to know of the existence of filed Suspicious Activity Report (SARs), are seeking SARs from financial institutions for use in civil litigation and other matters.

FinCEN issued an advisory Friday to financial institutions, and "in particular, the lawyers that advise them," that Bank Secrecy Act rules require confidentiality of SARs.

"Financial institutions, and their current and former directors, officers, employees, agents, and contractors, are prohibited from disclosing SARs, or any information that would reveal the existence of a SAR," FinCEN reminded.

"This is especially true when external counsel is unfamiliar with the regulations covering SAR confidentiality. Financial institutions, and their current and former directors, officers, employees, agents, and contractors could be subject to civil and criminal penalties for the unauthorized disclosure of a SAR," FinCEN warned.

The unauthorized disclosure of a SAR is a violation of federal law. The agency noted that both civil and criminal penalties may be imposed for SAR disclosure violations:  Violations may be enforced through civil penalties of up to $100,000 for each violation and criminal penalties of up to $250,000 and/or imprisonment not to exceed five years.

For more on the FinCEN advisory, including associated penalties, use the resource link below.

CUNA meets with top White House advisor

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WASHINGTON (3/5/12)--As part of an ongoing legislative and regulatory advocacy efforts and wasting no time following the release of the president's corporate tax reform proposal, Credit Union National Association (CUNA) President/CEO  Bill Cheney and senior staff met with White House Deputy Chief of Staff for Policy Nancy-Ann DeParle.

The discussion focused on reaffirming the importance of credit unions' tax exempt status, the need for regulatory relief for credit unions, and enhancing the administration's support for credit union initiatives, such as member business lending.

Click to view larger image CUNA President/CEO Bill Cheney (center, under the White House seal) with (from left) General Counsel Eric Richard, Deputy General Counsel Mary Dunn, Executive Vice President John Magill, and Legislative Affairs Senior Vice President Ryan Donovan prepare to meet with White House Deputy Chief of Staff Nancy-Ann DeParle. (CUNA photo)
"I was pleased I was able to meet with Deputy Chief of Staff DeParle and that she is so conversant on credit union issues.  I felt the meeting was productive, and she was receptive to hearing about our concerns," Cheney said.  He was accompanied by CUNA Senior Staff John Magill, Eric Richard, Mary Dunn and Ryan Donovan.

Cheney added, "At a time when policy makers are scrutinizing every aspect of the tax code for revenue, we are reassured the credit union tax exemption is not a target in the president's package."   

During the meeting, CUNA emphasized the importance of the nation's 7,300 credit unions to their more-than 94 million members, consumers and small businesses alike and how the tax exemption for credit unions benefits credit union members, their communities and the nation's economy.

CUNA also highlighted credit unions' anxieties about regulatory burdens and, as requested, will be following up with White House staff on these concerns.

In addition, CUNA urged the White House to be more vocal of its support for credit unions' role in meeting their members' financial needs and the legislation endorsed by the U.S. Treasury Department to raise the member business lending cap to 27.5% of assets, up from the current 12/25% restriction.  CUNA estimates the increase would create the availability of  $13 billion of new credit for small businesses and create as many as 140,000 new jobs--all at no cost to the U.S. taxpayer and all within the first year of enactment.

CUNA seeks comment on CFPB remittance changes

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WASHINGTON (3/2/12)--Credit unions can provide their own insights on how the Consumer Financial Protection Bureau's (CFPB) recently released remittance rule would impact their practices, and how compliance burdens caused by the rule could be mitigated, in a new Credit Union National Association (CUNA)  comment call.

The CFPB has issued a proposal to further define certain aspects of the "remittance transfers" final rule under Regulation E, as required by the Dodd-Frank Act. The final rule's requirements will apply to most credit unions and financial institutions that provide consumers with international electronic funds transfer services because it broadly defines the term "remittance transfers" to include virtually all cross-border electronic funds transfers initiated by consumers in the U.S. including Automated Clearinghouse and wire transfers, and products such as the World Council of Credit Unions' IRnet.

The final rule does not apply to most transfers involving credit, debit, and prepaid cards.

The CFPB has also asked for comment on:
  • Whether to provide a safe harbor to exempt certain financial institutions and other "remittance transfer providers" from the final rule if they transmit a low number of transfers (e.g., 25 transfers per year); and
  • For transfers scheduled in advance, including preauthorized transfers, whether to provide additional flexibility on the required disclosures, including: additional use of estimates for a scheduled one time or first transfer in a series of preauthorized transfers; a longer timeframe for or the elimination of the pre-payment disclosure for subsequent transfers; and other potential changes to the cancellation requirements.

The CFPB expects to complete any further rulemaking on these issues before the final rule becomes effective on Feb. 7, 2013.

Comments on the proposal are due to CFPB by April 9. CUNA will accept comments until March 26.

For the full comment call, use the resource link.

Nearly 400M in funds requested from 2012 CDFI Fund

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WASHINGTON (3/2/12)--A total of 44 credit unions have applied for a combined $59 million in funding during the 2012 round of the U.S. Treasury Department's Community Development Financial Institutions (CDFI) Fund.

Twenty-four of those credit unions applied for technical assistance (TA)  grants. Twenty applied for financial assistance (FA) grants.

In total, 403 credit unions, banks, loan funds, venture capital funds, thrifts, and holding companies applied for the $123 million in funds that will be disbursed this year.  The FY 2012 applicants requested almost $395.7 million, with FA applicants requesting $384.3 million and TA applicants requesting $11.4 million. Applicants for FA are from 46 states plus the District of Columbia and Puerto Rico; TA applicants are from 38 states plus the District of Columbia and Puerto Rico.

A total of 393 institutions applied for funding during last year's round.

CDFI Fund Director Donna Gambrell said "the response to this year's round demonstrates that there is still work to be done in many communities across our nation and that there is continued need for the flexible capital that the CDFI Program provides. These CDFIs are on the frontlines of these economically distressed communities, and are providing critically needed financial products and services to those who often have no alternatives."

The Treasury's CDFI Fund helps locally based financial institutions offer small business, consumer and home loans in communities and populations that lack access to affordable credit. Credit unions that are certified to take part in the CDFI program may apply for as much as $2 million in funding to help maintain their credit union's presence in the community. CDFI fund distributions are merit-based.

The fund awarded $142,302,667 to 155 institutions, including 25 credit unions, last year, in the largest single round of monetary awards since the CDFI Fund program began in 1994.

The CDFI Fund eclipsed $1 billion in total awards in 2011.

This year's recipients will be announced in the summer, the release said.

For the CDFI Fund release, use the resource link.

Inside Washington (03/01/2012)

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  • WASHINGTON (3/2/12)--The Credit Union National Association (CUNA) has named former Capitol Hill staffer Sam Whitfield to serve as its new vice president of legislative affairs. Whitfield, a native Mississippian with a BS from the University of Mississippi, has previously worked on Sen. Trent Lott's (R-Miss.) staff, in the senator's roles as both Senate majority leader and Republican leader. He also served President George W. Bush's administration as a legislative analyst/public affairs specialist with the White House Office of National Drug Policy, and worked as a press officer for the Coalition Provisional Authority in Baghdad, Iraq. He most recently served as a legislative representative for the National Association of Realtors. Whitfield's primary role will be to manage the association's team of congressional advocates and their efforts to execute credit union/CUNA strategies on Capitol Hill. Whitfield takes on a position that was formerly held by CUNA Senior Vice President of Legislative Affairs Ryan Donovan, who now leads the association's advocacy efforts with Congress. John Magill, CUNA executive vice president and special assistant to the president, will continue his role as the association's chief lobbyist on Capitol Hill as well as providing high-level strategic counsel to CUNA President/CEO Bill Cheney. Cheney said "Sam's broad experience on the Hill and in government, as well as his effectiveness as an advocate, will serve credit unions well in his new role with us." …
  • WASHINGTON (3/2/12)--U.S. regulators are unlikely to make the July 21 deadline to finalize a rule that would ban proprietary trading by banks and limit their investments in private equity and hedge funds, Federal Reserve Chairman Ben Bernanke told Congress Wednesday (American Banker March 1). The deadline to finalize the so-called Volcker Rule is July 21. Bernanke told the House Financial Services Committee he couldn't provide an exact date when the rule would be finalized. The Fed has received about 17,500 comments on the rule, which has received criticism from banks and foreign governments. Concerns are primarily related to the exceptions the rule allows. Banks would be permitted to make certain kinds of trades, including those for market-making activities. Bernanke said regulators are having difficulty distinguishing between proprietary trading and market-making activities …
  • WASHINGTON (3/2/12)--In a new Securities and Exchange Commission filing, Fannie Mae said it cancelled Bank of America's (BofA) loan delivery contract. The cancellation bars BofA from selling most types of loans to Fannie because of delays by the bank in making good on outstanding buyback requests (American Banker March 1). BofA accounted for 59% of buyback requests that were more than 120 days past due, Fannie said in the filing. Last week, BofA announced it would stop selling purchase money loans made to Fannie Mae. Although BofA has yet to honor its repurchase obligations, Fannie has not changed the amount it expects to collect from them, the government-sponsored enterprise said, adding that it will continue to work with the bank to resolve the issues …

CFPB accepting more consumer complaints

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WASHINGTON (3/2/12)--Consumers can forward their issues and complaints regarding checking and savings accounts to the Consumer Financial Protection Bureau (CFPB), under an initiative announced Thursday by the bureau.

The CFPB plans to have comment systems set up for comments and complaints on all consumer financial products and services by the end of 2012. The bureau currently also  accepts complaints related to credit cards, mortgages, and other home loans.

CFPB Director Richard Cordray said in a blog post announcing the new comment initiative that collecting consumer complaints on checking and savings accounts "is an important step" for the agency.

"We have heard story after story of consumers being hit with fees they did not expect and do not understand. We take these complaints very seriously," he added.

Cordray said that financial institutions will be expected to respond to checking and savings account consumer complaints within 15 days. They must resolve the issue within 60 days. Consumers will be able to monitor the status of their complaint on the CFPB's homepage. During a recent conference call in which CUNA staff participated, CFPB officials confirmed that complaints received outside of the CFPB's direct examination and supervision authority are transferred to the appropriate prudential regulators for processing.

Regarding other consumer complaints, the CFPB's Consumer Response team had received nearly 12,000 credit card complaints and 7,000 mortgage complaints as of Feb. 22. 

Cordray said the credit card complaints have focused on three issues: consumer confusion, third-party fraud, and factual disputes between the consumer and the card issuer. Most mortgage complaints have been tied to foreclosure issues.

For the full CFPB blog, use the resource link.

2011 CU membership growth impressive Cheney says

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ALEXANDRIA, Va. (3/2/12)--The number of credit union memberships nationwide grew to 91.8 million in the fourth quarter of 2011, the National Credit Union Administration (NCUA) reported, setting a new historical high to end a year that saw many move their money from larger banks into credit unions on Bank Transfer Day.

Credit union membership increased by 398,000 in the fourth quarter of 2011, and 1.3 million over the course of the year, the NCUA added in its analysis of the call report data submitted by the nation's 7,094 federally insured credit unions.

Credit Union National Association (CUNA) President/CEO Bill Cheney said the NCUA numbers demonstrated "very impressive membership growth for credit unions," and added that the large increase in members in the fourth quarter "is very positive compared to declines in prior years."

Net worth and assets both climbed when compared to 2010 fourth quarter results, increasing by 6.9% and 5.2%, respectively. Credit union net worth totaled $98.4 billion as of Dec. 31, and credit unions held $961.8 billion in assets as of that date. The credit union industry's return on assets (ROA) ratio, a measure of earnings, also increased over 2010's total, standing at 68 basis points (bp) as of Dec. 31. The NCUA noted that credit union industry ROA has increased by 50 bp since December 2009.

NCUA Chairman Debbie Matz noted "credit unions ended 2011 in a safer and stronger position than at the start of the year," as net income increased by 41.2% over 2010's total, finishing the year at $6.4 billion.

The NCUA also reported the following results between the fourth quarters of 2010 and 2011:

  • Shares increased 5.2% to $827.4 billion from $786.4 billion;
  • Investments, cash on deposit, and cash equivalents increased 12.4% to $352.1 billion from $313.3 billion; and
  • Loans increased 1.2% to $571.5 billion from $564.7 billion.
"Credit unions' net income and other growth numbers reinforce that new safety and soundness  rules are not needed, certainly, for the vast majority of credit unions," CUNA Deputy General Counsel Mary Dunn  said.

For more on the NCUA's fourth quarter credit union statistics, use the resource link.

CFPB-NCUA webinar now available online

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ALEXANDRIA, Va. (3/2/12)--The free joint Town Hall session with National Credit Union Administration (NCUA) Chairman Debbie Matz and Consumer Financial Protection Bureau (CFPB) Director Richard Cordray is now available online.

The 90-minute, Feb. 8 session discussed such topics as overdraft protection programs, which the CFPB director acknowledged are on the bureau's radar screen, and credit card disclosures. From the NCUA side, the session covered new rules on credit union service organizations and trouble debt restructuring loans, among other issues.

To access the archived version of the webinar, use the resource link below.

Big bank fees back in the news

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WASHINGTON (3/2/12)--Big banks' growing fees is a topic that is back in the news this week, with The Wall Street Journal zeroing in on a Bank of America (BofA) plan to add a new string of fees and The Huffington Post highlighting recent fee-celebrating comments by a JP Morgan Chase official.

In its March 1 issue, the Journal reported that BofA is considering new monthly fees that range from $6 to $25. The article said the new line of fees would be targeted primarily to basic-checking accountholders, unless they agree to "bank online, buy more products or maintain certain balances."

Reporters Dan Fitzpatrick and David Enrich wrote, "Those efforts are tricky, because they risk upsetting the banks' best customers or drawing fire from politicians. Bank of America retreated last fall from a new $5 debit-card charge following a customer revolt and a wave of criticism."

It was that $5 debit-card fee that many see as the spark that ignited the grassroots Bank Transfer Day (BTD) movement, where a social media post by Kristen Christian transmogrified into a mass movement of consumers away from big banks and toward smaller financial institutions, like credit unions and community banks.

Also in the news, The Huffington Post, picking up a New York Times live blog post from the bank's investor day conference, reported that the head of JP Morgan Chase's consumer banking division, Todd Maclin, said he would "celebrate" if the bank could charge even higher fees.

According to the Thursday article, JP Morgan is itching for a time when consumers begin to view maintenance fees for checking the way they see items on their monthly household budgets--like gym memberships.

The Post went on to say that while the banking industry defends its fees by saying it costs a lot to maintain and service checking accounts, it highlights the fact that small institutions, like credit unions, "are doing just fine with middle-class customers who have less than one hundred grand in the banks--and they don't need to charge fees to do it."

Eighty percent of credit unions, in fact, offer free checking accounts, the Post reports, quoting CUNA figures.

NEW Federally insured CUs enjoy new membership highs NCUA says

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ALEXANDRIA, Va. (UPDATED: 12:35 p.m. ET, 3/1/12)--The number of credit union memberships nationwide grew to 91.8 million in the fourth quarter of 2011, the National Credit Union Administration (NCUA) reported, setting a new historical high to end a year that saw many move their money from larger banks into credit unions on Bank Transfer Day.

Credit union membership increased by 398,000 in the fourth quarter of 2011, and 1.3 million over the course of the year, the NCUA added in its analysis of the call report data submitted by the nation's 7,094 federally insured credit unions.

NCUA Chairman Debbie Matz noted "credit unions ended 2011 in a safer and stronger position than at the start of the year," as net income increased by 41.2% over 2010's total, finishing the year at $6.4 billion.

The NCUA also reported the following results between the fourth quarters of 2010 and 2011:
  • Net worth increased 6.9 percent to $98.4 billion from $92.0 billion;
  • Assets increased 5.2 percent to $961.8 billion from $914.3 billion;
  • Shares increased 5.2 percent to $827.4 billion from $786.4 billion;
  • Investments, cash on deposit, and cash equivalents increased 12.4 percent to $352.1 billion from $313.3 billion; and
  • Loans increased 1.2 percent to $571.5 billion from $564.7 billion.
For more on the NCUA's fourth quarter credit union statistics, use the resource link.