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NEW: Udall Reintroduces Bill To Increase CUs' MBL Cap

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WASHINGTON (UPDATED: 5/16/13, 12:30 p.m. ET)--Sen. Mark Udall (D-Colo.) today reintroduced legislation that would increase the credit union member business lending (MBL) cap to 27.5% of assets, from the current 12.25%-of-assets level.

Credit Union National Association President/CEO Bill Cheney thanked Udall for introducing the bill. "Your legislation is a commonsense economic-recovery and job-creation measure that would permit credit unions with experience in business lending to continue to lend to their small business members, without increasing the size of government," Cheney told Sen. Udall.

"When other lenders fled the market, credit unions stood with those in need," Cheney said. "Your legislation says to the credit unions that stood with their business-owning members, keep lending."

CUNA estimates the MBL cap change would help credit unions lend an additional $13 billion to small businesses in just the first year after enactment. This money, which would be made available at no expense to taxpayers, would in turn help small businesses create around 140,000 new jobs.

Reps. Ed Royce (R-Calif.) and co-sponsor Carolyn McCarthy (D-N.Y.) released similar legislation early this year. That bill, H.R. 688, has 94 co-sponsors.

'Don't Tax My CU' Campaign Mobilizes 96 Million Members

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WASHINGTON (5/16/13)--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 CUNA 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."

One example of these reform efforts came yesterday, when the Senate Finance Committee released a paper examining tax considerations related to economic and community development. The committee paper discusses potential mortgage interest deduction changes, and other tax expenditures. Credit unions are not mentioned in the paper.

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.

NEW: NCUA Releases CU Derivatives Program Proposal

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ALEXANDRIA, Va. (UPDATED: 5/16/13, 11 a.m. ET)--Well-run federal credit unions would be permitted to use simple derivatives to hedge against interest rate risks under a just-proposed National Credit Union Administration program.

Under the terms of the NCUA proposal, only credit unions that have assets of more than $250 million, are well-managed, and have the appropriate expertise will be eligible to apply for an agency derivatives investment program. Swaps and caps will be the only approved derivatives investments, the NCUA said. There will be an application process, and fees will be charged to cover costs related to application processing and supervision.

The NCUA estimated that 75 to 150 credit unions would apply for derivatives authority within the first two years of the program. The agency said it would need to add new resources to handle application processing and supervision if the program is approved.

The agency is seeking comments for 60 days on the proposal.

The Credit Union National Association is reviewing the proposal in detail and will work with its Examination and Supervision Subcommittee to develop its comments CUNA urges any credit unions interested in engaging in these investments to share their reaction to the proposal and to flag problem areas as well as favorable provisions they identify.

While CUNA commend the agency's decision to move forward on this issue, CUNA plans to urge that the final rule not be so restrictive that it discourages well run credit unions that meet the proposal's criteria from applying for derivatives authority.

A board briefing on a supplemental interagency proposed rule that covers appraisals for higher-priced mortgage loans, and a final rule making technical adjustments to credit union regulations are also on today's open meeting agenda.

For more on the NCUA May board meeting, see Friday's News Now.

CFPB Encourages CUs To Write Non-QM Mortgages

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WASHINGTON (5/16/13)--Credit unions should continue to feel free to write non-qualified mortgage loans, as long as those loans are supported by strong underwriting, Consumer Financial Protection Bureau Director Richard Cordray said this week.

Cordray made his remarks before a National Association of Realtors gathering. In his remarks, Cordray said "lenders that have long upheld strong underwriting standards have little to fear" from the CFPB's ability to repay regulations.

The CFPB issued standards to define a "qualified mortgage" under the agency's "ability to repay" rules 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). It also establishes certain protections from liability under this requirement for "qualified mortgages."

"These qualified mortgages cover the vast majority of loans made in today's market, but they are by no means all of the mortgage market. This point is quite important, and it should not be misunderstood," Cordray said this week.

Credit unions and other community financial institutions "have seen the strong performance of their loans over time," he added. "Nothing about the traditional lending model has changed, and they should continue to offer such mortgages to borrowers whom they evaluate as posing reasonable credit risk--whether or not they meet the criteria to be classified as qualified mortgages. We all benefit by recognizing and sustaining responsible lending wherever we find it in the mortgage market," Cordray said.

For the CFPB Director's full remarks, use the resource link.

Derivatives On NCUA Agenda Today

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ALEXANDRIA, Va. (5/6/13)--A proposal to allow federal credit unions to invest in simple derivatives, technical amendments to agency regulations, and a board briefing on a supplemental interagency proposed rule that covers appraisals for higher-priced mortgage loans are on the agenda of this morning's National Credit Union Administration open board meeting.

While details of the proposal will be released after 10 a.m. ET, it is anticipated that the board will consider authority for well-run credit unions with the necessary expertise to use simple derivatives to hedge against interest rate risk (IRR). NCUA Board Chairman Debbie Matz has said managing IRR is a key concern for the agency.

The Credit Union National Association strongly supports permitting credit unions to manage IRR through investments in simple derivatives and urged the agency to proceed with consideration of this authority.

Supervisory activities and an appeal under Section 701.14 and Part 747, Subpart J of NCUA regulations are on the closed agenda. The closed board meeting is scheduled to begin after the open meeting has ended.

Watch @NewsNowLiveWire for up-to-the-minute tweets on the NCUA meeting, and News Now for breaking coverage on meeting developments.

For the full NCUA agenda, use the resource link.

Tax Talk Kicks Off CUNA Inside Exchange Video Series

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WASHINGTON (5/16/13)--The Credit Union National Association is launching a new regular video feature today called "Inside Exchange." CUNA has launched the new communications tool to give members insight into what's happening in Washington, D.C., in the legislative, regulatory and political arenas.

In the inaugural video, CUNA President/CEO Bill Cheney and Executive Vice President of Strategic Communications and Engagement Paul Gentile dive into efforts to preserve the credit union tax exemption, including more about CUNA's new "Don't Tax My Credit Union" campaign.



Cheney in the video notes that Congress now has an interest in comprehensive tax reform--a key change that can put the credit union tax exemption into play.

"What's changed is that Congress is talking about starting with a blank sheet of paper," Cheney said. "It's not like last year when they were talking about closing loop holes--a blank sheet of paper means everyone has lost their tax exemption, and not just credit unions. They haven't done that yet--but the conversation has started now."

This first video gives a good flavor of what is to come as CUNA hits all the hottest credit union topics in these periodic videos. 

"This is just one more direct line to our member credit unions--to share what we know about the things they want and need to know about most," Gentile says.

Reid: Senate To Vote On Cordray Nomination Next Week

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WASHINGTON (5/16/13)--A Senate confirmation vote for Consumer Financial Protection Bureau Director Richard Cordray will be on the schedule next week, Sen. Harry Reid (D-Nev.) told reporters Wednesday.

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 Cordray's nomination by a 12 to 10 vote, moving the nomination on to the full Senate.

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.

White House Nominates Former Oregon State Senator To NCUA Board

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WASHINGTON (5/16/13)--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 Wednesday by President Barack Obama, Metsger, if confirmed by the U.S. Senate, 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 at 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 led 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."

Spanish Site, New Mortgage Videos Unveiled By CFPB

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WASHINGTON (5/16/13)--The Consumer Financial Protection Bureau on Wednesday added new tools to its consumer outreach arsenal, unveiling a Spanish-only version of its website, consumerfinance.gov/es, and a series of videos that break down new mortgage regulations.

Language barriers can make financial struggles more difficult and can make individuals more prone to financial abuse, the agency noted in a release. "Recognizing these challenges, we wanted to provide our Spanish-speaking audience with access to clear, unbiased information about financial products and services," the CFPB said.

The Spanish-language site provides plain-language answers to frequently asked questions. The CFPB said it hopes to include more resources and tools in languages other than English to reach as many consumers "as effectively as possible."

The new CFPB videos provide a general overview of the CFPB's new mortgage rules.

An hour-long video takes on all of the new mortgage regulations.

Shorter, more focused presentations on individual regulations are also provided. Those videos cover:

  • Ability-to-Repay and Qualified Mortgage regulations;
  • The 2013 Home Ownership and Equity Protection Act;
  • Equal Credit Opportunity Act valuations and Truth in Lending Act (TILA) higher-priced mortgage loans appraisal rules;
  • Loan originator compensation regulations;
  • Mortgage servicing regulations; and
  • TILA escrow regulations.
"Although the videos and guides give an overview of the rules, they are not a substitute for the underlying rules," the CFPB stressed.

For more on both CFPB outreach efforts, use the resource links.