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Fed amends Regs D J

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WASHINGTON (4/9/12)--The Federal Reserve has amended its Regulation D, which governs reserve requirements of depository institutions, in a bid to simplify those requirements and reduce costs.

According to the Fed, the amendments simplify reserves administration by:

  • Creating a common two-week maintenance period for all depository institutions;
  • Creating a penalty-free band around reserve balance requirements in place of carryover and routine penalty waivers;
  • Discontinuing as-of adjustments related to deposit revisions;
  • Replacing all other as-of adjustments with direct compensation; and
  • Eliminating the contractual clearing balance program.


The Fed said the amendments will be implemented in two waves.  The contractual clearing balance and direct compensation changes will take effect on July 12. The remaining amendments will take effect on Jan. 24, 2013.

The Fed added that it would notify financial institutions by Nov. 14 if it decides to delay the Jan.24 effective date further.

Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn said CUNA supports the changes and the Fed's decision to use staggered effective dates.

The Fed has also amended Regulation J (Collection of Checks and Other Items by Federal Reserve Banks and Funds Transfers through Fedwire) to eliminate references to "as-of adjustments."  These changes will take effect on July 12.

For the full Fed release, use the resource link.

NCUA OIG recommends asset management changes

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ALEXANDRIA, Va. (4/9/12)--A National Credit Union Administration (NCUA) Office of the Inspector General (OIG) review of the agency's Asset Management Assistance Center (AMAC) found "deficiencies over the valuation process of real estate owned (REO) by AMAC."

The NCUA's AMAC conducts credit union liquidations and performs management and recovery of assets, and can, at times, assist NCUA regional offices with the review of large complex loan portfolios and actual or potential bond claims, the NCUA OIG said.

Many of the properties cited in the report were owned by now-defunct credit unions Norlarco CU and Huron River Area CU.

Norlarco, of Fort Collins, Colo., was placed into conservatorship by state regulators in May 2007, and the credit union was eventually purchased by nearby Public Service CU, Denver, Colo. Huron River Area CU, Ann Arbor, Mich., was taken under NCUA control in early 2007, and was liquidated later that year.

Credit risk and strategic risk were major factors in the failures of both of these credit unions, and the NCUA OIG in an earlier report on both failures said the management of each credit union failed to adequately manage and monitor the credit risk within their loan programs.

Both failures led to 850 properties that were owned by the credit unions being taken over by the NCUA, and 409 of those properties have been sold so far, the OIG report said. These NCUA-owned properties have sold for around 42.8% of their market value, on average, according to the report.

The NCUA OIG report specifically noted that AMAC did not perform valuations on the properties in accordance with industry standards and did not always maintain proper support for the valuations that were completed.

In the report, the OIG recommended that NCUA AMAC improve its review and documentation process for appraisals over $250,000, perform and document their analysis when determining whether to maintain properties versus selling them in a bulk sale, and improve its account reconciliation processes. Other recommendations were also made, and the AMAC agreed to follow the majority of the recommendations. The AMAC also noted that it has already acted to address some of the deficiencies identified in the OIG report.

For the full OIG report, use the resource link.

CUNAleague radio ads tout MBL aid for small biz

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WASHINGTON (4/9/12)--The Credit Union National Association (CUNA) and state credit union leagues are today letting small business-owning listeners that have had trouble accessing loans know that "credit unions are ready to lend a hand," and will have more money to lend to them, once Congress moves to increase the credit union member business lending cap.

CUNA and the Mountain West Credit Union Association, the Virginia Credit Union League, the Credit Union Association of the Dakotas, the Nebraska Credit Union League, the Wisconsin Credit Union League, the South Carolina Credit Union League, the Iowa Credit Union League, the League of Southeastern Credit Unions, the Mississippi Credit Union Association, and the Idaho Credit Union League are sponsoring radio ads in key states.



The ads seek to increase public support in key markets for legislation that would increase the MBL cap from 12.25% of assets to 27.5% of assets.

Listeners are encouraged to call their senators and ask them to support Senate MBL cap increase legislation. A senate bill that would increase the MBL cap, injecting $13 billion in new funds into the economy and creating 140,000 new jobs, is expected to come up for a vote in the Senate once Congress returns from their spring district work period.

Many of the ads use testimony from local business owners that have been denied by banks, but helped by credit unions.

The ads are scheduled to run in Arizona, Virginia, Wisconsin, Iowa, Alabama, Nebraska, South Dakota, South Carolina, and Idaho radio markets, and are part of an array of in-district activity.

CUNA has urged credit unions to use the current April District Work Break as an opportunity to meet with lawmakers in their home offices, attend town-hall type meetings, and use every opportunity to get across the credit union message that increasing the member business lending cap is good for small businesses and therefore good for the economy.

CUNA nominates 28 for CFPB consumer advisers

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WASHINGTON (4/9/12)--The Consumer Financial Protection Bureau (CFPB) is developing a Consumer Advisory Board to help keep the agency abreast of emerging trends and practices in the financial services and products industry, and the Credit Union National Association (CUNA) last week submitted a list of 28 nominees from credit unions across the country.

"All of these individuals have indicated a willingness to serve and to provide the agency with the benefit of their experience, knowledge and expertise on issues relating to consumer protection, financial institution operations, financial regulations and public policy concerns," CUNA President/CEO Bill Cheney said.

Cheney added that the advisory board "has the potential to be extremely important to the agency in its oversight of consumer protection," and added that CUNA strongly supports "balanced membership on the board who will appreciate the need for protections for consumers in the financial marketplace while understanding the need to avoid burdening entities such as credit unions that already work hard to ensure their members are well served."

The work of the agency "will be enhanced if several members of the board are from credit unions or credit union leagues," Cheney added. The CUNA CEO suggested that nominees that are not accepted for the consumer board be considered for the CFPB's planned Credit Union Advisory Council.

Those interested in more information on the CUNA nominees may contact CUNA Senior Vice President and Deputy General Counsel Mary Dunn at mdunn@cuna.coop.

Inside Washington (04/06/2012)

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  • WASHINGTON (4/9/12)--The Office of the Comptroller of the Currency (OCC) Thursday issued a cease-and-desist order against Citibank for allegedly violating the Bank Secrecy Act (BSA). The order requires the Citibank to take corrective actions to improve its BSA compliance program. The OCC found that the bank's BSA compliance program had deficiencies with internal controls, customer due diligence, the independent BSA and anti-money laundering audit function, monitoring of its remote deposit capture and international cash letter instrument processing in connection with foreign correspondent banking, and suspicious activity reporting related to that monitoring. The findings resulted in violations by the bank of statutory and regulatory requirements to maintain an adequate BSA compliance program, file suspicious activity reports, and conduct appropriate due diligence on foreign correspondent accounts, said the OCC. It added that Citibank has begun corrective action, committing to taking all necessary and appropriate steps to remedy the deficiencies identified by the OCC and to enhance the bank's BSA compliance program …