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CUNA details CU reg burden, patent reform concerns for the record

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WASHINGTON (4/8/14)--The Credit Union National Association this week has submitted letters for the record of hearings on two key credit union issues.

In a letter for the record of today's House Financial Services Committee hearing, entitled "Who's In Your Wallet: Examining How Washington Red Tape Impairs Economic Freedom," CUNA said the ever-increasing regulatory burden that credit unions face makes it more difficult for them to promote thrift and provide credit.

Today's hearing will feature testimony from National Credit Union Administration, Consumer Financial Protection Bureau, Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency representatives. The hearing is scheduled to begin at 10 a.m. (ET). (See related story: Reg burden, patent troll hearings on tap this week.)

The crisis of increasing regulatory burdens "has contributed to consolidation in the financial services industry and a reduction in the availability of services to consumers and small businesses. New and frequently changing regulations drive costs up for credit unions and their members, making matters worse," CUNA President/CEO Bill Cheney said in the letter.

Cheney called on committee members to closely examine the National Credit Union Administration's proposed risk-based capital regulation, calling the rule "one of the most severe threats to credit unions' ability to continue to fulfill their statutory mission.

CUNA also joined a coalition of financial services representatives to submit a second joint letter to the hearing. In that letter, CUNA and others said they fully support the federal government's role in fighting fraud and ensuring the integrity of markets, but are concerned that the overly aggressive enforcement tactics promoted by the Financial Fraud Task Force's initiative "Operation Choke Point" undermine its effectiveness and create serious risks to consumers and the economy.

The Senate Judiciary Committee's is expected to finish marking up its patent reform bill. And patent demand letter abuses will also be a topic as a House Energy and Commerce's subcommittee conducts its hearing entitled "Trolling for a Solution: Ending Abusive Patent Demand Letters."

In a letter to that subcommittee, CUNA urged members of Congress to consider provisions that increase transparency and strengthen disclosure requirements for demand letters, and clarify that the Federal Trade Commission has enforcement authority over patent trolls that operate in unfair or deceptive ways. Minimum disclosure standards would help ensure that only demand letters truly asserting a potentially valid claim of infringement are sent, the CUNA letter said.

CUNA also participated in a patent reform discussion Monday during a Main Street Patent Coalition event on Capitol Hill.

NEW: NCUA testifies supplemental capital could be considered as part of RBC plan

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WASHINGTON (4/8/14, UPDATED 1:34 p.m. ET)--The National Credit Union Administration could consider allowing credit unions greater access to supplemental capital as it finalizes proposed risk-based capital regulations, NCUA General Counsel Mike McKenna said this morning.
McKenna made his remarks in response to a question during today's ongoing House Financial Services Committee hearing entitled "Who's In Your Wallet: Examining How Washington Red Tape Impairs Economic Freedom."
California Reps. Ed Royce (R) and Brad Sherman (D) each had questions about the RBC proposal for McKenna.
Royce told McKenna he is concerned that the risk weights applied to mortgages under the RBC proposal do not reflect actual risk and are more stringent then the standards imposed on community banks despite credit union generally better delinquency rates.
Royce also questioned whether the RBC rule could prevent some credit unions from making loans to their members.
Both Royce and Sherman asked McKenna why the risk weights in the NCUA proposal differ so much from those imposed in similar regulations placed on comment banks. McKenna noted that the agency has received many comments on risk weights and is looking them over and considering the issue.
The NCUA hopes to work with all stakeholders to make the final RBC rule more effective, McKenna said.

Credit Union National Association  President/CEO Bill Cheney said of the hearing comments, "It's terrific to see and hear Congress' deep interest in the subjects of credit union capital and business lending. We have urged Congress to take a particular interest in the proposed risk-based capital rule, and clearly the issue has piqued interest."
He continued, "The questions about the risk-based capital proposal reflect a level of concern in Congress that the proposal is in need of significant improvements. We appreciate that NCUA has indicated it will consider changes and we will continue to encourage them to do so.
"Meanwhile, as credit unions file their comment letters with the agency on the proposal, we are urging them to share their comments with their lawmakers, so that Congress can keep a watchful eye on this issue going forward."
During the hearing, Royce also took a moment to draw attention to his Credit Union Residential Loan Parity Act, which he noted would increase the amount of capital made available to small businesses and also increase the amount of rental housing available to Americans. McKenna said the agency has reviewed Royce's legislation and has no concerns about it.
Watch News Now Wednesday for more.

NCUA to CUs: Work with members affected by Wash. mudslide

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ALEXANDRIA, Va. (4/8/14)--Recognizing that a disaster can disrupt the "orderly conduct of lending relationships with individual members," the National Credit Union Administration Monday encouraged credit unions to work with their members affected by the March 22 mudslide in Snohomish County, Wash.

The mudslide was responsible for at least 30 deaths and an estimated $10 million in property damage. The agency said it is monitoring the situation closely.
The agency said in a release that appropriate efforts to assist those members could include extending the terms of loan repayments, restructuring a borrower's debt obligations and easing credit terms for new loans, consistent with prudent practices.
Credit unions can also make members aware of assistance from other government agencies.
Also related to credit unions helping victims of the mudslide, the Northwest Credit Union Association and Northwest Credit Union Foundation partnered to raise funds for families impacted by the disaster (News Now April 1).  The campaign already has raised $50,000, and online donations will be accepted through Wednesday. To donate, use the resource link.
The National Credit Union Foundation also said it has funds in its CUAid general disaster relief fund and is working with NWCUA and NWCUF to get disaster relief grant applications to credit union people who were affected by the mudslide.

Congress this week: Reg burden, patent troll hearings on tap

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WASHINGTON (4/8/14)--A Tuesday House committee hearing on regulatory burdens will lead the week for credit unions, but also high on the radar are congressional actions involving patent reform bills. The Senate Judiciary Committee is expected to complete a mark-up of patent reform legislation and the House Energy and Commerce subcommittee has scheduled a hearing on patent abuses.
On financial institution regulatory issues, the House Financial Services Committee regulatory burden hearing, entitled "Who's in Your Wallet: Examining How Washington Red Tape Impairs Economic Freedom," will feature testimony from:
  • National Credit Union Administration General Counsel Michael McKenna;
  • Consumer Financial Protection Bureau General Counsel Meredith Fuchs;
  • Federal Deposit Insurance Corp. Acting General Counsel Richard Osterman;
  • Federal Reserve Board General Counsel Scott Alvarez; and
  • Office of the Comptroller of the Currency Senior Deputy Comptroller and Chief Counsel Amy Friend.
Also on Tuesday, the Senate Judiciary Committee plans to mark up the Patent Transparency and Improvements Act of 2013 (S.1720). CUNA and partners have called on the committee to make improvements to the bill. Patent law abuses will also be on the agenda when the House Energy and Commerce manufacturing and trade subcommittee holds a hearing entitled "Trolling for a Solution: Ending Abusive Patent Demand Letters." (See related story: A details CU reg burden, patent reform concerns for the record.)
Other Tuesday hearings include:
  • A Senate Budget Committee hearing on "Supporting Broad-Based Economic Growth and Fiscal Responsibility through a Fairer Tax Code."; and,
  • A House Appropriations homeland security subcommittee hearing on cybersecurity spending in the 2015 budget.
On Wednesday, the House Financial Services capital markets subcommittee has scheduled a hearing on legislative proposals to enhance capital formation for small companies. And the Senate Finance Committee on Thursday has scheduled a hearing on President Barack Obama's 2015 budget.
The House this week is expected to consider the fiscal 2015 Budget Resolution (H.Con.Res. 96), the Baseline Reform Act of 2013 (H.R. 1871), and the Budget and Accounting Transparency Act of 2014 (H.R. 1872). The Senate is expected to vote on the Emergency Unemployment Benefits Extension Act (H.R. 3979).
Congress recesses for a Spring District Work Session on April 11.

Fed offers free April 10 compliance webinar

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WASHINGTON (4/8/14)--Common compliance concerns and the components of a successful compliance program will be addressed in an April 10 Federal Reserve Outlook Live webinar.

The hourlong webinar, titled "Consumer Compliance Management Program--Common Concerns and Best Practices," is scheduled to begin at 2 p.m. (ET).

The event is free of charge.

Federal Reserve Bank of Boston examiners Katina Tsagaroulis and Evangelia Stergiou will make presenations during the webinar. A question-and-answer segment will follow.

To register for the event, use the resource link.

Hampel urges CU exec meeting to send RBC plan comments

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WASHINGTON  (4/8/14)--Addressing a group of about 60 Washington, D.C.-area credit union executives and officials Monday evening, Credit Union National Association Chief Economist Bill Hampel explained the National Credit Union Administration's proposed risk-based capital rule to the group.
Click to view larger image CUNA's Bill Hampel discusses details of the NCUA proposal on risk-based capital with a participant at Monday's Metropolitan Credit Union Management Association meeting in Arlington, Va. Hampel explained the proposal, CUNA's concerns about it, and urged the group to comment on the proposal. (CUNA Photo)
Addressing the Metropolitan Credit Union Management Association's monthly meeting, Hampel noted CUNA's concerns with the proposal and strongly urged the credit union representatives to file comment letters urging the agency to make changes.
He urged his audience to share those comment letters with their representatives in Congress, as well as with CUNA and their credit union league.
CUNA has called the NCUA proposal fundamentally flawed. For example, it would increase by a total of $7.3 billion the amount of capital credit unions would be required to hold to be "well capitalized" through the imposition of asset risk-weightings that are poorly calibrated.

Because of the poorly designed risk-weights, the proposed rule would have a significant, adverse impact on credit unions' ability to serve their members, particularly through mortgage lending and small business loans. Also, CUNA maintains that the time period for implementation is unreasonably short at 18 months.

"It's really important that NCUA hears from you on this. If they hear from enough of us, I think there is a really good chance that they will revise this substantially before it becomes final," Hampel said.
Hampel said he bases that assessment, in part, on how the agency significantly modified its final rule on credit union derivatives use to reflect industry concerns expressed in CUNA's and credit unions' comment letters. 
He added that when the NCUA proposed the RBC, on the same day it approved the final derivatives rule, the agency itself called attention to the changes it made in the derivatives final.
Hampel noted that CUNA has created a Risk Based Capital Action Center on its website that, in part, help credit unions both calculate the impact of the RBC plan on their operations and supports comment letter writing efforts.