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TDR Guidance Released For NCUA Examiners

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ALEXANDRIA, Va. (4/3/13)--The National Credit Union Administration has shared with credit unions guidance it provided to agency examiners on how to review loan workouts, nonaccrual policies, and regulatory reporting of troubled debt restructurings.

The guidance, which was released to the public in a Tuesday letter to credit unions (12-CU-03), provides additional clarity and consistency related to the review of loan workout programs in credit unions, the agency noted.

The release of this guidance was encouraged by the Credit Union National Association, and CUNA is reviewing the guidance at this time. "We appreciate the NCUA's decision to release this letter and guidance, and plan to review it with our Accounting Subcommittee," CUNA Deputy General Counsel Mary Dunn said.

The NCUA letter and guidance address:

  • Appropriate nonaccrual policies and procedures for loan workouts and TDRs;
  • Revised regulatory reporting requirements for loan workouts;
  • What credit unions should address in a workout policy including controls and decision-support systems consistent with the size and scope of their program;
  • Key components of a sound information system for loan workouts and TDRs; and
  • How examiners will determine which loan workouts are, or are not, TDRs;
  • Other important considerations for NCUA examiners.
NCUA TDR rules effective as of Dec. 31, 2012, allow credit unions to modify TDR loans without having to immediately classify those loans as delinquent. The rules also set consistent standards for the management of loan workout arrangements that assist borrowers, and are intended to eliminate confusion between TDRs and other loan modifications.

Credit unions are also no longer required to report modified-loan information on their 5300 Call Reports. This change affects the delinquency, charge-off and recovery, and specialized-lending schedules, the NCUA has noted.

For the NCUA letter and guidance, use the resource link.

New NCUA Online Resources Offers Fin Lit 'Fun For All Ages'

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ALEXANDRIA, Va. (4/3/13)--Financial education is often a serious topic, but the National Credit Union Administration on Tuesday announced it is taking a different tack: The agency has developed a new game to help teach youngsters how they can make better financial decisions.

The game, called "Hit the Road," is hosted on the NCUA's financial literacy microsite, Pocket Cents. In the game, participants travel on a cross-country trip to Colorado. They earn and spend money along the way, and learn how to keep track of their funds through their credit union accounts.

"NCUA is deeply committed to promoting financial literacy and educating consumers of all ages to make better choices," Chairman Debbie Matz said in a release.

The agency has also provided new financial tips for consumers of all ages on Pocket Cents and the consumer website New resources posted on those pages include details on the cost of education and homeownership, and information to help retirement planning, debt management, online financial security and emergency planning.

The game and tips are part of the NCUA's observance of April's National Financial Literacy Month. Credit unions also will be participating in two annual national efforts sponsored by the Credit Union National Association:  National Credit Union Youth Week, April 21-27, and the National Youth Saving Challenge. (See April 1 News Now story: Financial Literacy Month Kicks Off, Financially Fit Day Is Wednesday.)

'Scaling Up Microfinance' Webinars Offered By CDFI Fund

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WASHINGTON (4/3/13)--Best practices and business analysis tools and strategies for microfinance market participants will be among the items addressed in a series of upcoming free Community Development Financial Institutions Fund (CDFI Fund) technical assistance webinars.

The CDFI Fund's "Scaling Up Microfinance" series, which is scheduled to begin in April and end in October, is set to include:

  • An April 9 webinar discussing innovative business models to scale microfinance;
  • An April 30 webinar on encouraging innovation and developing talent;
  • A May 14 webinar on adding new microfinance products to achieve scale and increase impact; and
  • A May 21 webinar on how technology can improve the lending process.
The CDFI Fund is planning six additional webinars. Topics for those webinars will be revealed at a later date, but underwriting, collections, and new product development are among the topics being considered, the CDFI Fund said.

The series is a continuation of webinars that were held last year.

Scaling Up Microfinance is part of the CDFI Fund's Capacity Building Initiatives. The federation has partnered with Opportunity Finance Network to provide the program of specialized training and technical assistance for credit unions and other CDFIs engaged in or working to build their microfinance or small business lending programs.

To register for the webinars, use the resource links.

B of A, NCUA Agree To $165M Securities Sale Settlement

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ALEXANDRIA, Va. (4/3/13)--The total amount of funds recovered from National Credit Union Administration securities lawsuits now totals more than $335 million after Bank of America and certain subsidiaries agreed to settle with the agency.

Bank of America has agreed to pay $165 million to the NCUA under the terms of the settlement announced on Tuesday. The agency has also settled with Citigroup, Deutsche Bank Securities, and HSBC, avoiding the cost of litigation and bringing in more than $170 million in funds that were lost due to the corporate credit union investments.

Bank of America is one of several Wall Street Firms the NCUA has pursued legal action against, alleging violations of federal and state securities laws when they sold billions in residential mortgage-backed securities that later failed to now-defunct corporate credit unions.

Bank of America did not admit fault under the terms of the settlement.

"As a result of the Bank of America settlement, NCUA has now successfully recovered more than a third of a billion dollars on behalf of credit unions," NCUA Board Chairman Debbie Matz said in a release. "These settlements and our ongoing lawsuits further NCUA's goal of minimizing the losses of the corporate crisis and cutting future costs to credit unions," she added.

Funds recovered through these legal actions will be used to help reduce the amount of future corporate stabilization assessments on credit unions, according to the NCUA.

Matz said the NCUA has "a statutory obligation to secure recoveries for credit unions and ensure that consumers remain protected. The NCUA "will continue to expend every possible effort to fulfill that important responsibility," she added.

Minority, Women Hirings Up, Says NCUA Report

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ALEXANDRIA, Va. (4/3/13)--The National Credit Union Administration says it has "made work force diversity a top priority," and these efforts have led to a 1.5% increase in minority representation in the agency workforce from Dec. 31, 2011 to Dec. 31, 2012, the agency said in a report to the U.S. Congress. With that increase minorities represented 27% of the agency workforce.

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The NCUA's Office of Minority & Women Inclusion annual report said that the most significant change in diversity representation occurred in executive positions. Minorities rose from 9% to 15% of the total senior staff positions, representing a 6% increase.

Women in senior staff positions also increased from 24%  to 41% of the total senior staff positions, representing an increase of 17%.

The report also updated Congress on the progress of diversity education and outreach efforts.

The agency said it has worked to incorporate greater supplier diversity into its procurement process, and to enhance employee awareness of supplier diversity. The NCUA said it plans in 2013 to offer greater technical assistance resources to minority and women-owned businesses, and conduct greater outreach with these businesses.

Credit unions serving diverse fields of membership have achieved some degree of diversity within their work forces, the NCUA report noted. Minorities account for 30.9% of the credit union work force, and women represent about 70.7% of that work force, according to the report. "Credit unions' work forces are generally diverse and resemble the nation's population," the NCUA said.

The NCUA said it continues to work with other federal agencies to draft joint diversity policy and practice assessment standards, and held roundtables with stakeholders on this issue during 2012. The agency said it is working to finalize these assessment standards, and plans to work with credit unions to educate them about the final assessment standards once they are adopted. The NCUA also noted it "will be burdensome for smaller credit unions to achieve diversity in employment and business activities." Developing a set of diversity assessment standards that can be applied to all financial institutions, including credit unions that are, at times, limited to serving specific geographic areas, could also prove difficult, the NCUA report said.

The Credit Union National Association in a letter sent to the NCUA last year urged the agency to implement diversity standards "in a manner that would minimize the information gathering and reporting burden on credit unions."

NCUA does not have enforcement authority regarding work force diversity standards at credit unions, CUNA has noted.

The NCUA established OMWI in January 2011. It consists of a director, an administrative assistant, a business activities program analyst and two diversity outreach program analysts. The two diversity analysts are responsible for enhancing diversity and inclusion of minorities at all levels in the workforce of the agency and in the credit union industry.