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CU credit report rights covered in iCU Magi

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WASHINGTON (5/3/12)--Credit unions and others that use consumer reports must have a "permissible purpose" to obtain them according to the Fair Credit Reporting Act (FCRA), and Credit Union National Association (CUNA) Director of Compliance Information Valerie Moss has outlined the circumstances under which the FCRA allows a credit bureau to release a credit report to a credit union in the May issue of CUNA's Credit Union Magazine.

In the article, Moss notes that credit unions may collect credit reports:

  • When they are instructed by a consumer, in writing, to obtain their credit report;
  • When a member applies for a new line of credit; and
  • When they are needed for pre-employment research on a given job applicant.
The reports can also be collected to aid credit account reviews or collections. However, only active members' credit reports can be collected for this purpose.

Moss writes that the FCRA does not allow financial institutions to access credit reports for members with paid off or closed accounts. Credit unions with a legitimate business need for information may also collect credit reports provided they are used in connection with a business transaction that's initiated by the consumer, or to review an account to determine whether the consumer continues to meet the terms of the account.

Credit bureaus may furnish credit reports without a consumer's specific authorization if they are tied to loan applications, but many credit unions and other institutions still require their members to authorize the release of their credit report in these cases, according to Moss.

With the exception of prescreened solicitations, credit unions may not use credit reports to market products and services to their members, she added.

Other compliance articles are available in the latest issue of Credit Union Magazine. For those articles, and more from the magazine, use the resource link.

IRS opens 2013 low-income tax clinic grant program

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WASHINGTON (5/3/12)--Applications for the 2013 round of the Internal Revenue Service's (IRS) Low Income Taxpayer Clinic (LITC) grant process will be accepted until June 15, the IRS said Wednesday.

LITCs represent low-income taxpayers in federal tax disputes the IRS for free or for a small charge. The LITCs also may provide tax education and outreach for taxpayers who speak English as a second language.

The IRS noted its LITC program awards matching grants of up to $100,000 per year to qualifying organizations to develop, expand, or maintain low income taxpayer clinics. Around $10 million in grants were issued to 165 organizations, including some credit unions, last year.

LITC applications from all locations will be accepted, but the IRS said it is particularly interested in receiving applications from organizations in underserved areas of the country.

For more on the LITC program, use the resource link.

Majority of consumers support co-op businesses NCBACFA

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WASHINGTON (5/3/12)—A recent National Cooperative Business Association (NCBA)/Consumer Federation of America (CFA) survey found more Americans think credit unions and other cooperative businesses have the best interests of their members and customers in mind more than do for-profit businesses.

The NCBA/CFA survey, administered by Opinion Research Corp International (ORC), questioned 1,008 respondents over the weekend of April 19. Based on the survey results, close to one-third of Americans (29%) identified themselves as members of a consumer cooperative.

The survey also revealed a favorable view of cooperatives in regards to their business trustworthiness and quality of service. In fact, co-ops received higher marks across the board than for-profit businesses.

Seventy-seven percent of respondents said co-ops are committed to providing the highest quality of service to their customers, compared to 64% that said that of for-profits.

Nearly 80% said co-ops could be counted on to meet their customer's needs, and 77% said co-ops offered fair, competitive prices, according to the survey. For-profit businesses had lower scores in each of those categories, receiving approval marks of 70% and 67%, respectively.

"This survey illustrates that the 29,000 cooperatives in this country offer a much-needed alternative that consumers appreciate," Liz Bailey, NCBA interim president/CEO, said.

"At a time when the entire business community is focused on demonstrating shared value and social responsibility, it's gratifying to know that Americans continue to place their trust in member-owned, democratically governed cooperative business enterprises," she added.

CFA Executive Director Stephen Brobeck said his group "has long believed that cooperatives offer pro-consumer services and enhance pro-consumer competition in the marketplace."

2012 has been named the International Year of Cooperatives by the United Nations and the U.S. Senate. The theme for the year is "Cooperative Enterprises Build a Better World," and the Credit Union National Association (CUNA) has pledged to "lead efforts to engage the credit union community in the promotion of International Year of Cooperative Activities."

CUNA is also taking part in a NCBA-led steering committee that is working to raise the profile of cooperatives, improve access to cooperative business, and reach out to government officials and the youth of the world to educate them on cooperative business.

The 7,400 credit unions in the United States represent the largest segment of the more-than 29,000 American cooperative businesses, holding nearly $1 trillion in assets and serving more than 92 million consumers.

Inside Washington (05/02/2012)

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  • WASHINGTON (5/3/12)--Rep. Spencer Bachus (R-Ala.), chairman of the House Financial Services Committee, Tuesday welcomed the dismissal of ethics allegations against him. The board of the Office of Congressional Ethics (OCE) voted 6-0 Friday to clear Bachus on allegations of insider trading. "The OCE's unanimous dismissal of these false allegations is a welcome conclusion to a destructive and disruptive, media-generated assault," Bachus said in a press release.  "It has been a long, painful, and frustrating experience to have a reputation built over many years sullied by untrue accusations." Bachus thanked former Securities and Exchange Commission (SEC) chairmen Harvey Pitt and Roderick Hills and former federal judge and SEC official Stanley Sporkin "for reviewing the allegations, determining they were false and meritless, and publicly coming to my defense" …
  • WASHINGTON (5/3/12)--In a letter to Acting FHFA Director Edward Demarco, two Democratic House members said Demarco's office purposely quashed a mortgage principal reduction program despite analyses that showed the initiative would save U.S. taxpayers money. In the letter, Reps. Elijah Cummings (D-Md.) and John Tierney (D-Mass.) said they obtained internal documents that reveal how Fannie Mae officials worked with Citibank beginning in 2009 to develop a "shared equity" principal reduction pilot program that ultimately was terminated for unspecified reasons. They said the documents show that Fannie Mae officials strongly supported the concept of principal reduction and fully evaluated its risks and benefits as they obtained the necessary internal approvals to finalize the program …
  • WASHINGTON (5/3/12)--Tony Renzi, executive vice president of single family business, operations and information technology at Freddie Mac, has resigned, effective May 11, according to a Securities and Exchange Commission filing (American Banker May 2). Renzi joined the government-sponsored enterprise in April 2011 after leaving GMAC Mortgage. He has taken a position with an unnamed financial services company, according to the filing …
  • WASHINGTON (5/3/12)--Patricia Geoghan, acting special master for the Troubled Asset Relief Program (TARP), outlined the principles used to determine compensation for executive pay of TARP recipients, in an interview with American Banker (May 2). In most cases, 75% of compensation is issued in stock, Geoghan said. Up to a third of the stock is in incentive compensation, which is based on achievement of performance metrics.  If performance goals are reached, then the executive can only cash out that award as the company repays its TARP obligations in 25% increments. The remaining stock compensation is issued on every payroll date, but instead of being paid in cash, executives are paid in stock or stock units that are promises to deliver stock in the future. Any cash salary is limited to no more than $500,000. The overall CEO compensation packages payable by American International Group, Ally Financial and General Motors have not increased, Geoghan said.  Although there has been some modification in the mix of stock salary and long-term restricted stock for the CEO group, the overall amount of CEO compensation is frozen at 2011 levels …