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NCUA: 2012 A 'Transformative Year' for CUs

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ALEXANDRIA, Va. (5/15/13)--The credit union system in 2012 "transitioned from uncertainty caused by a severe recession and benefited from a recovering economy," making last year "a transformative year" for credit unions, the National Credit Union Administration said in its 2012 Annual Report.

This "transformative year" bore significant results: Credit union system assets exceeded the $1 trillion threshold for the first time, membership rapidly grew to 94 million, and the aggregate industry net worth ratio increased to 10.44%, the NCUA said.

Credit Union National Association Deputy General Counsel Mary Dunn said, "This report demonstrates clearly the health of the credit union system and supports CUNA's view that new, universally applied safety and soundness regulations are not needed."

Net credit union income totaled $8.5 billion at the end of 2012, and the return on average assets ratio for credit unions totaled 86 basis points. Loan charge-offs declined to 0.73%, the NCUA wrote.

Credit unions with more than $250 million in assets saw the strongest growth. While smaller credit unions tended to have higher net worth, they lagged behind in other areas, the NCUA reported. Credit unions with assets of less than $10 million "sustained sluggish loan growth compared to credit unions with assets above $250 million" and "struggled to generate earnings and lost membership overall," the agency added. The NCUA's Office of Small Credit Union Initiatives is working to help small credit unions survive hardship, the NCUA noted.

The report also detailed how the agency worked to:

  • Ensure a safe and sound credit union system;
  • Modernize regulations;
  • Continue corporate credit union system resolution efforts;
  • Engage, assist and coordinate with stakeholders; and
  • Position the NCUA for the future.
Interest rate risk, liquidity risk, cyberattacks and an aging membership base outside of its prime borrowing years are among the most pressing risks to credit unions going forward, the agency said.

The report serves as the agency's official report to the president and Congress, and covers NCUA and credit union operations. The report also tabulates 10 years of financial trends for credit unions and the National Credit Union Share Insurance Fund.

For the full NCUA report, use the resource link.

CUNA's Examination and Supervision Subcommittee will be reviewing the report and following up on issues of concern.

NEW: Former Oregon State Senator Nominated To NCUA Seat

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WASHINGTON (5/15/13 FILED 7:11 p.m. ET)--Former Oregon State Sen. Rick Metsger (D) has been tapped by the White House to fill the vacant seat on the three-member National Credit Union Administration board.

Nominated today by President Barack Obama, if confirmed by the U.S. Senate, Metsger will fill the seat vacated late last year after the term of board member Gigi Hyland expired.

Highlights from Metsger's resume include:
  • Oregon state senator from 1999 to 2011;
  • Oregon senate president pro-tempore from 2009 to 2011;
  • Chaired Oregon senate committee that heard all financial institution legislation;
  • Oregon state Debt Policy Advisory Commission member from 2001 to 2011;
  • Board member of Financial Beginnings, a nonprofit focused on increasing students' financial literacy; and,  
  • Former board of director on Portland Teachers CU from 1993 to 2001.
"Sen. Metsger has a strong background of public service and certainly understands the complexity of the financial services landscape including the importance of safety and soundness in the credit union system," said Northwest Credit Union Association President/CEO Troy Stang.

"With so many consumers interested in becoming part of the cooperative credit union system, it's important the industry's regulatory and insurance system is lead by the most qualified individuals. Sen. Metsger should complement the skills and talent on the NCUA board well with a solid focus on the future."

CFPB, Dodd-Frank On House Fin. Svcs. Hearing Schedule

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WASHINGTON (5/15/13)--How Consumer Financial Protection Bureau mortgage regulations could impact consumer credit access and the housing market will be one of many key items discussed in House Financial Services Committee hearings planned for next week.

The CFPB hearing, which will focus on the CFPB's Ability to Repay/Qualified Mortgage rule, will be held before the financial institutions and consumer credit subcommittee on Tuesday, May 21.

New standards to define a "qualified mortgage" under the agency's "ability to repay" regulations were issued by the CFPB in January. The rule amended Regulation Z, which implements the Truth in Lending Act, to require creditors to make a reasonable, good faith determination of a consumer's ability to repay any consumer credit transaction secured by a dwelling (excluding an open-end credit plan, timeshare plan, reverse mortgage, or temporary loan). The regulations also establish certain protections from liability under this requirement for "qualified mortgages."

Other hearings scheduled for next week include:
  • A May 21 monetary policy and trade subcommittee hearing on the unintended consequences of the conflict minerals provision of the Dodd-Frank Act. That provision requires the Securities and Exchange Commission to promulgate rules for public companies to disclose their use of minerals that originated in the Democratic Republic of Congo;
  • A May 22 full Financial Services Committee hearing that will feature testimony from U.S. Treasury Secretary Jacob Lew. Lew will present the annual Financial Stability Oversight Council report during that hearing;
  • A May 22 oversight and investigations subcommittee hearing on how the U.S. Department of Justice determines whether a financial institution is "Too Big to Jail"; and
  • A May 23 capital markets and government-sponsored enterprises subcommittee hearing on the Burdensome Data Collection Relief Act (H.R. 1135), the Small Business Capital Access and Jobs Preservation Act (H.R. 1105), the Audit Integrity and Job Protection Act (H.R. 1564) and a proposal to amend portions of the Dodd-Frank Act that address the fiduciary duties of broker-dealers.
The committee stressed that this is a tentative schedule, and said witnesses will be announced later.

For the full schedule, use the resource link.

In Fox Biz Piece, Cheney Reminds 'There's a CU For Everyone'

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WASHINGTON (5/15/13)--"There's a credit union for everyone...You just have to find it," Credit Union National Association President/CEO Bill Cheney said in a new Foxbusiness.com story.

In the story, entitled "Five Types of Credit Unions Worth Joining," Cheney recommended that consumers use CUNA's aSmarterChoice.org to help them find a credit union that fits their needs. The story also ran on Bankrate.com.

American families that chose a credit union over a bank saved around $130 in 2012, according to CUNA estimates. Better loan rates and lower and fewer fees help create these types of benefits for credit union members, Cheney said.

The Foxbusiness.com story said consumers seeking a credit union to join can look into:

  • University-tied credit unions that offer membership to current students, graduates, faculty and area residents. Many of these credit unions feature convenient on-campus branches, and help young members establish their credit;
  • Community development financial institutions that aim to serve low- and moderate-income people and can offer affordable mortgages, tax preparation services, or enhanced savings accounts;
  • Going green with credit unions that offer paperless statements, loan discounts for high-fuel-economy cars, and green workshops;
  • Examining religiously affiliated institutions they could join; and
  • Considering military credit unions, if they are eligible to join.
For the full Foxbusiness.com story and more on aSmarterChoice.org, use the resource links.

CU Mag Compliance Column Takes On Credit Reporting Queries

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WASHINGTON (5/15/13)--The Fair Credit Reporting Act's (FCRA) treatment of credit report information-sharing rights and adverse action notices are two topics taken on in the May edition of Credit Union Magazine's Compliance Q&A Column.

First, credit reports: As explained by Credit Union National Association Senior Director of Compliance Analysis Valerie Moss in the column, section 1681e of FCRA permits a credit union to disclose the contents of a member's credit report to that member if a loan denial or other adverse action is based in whole or in part on information in the report.

Credit unions should check their credit reporting bureau contracts to see if it is permissible to provide their members with actual copies of their credit reports, Moss recommended.

The FCRA does not require adverse action notices to be released in written form. When a financial institution takes adverse action with respect to a consumer based--in whole or in part--on any information contained in a credit report, the financial institution shall provide an oral, written, or electronic notice of the adverse action to the consumer, Moss explained.

On the other hand, she noted, Regulation B [the Equal Credit Opportunity Act] requires adverse action notices to be in writing for consumer credit. "The term 'in writing' includes electronic delivery of the notice if provided in compliance with the federal ESIGN statute. But, you may give the notifications for business credit verbally or in writing," Moss wrote.

For other engaging Credit Union Magazine articles, use the resource link.

NEW: Senate Will Vote On Cordray Nomination Next Week, Reid Says

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WASHINGTON (UPDATED: 5/15/13, 3 p.m. ET)--A Senate confirmation vote for Consumer Financial Protection Bureau Director Richard Cordray will be on the schedule next week, Sen. Harry Reid (D-Nev.) reportedly said today.

According to Talking Points Memo, Reid is adamant that the job of CFPB director will be filled. Cordray will receive a vote, the senator said.

The Senate Banking Committee in March approved the nomination by a 12 to 10 vote.

Cordray's nomination passed the committee in 2011, but ultimately failed to get a vote in the Senate. President Barack Obama appointed Cordray to the CFPB director position during a brief congressional recess in 2012, and Cordray's term as director would end this year if he is not confirmed.

Many Senate Republicans have consistently said they would block any CFPB nominee if certain structural changes were not made to the agency makeup.

House and Senate Republicans have supported replacing the CFPB director's position with a five-member panel of leadership. Legislation that would create such a panel (S. 205) has been introduced in the Senate.

The Credit Union National Association backs a multi-member panel of directors if it includes seats statutorily designated for credit union system representatives, including a state or federal credit union regulator, and possibly a state consumer agency representative.

NEW: CUNA and Leagues Mobilizing 96 Million Members to Preserve CU Tax Status

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WASHINGTON (UPDATED: 5/15/13, 10:15 A.M. ET)--The Credit Union National Association and its affiliated state credit union leagues have launched a large-scale, nationwide grassroots-mobilization campaign urging America's 96 million credit union members to deliver a united message to the U.S. Congress: "Don't tax my credit union!"

The campaign is being launched at a time when the U.S. House and Senate have made broad-based tax reform a major priority. The initiative will urge lawmakers as part of any final tax reform plan to preserve the federal tax exemption credit unions receive as not-for-profit, member-owned cooperatives.

"Policy is being formulated on Capitol Hill now, so we must act now. We can't wait," said CUNA President and CEO Bill Cheney. "It's rare that credit unions call upon their 96 million members to take action, but our members will be the best spokespeople we have, especially on an issue as vital to our future as this."

The campaign will emphasize that any tax on credit unions is really a tax on its members since credit unions are cooperatively-owned by the people they serve. If credit unions were taxed, their benefits to members and communities will be lost, and a consumer-friendly option in the financial marketplace will vanish.

The nationwide action alert urges nearly 7,000 state and federally chartered credit unions to support this campaign by engaging their consumer-members on this issue and directing them to a range of new resources.

"We have to take action on a large scale," said Cheney. "This is about more than just the banking sector wanting to see us taxed. We're vying with some 400 other organizations and industries that see their own tax status threatened. There will be a great deal of noise on Capitol Hill. We've got to be sure our voice is clearly heard."

The "Don't Tax My Credit Union" campaign will utilize direct communication from credit unions to their members and supporters as well as web-based and social media channels in order to convey a powerful and sustained message to Congress. Elements include:

  • A new web site, DontTaxMyCreditUnion.org, where people can learn about the issue, send an email message directly to their members of Congress;
  • Engagement of influential third-party coalition members that recognize credit unions' tax status is good public policy that benefits consumers and society as a whole;
  • A national webinar for credit union executives, to be held Wednesday, May 22 at 3:00 p.m. ET, where CUNA will fully outline the issues, strategy, and required actions. To sign up for the webinar, click here;
  • A reformatted version of CUNA's tax advocacy tool kit.
"Our research shows that informed members are ready to stand with us in this battle," Cheney said. "We have a great opportunity to unite for the good of our members. If Congress taxes credit unions, they'll take away the best financial option from America's consumers. We won't allow that to happen."

For more on the "Don't Tax My Credit Union" campaign, use the resource links.