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Stein to leave Fed board May 28

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WASHINGTON (4/4/14)--Federal Reserve Board Governor Jeremy Stein Thursday submitted his resignation, effective May 28, and announced plans to return to his teaching position in Harvard University's department of economics.

Stein has been a Fed board member since May 30, 2012, and was appointed by President Barack Obama to fill an unexpired term that ends Jan. 31, 2018.

New Fed Chair Janel Yellen said of Stein, "His understanding of monetary policy and markets as well as his expertise in banking and financial regulation has proven invaluable in his service to the Federal Reserve and the country." She added he has served as an "intellectual leader" during his time at the Fed.

While at the Fed, Stein served on the Committee on Bank Supervision and Regulation. He co-chaired the Financial Stability Board's Official Sector Steering Group on reforming interest-rate benchmarks, an international group of regulators charged with developing alternative reference rates and transition strategies in the wake of the "well-documented problems with LIBOR."

Use the resource link to access Stein's letter of resignation.

NCUA will drop RBC calculator from site

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ALEXANDRIA, Va. (4/4/14)--The National Credit Union Administration's risk-based net worth calculator, which is intended to help credit unions calculate how an agency proposal would impact their business practices, will be taken off the NCUA homepage once the comment period on the proposal is up on May 28.
 
The Credit Union National Association has urged the agency to limit access to the calculator, as the online tool currently allows the public to determine a credit union's capital adequacy under the proposal. CUNA is pleased the agency will take the calculator down but feels it should not have been available to the general public.  

The announcement was made within an NCUA release Thursday that reminded credit unions that they have until May 28 to comment on the agency's pending risk-based capital proposal.  

The NCUA release also referred to an extended phase-in period for the final risk-based capital (RBC) rule in order to allow credit unions enough time to adjust risk profiles or capital levels, or both, and to ensure compliance with the new regulation. 

The supplementary information to the RBC proposed rule indicates an 18-month implementation period. CUNA asserts that this is nowhere near long enough and points out that commercial banks have until 2019 to comply with Basel III risk-based requirements.

In the release the agency also noted that after it approves a final rule, it will modify the Call Report to comply with the terms of a new rule and provide Prompt Corrective Action classifications accordingly.

The NCUA board approved the RBC proposal at its January open board meeting. The plan would apply to credit unions with assets greater than $50 million and assigns certain risk weights for different assets.
 
In mid-March, NCUA Chairman Debbie Matz wrote to CUNA President/CEO Bill Cheney--in response to CUNA's urgings that the agency scrap the plan or make significant changes--and at the very least allow for an extended phase-in period. She said key changes to the proposal are "not out of the question."
 
Matz added, "Just as NCUA incorporated significant changes to our final rules on troubled debt restructurings, loan participations and derivatives ... I assure you NCUA will do so, as appropriate, on this critically important rule"  (News Now March 11).
 
CUNA continues to urge credit unions to weigh in on the proposal to let regulators know their concerns. CUNA's RBC Action Center is a complete catalog of reference materials for credit unions and it also provides credit unions with a tool to send comment letters to the NCUA.
 
For the NCUA release and CUNA's RBC action center, use the resource links.

New CUNA RBCblog keeps CUs informed on all fronts

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WASHINGTON (4/4/14)--The Credit Union National Association wants the credit union system conversation on risk-based capital (RBC) to become more interactive. The trade association has launched a new blog to provide the means to make that happen.

Making its debut this morning, the RBCblog is the latest CUNA advocacy tool sparked by the National Credit Union Administration's RBC plan proposed at its January open board meeting. The 198-page risk-based capital framework would impose new requirements on credit unions with assets of $50 million and above. The current 7% leverage capital standard, which is required by the Federal Credit Union Act, would remain the floor.
 
CUNA supports a risk-based approach to capital but urges significant changes to the NCUA's plan. CUNA maintains that the current proposal will impact far more than the 199 credit unions predicted by the NCUA, and have a far greater cost to credit unions working to replenish their existing capital buffers.
 
The intent of the new blog is to provide a forum for sharing thoughts on risk-based capital in general and the NCUA's proposal in particular, and to serve as an aggregator of industry-wide thoughts, comments, questions and concerns regarding the proposal.

The blog will allow credit unions and state credit union leagues to air their concerns and share how the proposal will affect their operations.  CUNA will also be updating the blog with the latest developments in its efforts to improve the outcome for credit unions regarding the proposal.    

For more information about the blog, contact Robin Cook, assistant general counsel for special projects, or Lance Noggle, assistant general counsel for regulatory advocacy, at CUNA. Use the resource links to visit the blog and to access CUNA's RBC Action Center.

Final patent bill must strengthen end-user protections: CUNA

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WASHINGTON (4/4/14)--Effective protections for the end users of technologies like ATMs must be a part of any patent reform legislation enacted into law, the Credit Union National Association wrote in a Thursday joint letter to members of Congress.

The letter was sent to Senate Judiciary Committee Chairman Pat Leahy (D-Vt.), ranking member Charles Grassley (R-Iowa) and all other committee members in advance of an expected markup of a patent reform bill.

Effective protections, the letter said, would include clarifying that depository institutions are included under the definition of "covered customer" as defined in the Federal Reserve Act.

"Credit unions and banks, are in almost all circumstances buyers (end users) of technology and rarely develop it themselves. Simply, they should not be sued for buying something in good faith, off the shelf," the letter said.

Other protections advocated in the letter include:
  • Defining in greater detail the minimum elements of demand letter transparency, or
     
  • Allowing a federal agency, such as the Federal Trade Commission or Patent and Trademark Office, to promulgate standards for a demand letter through rulemaking that the FTC could enforce; and
     
  • Enhancing pleading standards for patent litigation.
Leahy last year introduced the Patent Transparency and Improvements Act of 2013 (S. 1720), which would aid credit unions and other businesses that have been targeted by patent trolls. The committee may mark up this patent reform legislation on Tuesday.

Other Senate bills that would address patent troll issues include the Patent Litigation Integrity Act of 2013 (S. 1612) and the Patent Quality Improvement Act of 2013 (S. 866), offered by Sen. Charles Schumer (D-N.Y.).

"Reforms are desperately needed. This growing problem will not be solved until Congress passes bipartisan legislation that makes clear patent trolls can no longer get away with abusing the system," CUNA and others said in the letter.

The Independent Community Bankers of America,  National Association of Federal Credit Unions and American Bankers Association co-signed the letter.

Additional credit union priorities for patent law reform include:
  • More transparency in demand letters;
     
  • Clarification of Federal Trade Commission enforcement authority over unfair and deceptive demand letters;
     
  • A demand letter registry; and
     
  • Stronger end-user protections.
For the full letter, use the resource link.

NCUA grants year's 1st new charter to CommunityWorks FCU

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ALEXANDRIA, Va. (4/4/14)--CommunityWorks Inc., a nonprofit community development financial institution, is sponsoring the first newly chartered credit union of the year with support from the United Way of Greenville County, S.C., and the Hollingsworth Fund.

The National Credit Union Administration announced Thursday that it granted a community charter to CommunityWorks FCU to serve people who live, work, worship or attend school in Greenville County, as well as businesses and other legal entities in the county.

The credit union's potential field of membership is nearly 475,000 people. The credit union plans to offer affordable financial services to individuals who currently are limited to high-cost alternatives.

"Everyone needs and deserves to have access to financial products and services they can afford," NCUA Chair Debbie Matz said. "CommunityWorks will serve a real need among people who live in Greenville County. I commend everyone who worked hard to establish this credit union and made a commitment to the future of their community."

The new federally chartered credit union is expected to open in June with a main office in Greenville. It will serve a low-income community and intends to seek a low-income credit union designation at a later date.

CUNA names Russell Reynolds to conduct CEO search

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WASHINGTON (4/4/14)--Overseeing the search for a new president/CEO for the Credit Union National Association will be the task of a seven-member committee appointed by CUNA Board Chairman Dennis Pierce, the association announced Thursday.

CUNA also announced it has retained the executive search firm of Russell Reynolds Associates of Washington, D.C., to conduct the search.

CUNA is conducting a search to replace outgoing president/CEO Bill Cheney, who is returning to California to become president/CEO of SchoolsFirst FCU, Santa Ana. SchoolsFirst FCU is the fifth-largest credit union in the country, serving more than 600,000 members and with $10 billion in assets. Cheney--who came to CUNA in 2010 after serving as a credit union and state association CEO in California--will leave the association in June.

"Bill Cheney is returning to California with both CUNA and credit unions in excellent condition," said Pierce, who is also president/CEO of CommunityAmerica CU, Lenexa, Kan. "The search committee has a big job to do in finding Bill's replacement. But I know that the committee members' combined experience, dedication and deep understanding of the mission of credit unions and our trade association will serve the movement well in selecting a new leader."

Serving on the committee are:
  • Susan Streifel (chair), CEO, Woodstone CU, Federal Way, Wash.;
  • Tony Budet, CEO, University FCU, Austin, Texas;
  • Pete Dzuris, CEO, Northland Area FCU, Oscoda, Mich.;
  • Brett Martinez, CEO, Redwood CU, Santa Rosa, Calif.;
  • Rod Staatz, CEO, SECU, Linthicum, Md.;
  • Wendell Lyons, CEO, Kentucky Credit Union League, Louisville, Ky.; and
  • Pat Wesenberg, CEO, Central City CU, Marshfield, Wis.
Pierce will serve ex officio on the committee.

Committee members were chosen who represent a cross section of credit union size and geographic location, as well as the leagues and CUNA's subsidiary, CUNA Strategic Services Inc.

The firm selected to conduct the search, Russell Reynolds Associates, performed the same function prior to Cheney's hiring as CEO in 2010. Russell Reynolds is a global provider of senior-level executive search and assessment with 42 offices across North and South America, Europe and Asia/Pacific. The firm advises clients on recruiting, assessing and retaining leadership.

Avoid penalties--report on time, CUNA reminds CUs

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WASHINGTON (4/4/14)--First quarter Call Reports are due to the National Credit Union Administration April 25, and that deadline must be met to avoid a potential civil money penalty, the Credit Union National Association is reminding credit unions.
 
The NCUA put late-filers on notice in January with a Letter to Credit Unions (14-CU-03). The agency called filing tardiness a "a serious problem" that impacts its ability to conduct effective off-site supervision and drains agency resources. Late filings also delay the release of quarterly industry data to the general public.
 
"The NCUA has made it abundantly clear that it will not condone late reports any longer," said CUNA Assistant General Counsel Lance Noggle. 
 
"The agency, in effect, fired a warning shot last quarter by sending late-filers a warning letter. And the warning is that any subsequent late filings could  be subject to civil money penalties," Noggle added.
 
Potential penalties for late filers include:
  • Up to a maximum of $2,000 per day for each day a required report is "minimally" late or contains uncorrected false/misleading information if the late or false/misleading filing is unintentional and the credit union has reasonable procedures in place to avoid such errors;
  • Up to a maximum of $20,000 per day for each day a required report is late or contains false/misleading information if the late or false/misleading filing is not covered by the "unintentional" safe harbor outlined above; or
  • Up to a maximum of $1 million, or 1% of total assets, whichever is less, per day if a federally insured credit union knowingly or with reckless disregard for accuracy submits a false or misleading report and fails to correct it.
To determine the size of the fine, the NCUA said it will consider:
  • The size of financial resources and good faith of the credit union;
  • The gravity of the violation;
  • The history of previous violations; and,
  • Other matters as justice may require regarding the circumstances of late or false/misleading submissions, such as natural disasters and incapacitation of key employees.
Proceeds from the fines will go to the U.S. Treasury, the NCUA said.

Debit fraud protection bill introduced in Senate

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WASHINGTON (4/4/14)--Legislation that would put a $50 liability cap for consumers hit by debit card fraud was introduced in the U.S. Senate.
 
The primary sponsors of the bill, known as the Consumer Debit Card Protection Act of 2014, are Sens. Mark Warner (D-Va.) and Mark Kirk (R-Ill.). The proposed $50 maximum liability limit matches the limit protecting credit card fraud victims. Debit card fraud victims can currently be on the hook for as much as $500 of a wrongfully made purchase.
 
"Debit card use has just exploded in recent years, especially among young people, and consumer protections must keep pace," Warner said of the bill's intent. "This legislation ensures that our federal statutes for debit card protections are on par with those of credit cards, and will help consumers keep their wallets safe," Kirk added.

"In light of the millions of consumers who have had their financial information stolen during one of the recent data breaches, Sen. Warner and I will continue to take data security and the importance of consumer protections very seriously," Kirk pledged.
 
The bill would also shorten the time consumers must wait to receive refunds for fraudulent debit card charges to seven business days from 10 business days.
 
Consumers made 47 billion debit card purchases in 2012, nearly double the 26 million credit card purchases that were made in that year. Debit card transactions were behind $1.68 trillion in 2012 commerce, according to a release by the senators.