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What's brewing on patent reform

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WASHINGTON (4/4/14)--A House Energy and Commerce subcommittee has scheduled a hearing next Tuesday--April 8--on patent reform issues, entitled "Trolling for a Solution: Ending Abusive Patent Demand Letters." That announcement comes amid reports that the Senate Judiciary Committee's expected patent reform bill markup could be delayed to April 8.

At the Tuesday 10 a.m. hearing, the subcommittee will gather testimony from stakeholders regarding the "growing abuse" of patent demand letters.  
 
"In recent years, small businesses have increasingly been targeted with financial threats through demand letters. Businesses are often told to either pay for a license within a short period of time, or face going to court for infringing the sender's vaguely defined and often specious intellectual property rights," the subcommittee notice explains. Credit unions are among the businesses to fall victim to the patent exploitation.

However, patent demand letters are not always abusive, and the subcommittee intends to explore ways to prevent the bad actors from abusing the process.

Patent law reforms to address "trolls" is a significant issue for credit unions and is seeing a lot of attention from lawmakers on both the federal and state levels.

The Credit Union National Association and many state credit union leagues continue to heavily advocate for patent reforms on Capitol Hill and in state legislative offices.

CUNA also participated in a recent White House gathering of stakeholders to discuss patent law reforms--including addressing the plague of patent trolls. At the meeting, the U.S. Patent and Trade Office unveiled a website to help consumers and businesses who receive demand letters understand their rights and get answers to common questions.  See the resource link.

New CUNA survey seeks CUs' mortgage rule assessments

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WASHINGTON (4/3/14)--The Credit Union National Association is following up with credit unions now that the Consumer Financial Protection Bureau's new mortgage rules have been in effect since Jan. 10, seeking more information about how those rules are affecting credit union practices.
 
CUNA has posted a new, brief survey on its website asking questions about how credit unions are handling the requirements of the CFPB's Ability-to-Repay/Qualified Mortgage lending rules.
 
"We want to know if the rules are impacting credit availability in the marketplace and whether credit unions are reducing their mortgage loan product offerings as a result of having to comply with the rules," CUNA Deputy General Counsel Mary Dunn said. 
 
The rules cover consumer closed-end mortgage loans including home-purchase loans, refinances, and home equity loans secured by the borrower's dwelling.  There is a tight turn-around for the survey results.  CUNA asks credit unions to respond by respond by noon (ET) on April 7--this Monday.
 
Use the resource link to access the survey.

CUNA pens OMB: RBC plan casts wide net of burden

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WASHINGTON (4/3/14)--The National Credit Union Administration's definition of "complex credit union," as set forth in its proposed risk-based capital (RBC) regulation, "casts a regulatory net that is far too wide" and would create lasting burdens for credit unions, the Credit Union National Association said in a Wednesday letter.
 
The letter was sent to the Office of Management and Budget in response to that agency's request for public assessments of the paperwork burden any new rule would create. 

Under the 198-page NCUA RBC proposal, the current 7% leverage capital standard, which is required by the Federal Credit Union Act, would remain the floor. However, the agency has said credit unions with assets of $50 million would be considered "complex," and, thus, would be subject to revised risk-based capital requirements.
 
"The idea that a financial institution becomes 'complex' the moment its assets cross the $50 million threshold is arbitrary. By any reasonable measure, a financial institution with slightly more than $50 million in assets is small and likely to be relatively simple," CUNA Deputy General Counsel Mary Dunn wrote.
 
The CUNA letter also noted that the the FCU Act requires the agency to take more than asset size into consideration when it determines the complexity of a credit union. The NCUA must consider the complexity of a credit union's book of assets such as loan and investments as well as liabilities, and to determine whether a credit union's operations are "sufficiently multi-faceted to warrant the credit union being designated as 'complex'," Dunn said.

While the current definition of "complex," which sets that standard at $50 million in assets and a 6% risk-based net worth ratio, is not perfect, "it does go beyond mere asset size to determine whether a credit union is complex," the CUNA letter noted.
 
While the NCUA claims the proposal will impact less than 200 credit unions, CUNA has repeatedly warned that the RBC plan, as proposed, could affect the core operations of most, if not all, credit unions with assets over $50 million.

The proposed "complex" definition would make many more relatively small credit unions subject to the proposal, and create paperwork and regulatory burdens for credit unions that should not even be under the rule. "Because of their small size, many of these credit unions lack the staff resources necessary to deal with the associated burdens," Dunn noted.
 
For the full CUNA letter, use the resource link.

Federal agencies warn ATM cyber-attacks increasing

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WASHINGTON (4/2/14)--Credit unions and all financial institutions are being alerted to the risks associated with cyber-attacks on ATM and card authorization systems and the continued distributed denial of service (DDoS) attacks on public-facing websites. 
 
The National Credit Union Administration, in conjunction with the other federal financial regulators comprising the Federal Financial Institutions Examination Council (FFIEC), just released a statement that describes steps the regulators expect institutions to take to address these attacks. The release also highlights resources institutions can use to help mitigate the risks posed by such attacks. 
 
Cyber-attacks on financial institutions to gain access to, and alter the settings on, Web-based ATM control panels used by small- to medium-sized institutions are on the rise, the NCUA and partner agencies warn.

Financial institutions must review the adequacy of their controls over information technology networks, card issuer authorization systems, ATM usage parameters and fraud detection processes, the FFIEC states.
 
Also, the joint-agency body expects financial institutions to have effective response programs to manage this type of incident.
 
Regarding DDoS readiness, the FFIEC expects institutions to address it as part of their ongoing information security and incident plans. 
 
"More specifically, each institution is expected to monitor incoming traffic to its public website, activate incident response plans if it suspects that a DDoS attack is occurring, and ensure sufficient staffing for the duration of the attack, including the use of pre-contracted third-party servicers, if appropriate," the agencies said.
 
The FFIEC is comprised of the NCUA, the Federal Reserve Board, the Federal Deposit Insurance Corp., the Comptroller of the Currency, the Consumer Financial Protection Bureau and the State Liaison Committee. 

See resource links for more information.