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CUNAs Cheney Further interchange action is critical

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WASHINGTON (4/14/11)--This is a critically important time for credit unions nationwide to band together and use their "big voice" to continue calling on legislators to stop, study and start over on interchange fee cap regulations, Credit Union National Association (CUNA) President/CEO Bill Cheney emphasized during a Wednesday audio conference call with credit unions around the nation. Around 1,000 credit unions took part in the call. An archived recording of the 30-minute call will soon be posted on CUNA’s home page for those who were unable to participate yesterday. Cheney during the call noted the pending July 21 effective date for the interchange provisions, and said credit unions are at a critical junction because "the time window for action is relatively short." He added that credit unions, through this current interchange fee cap battle, are in effect fighting to save free checking--an important message for credit union members and other consumers to know. A key element of the current grassroots push is the "Call on Congress" campaign launched by CUNA and the leagues that provides a toll-free phone number, website and other resources so that credit unions can mobilize their members in urging Congress to "stop, study and start" over on interchange, Cheney explained. Two separate pieces of legislation, one in the House and one in the Senate, would delay the effective date of the interchange action. These bills would also require regulators to study the impact that the interchange fee cap would have on consumers, financial institutions, and merchants. The House interchange delay legislation was introduced by Rep. Shelly Moore Capito (R-W.Va.) and currently has 78 co-sponsors. Sen. Jon Tester (D-Mont.) introduced the interchange delay legislation in the Senate. That bill has 16 co-sponsors. Members of Congress will return at the end of this week to their home districts for a two-week work period, and Cheney said that this presents a key opportunity for credit union advocates to urge their respective legislators to support an interchange implementation delay. Credit union representatives should thank the legislators who are supporting an interchange implementation delay, and ask those who have not yet signed on as co-sponsors to do so. He urged credit union representatives to reach out to members of Congress in their home districts and schedule meetings during the break. "There is really no better way to talk to a member of Congress than face-to-face," Cheney emphasized. Outreach and education efforts are being made through the leagues, individual credit unions, and social media outlets. CUNA, credit unions and leagues are collaborating on district-based letter writing campaigns, and posters, sample letters and other materials have also been distributed to help credit unions push this effort forward. Cheney during the call noted that credit unions that have engaged their own members to help with outreach have seen as much as 20% of those members take action. "That is tremendous," he said. CUNA and the leagues' own legislative advocacy actions so far have helped credit unions generate nearly 93,000 contacts to Congress nationwide, Cheney added. To join CUNA's Call to Action on interchange, use the resource link.

Safeguarding CU tax exemption a priority CUNA

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WASHINGTON (4/14/11)--With potential tax reform discussions on the horizon, Credit Union National Association (CUNA) Senior Vice President of Legislative Affairs John Magill reminded credit unions that CUNA would vigilantly monitor upcoming budget discussions for any mentions of the credit union tax exemption. CUNA has repeatedly emphasized that credit unions save consumers more than $6 billion a year in better rates and lower fees--far more than would be gained by taxing credit unions. And because credit unions are not-for-profit and member-owned, taxing credit unions really amounts to taxing their 92 million members. Those savings are passed on to members via better pricing of financial services. “The credit union tax exemption is one of the highest-yielding investments the federal government has made,” CUNA President/CEO Bill Cheney said. The exemption also helps ensure that consumers have choices beyond commercial, for-profit banks. President Barack Obama in a Wednesday speech proposed several measures to reduce the deficit, including tax code reforms and cuts in both military and domestic spending. These cuts would save an estimated $4 trillion over the course of 12 years.

Inside Washington (04/13/2011)

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* WASHINGTON( 4/14/11)--The Federal Deposit Insurance Corp. (FDIC) on Tuesday updated its loss, income, and reserve ratio projections for the Deposit Insurance Fund (DIF) over the next several years. The projected cost of FDIC-insured institution failures for the five-year period from 2011 through 2015 is $21 billion, compared to estimated losses of $24 billion for banks that failed in 2010. The agency noted that while the projections are uncertain, the DIF should become positive this year and reach 1.15% of estimated insured deposits in 2018. The Dodd-Frank Act requires that the fund reserve ratio reach 1.35% by Sep. 30, 2020. The FDIC said it likely will consider a proposal later this year to implement the requirement in Dodd-Frank to offset the effect of increasing the reserve ratio from 1.15% to 1.35% on institutions with assets of less than $10 billion. Following seven quarters of decline, the DIF balance has increased for four consecutive quarters. The balance stood at negative $7.4 billion at year-end 2010, up from negative $8 billion in the prior quarter and negative $20.9 billion at the end of 2009 … * WASHINGTON (4/14/11)--Fourteen of the largest mortgage servicers had significant deficiencies in their foreclosure processing, according to enforcement actions filed by their regulators yesterday. These deficiencies included the filing of inaccurate affidavits and other documentation (so-called “robo-signing”), poor oversight of attorneys and other third parties, inadequate staffing and training of employees, and poor communications with borrowers who sought to avoid foreclosures. The enforcement action required banks to ensure that their affiliated servicers took corrective measures and address any deficiencies identified in the review. In a statement, the Federal Deposit Insurance Corp. said it supports a single point of contact for homeowners to work with during the foreclosure process … * WASHINGTON (4/14/11)--Five federal agencies are seeking comment on a proposed rule to establish margin and capital requirements for derivatives as required by the Dodd-Frank Act. The amount of margin required under the proposed rule would vary, based on the relative risk of the counterparty and of the swap or security-based swap. Dealers would not be required to collect margin from a commercial end user as long as its margin exposure is below an appropriate credit exposure limit established by the swap entity. Swap dealers would also not be required to collect margin from low-risk financial end users so long as its margin exposure does not exceed a specific threshold. The rule is proposed by the Federal Reserve Board, the Farm Credit Administration, the Federal Deposit Insurance Corp. the Federal Housing Finance Agency, and the Office of the Comptroller of the Currency. The proposed rule would require swap entities regulated by the five agencies to collect minimum amounts of initial margin and variation margin from counterparties to non-cleared swaps and non-cleared, security-based swaps. The proposed margin requirements would apply to new, non-cleared swaps or security-based swaps entered into after the proposed rule’s effective date. The proposal also seeks comment on several alternative approaches to establishing margin requirements …

Compliance Credit reporting changes coming

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WASHINGTON (4/14/11)--The July implementation deadline for many portions of the Dodd-Frank Act is approaching, and many credit unions still have questions regarding how the new Dodd-Frank rules will impact their practices. As covered in this month’s Compliance Challenge, two of the many coming changes will impact disclosures required by the Fair Credit Reporting Act (FCRA). The Federal Reserve Board and the Federal Trade Commission proposed regulations regarding the credit score disclosure requirements of the Dodd-Frank Act. The statute requires creditors to disclose credit scores and related information to consumers in risk-based pricing (RBP) notices under the FCRA if a credit score was used in setting the credit terms. The Compliance Challenge addressed whether or not credit unions would need to replace their current RBP forms with new ones once the proposal is finalized. The Credit Union National Association has said that the answer to that question will depend on whether a credit union uses a consumer’s credit score to set the material terms of credit. The Dodd-Frank Act will also require creditors to disclose on adverse action notices a credit score that was used in taking any adverse action against a consumer and any information relating to that score. The Fed proposed to amend the combined Equal Credit Opportunity Act (ECOA)-FCRA model adverse action notices to include credit score information as well. Both the RBP and adverse action notices would be amended to include the following:
* A statement that a credit score takes into account information in a consumer report and a credit score can change over time; * The specific numerical credit score used in making the credit decision; * The range of possible credit scores; * Key factors that adversely affected the credit score such as late payments and high credit utilization; * The date on which the credit score was created; and * The name of the consumer reporting agency that provided the credit score.
The proposed RBP changes would add two new forms, giving credit unions a total of four risk-based pricing notices to contend with. For more specifics on these forms, see this month’s Compliance Challenge. Comments on the RBP and adverse action changes are being accepted through the end of today.