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CUNA Urges Further Fixed-Asset Improvements to NCUA

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WASHINGTON (5/21/13)--The Credit Union National Association has spoken in support of National Credit Union Administration proposed fixed-asset rule changes, but is urging that more improvements be made to the rule, in a comment letter filed Monday.

The CUNA comment letter responds to a March NCUA proposal that makes plain language revisions to the agency's fixed asset rule, and adds new definitions and rewordings.

The changes would impact NCUA's current fixed-assets rule, Section 701.36, which allows federal credit unions to purchase, hold and dispose of property necessary or incidental to their operations. These fixed assets include office buildings, branch facilities, furniture, computer hardware and software, and ATMs.

The NCUA's amendments to section 701.36 would "clarify the regulation by improving its organization, structure and ease of use," CUNA Deputy General Counsel Mary Dunn wrote.

While these are positive improvements, Dunn also urged the NCUA "to take this opportunity to adopt substantive changes" that will make the rule more effective and meaningful for credit unions, while remaining faithful to the letter and intent of the Federal Credit Union Act.

"The rule in its current and proposed forms gives NCUA staff too much authority over the business decisions of federal credit unions...Involving itself into the decision-making process of credit unions is outside the duties for which the NCUA was created. CUNA is confident that credit unions themselves are in the best position to make business decisions and, conversely, are at a competitive disadvantage when NCUA dictates their business decisions to them," Dunn added.

CUNA's recommendations for improving the fixed-assets rule include:

  • Eliminating the current regulatory limit imposed on the ownership of fixed assets, which is 5% of a federal credit union's shares, since it is not required under the Federal Credit Union Act;
  • Improving the rule's definition of "partially occupy" to clear up some credit union confusion;
  • If the cap is retained, using the blanket waiver concept to give credit unions additional flexibility under the fixed-assets rule;
  • Adding an appeal process to denied fixed-asset rule waiver requests; and
  • Issuing an annual report detailing fixed-asset rule waiver-request statistics from each region.
For more of CUNA's comments on the fixed-asset rule, use the resource link.

Qualified Mortgage Updates Featured In Reg Advocacy Report

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WASHINGTON (5/21/13)--Plenty of news is swirling around recently approved and still-developing qualified mortgage changes, and this qualified mortgage (QM) news is featured in this week's edition of the Credit Union National Association's Regulatory Advocacy Report.

While Consumer Financial Protection Bureau Director Richard Cordray recently encouraged credit unions to continue to write non-QM loans, as long as they are supported by strong underwriting, participants at a recent symposium said there is little investor appetite for non-QM loans in the secondary market.

The remarks were made by a representative of the Securities Industry Financial Market Association. CUNA also participated in the symposium, which focused on the future of housing finance and was sponsored by accounting firm PricewaterhouseCoopers.

Low secondary market interest in QM mortgages could mean that credit unions that write non-QM loans may face an increasing need to hold them in portfolio, rather than selling them into the secondary market, CUNA Deputy General Counsel Mary Dunn wrote.

"CUNA continues to strongly advocate for flexibility for credit unions to issue mortgages to well-qualified members, without regard to the QM rules, and is carrying this message to the National Credit Union Administration, the CFPB, the Federal Housing Finance Agency, and other regulators," she added.

Other topics addressed in this week's Regulatory Advocacy Report include:

  • The results of the May NCUA open board meeting;
  • FHFA notices on lender placed insurance, terms and conditions;
  • JPMorgan Chase & Co. issues regarding collections practices;
  • A Securities and Exchange Commission credit ratings roundtable; and
  • CFPB escrow rule clarifications.
Employees or volunteers of CUNA- and state credit union league-member credit unions can sign up below to receive the Regulatory Advocacy Report.

The Regulatory Advocacy Report is archived on

New Senate Student Loan Fix Introduced

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WASHINGTON (5/21/13)--Sen. Kirsten Gillibrand (D-N.Y.) is the latest member of the U.S. Congress to take on student loan issues, announcing a new bill, the Federal Student Loan Refinancing Act, over the weekend.

Gillibrand's bill would enable federal student loan holders with interest rates above 4% to refinance those loans at a fixed rate of 4%. The senator in a release said her bill would reduce interest rates for nine of 10 student loans nationwide.

"The nation's $1.1 trillion in student loan debt is contributing to sluggish economic growth, negatively impacting young borrowers' purchasing power, home and car ownership, and even small business growth and entrepreneurship.

Keeping interest rates low would help reduce the debt burden on students and strengthen their purchasing power to boost economic growth," Gillibrand said.

The senator said she would also support another recent piece of student loan legislation: the Student Loan Affordability Act. That bill, introduced last week by Senate Majority Leader Harry Reid (D-Nev.) and Sens. Tom Harkin (D-Iowa), Patty Murray (D-Wash.) and Jack Reed (D-R.I.), would cap federal student loan rates at 3.4% for another two years.

The federal student loan rate is scheduled to double from 3.4% to 6.8% on July 1 if Congress does not take action.

Other student lending solutions have been introduced in the House and Senate. Sen. Elizabeth Warren (D-Mass.) introduced a bill, the Bank on Students Loan Fairness Act, which would offer federal student loans at the same rates that are charged to banks through the Federal Reserve discount window. That rate is currently 0.75%.

Rep. Karen Bass (D-Calif.) in March introduced her own bill that would cap federal student loan interest rates at 3.4% and also allow some borrowers to refinance their student loan debt to improve their rate.

The Credit Union National Association's first annual High School Student Borrowing Survey, released last month, found that nearly half of high school seniors don't know how much they will need for college costs. That lack of knowledge translates to a greater student-debt burden after college.

In a recent meeting with Consumer Financial Protection Bureau officials, CUNA said credit unions could do more to help debt-saddled grads if the maximum credit union student loan maturity of 15 years was increased. (Use the resource link for an April 23 News Now story: CFPB Seeks CU Help For Student Loan Issues.)

Still Time To Register For CUNA's CU Tax Status Webinar

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WASHINGTON (5/21/13)--There is still time for credit unions to register for Wednesday's Credit Union National Association National Webinar on the Credit Union Tax Status.

The tax advocacy webinar will feature:

  • A legislative briefing on the tax situation facing credit unions; and
  • Valuable information on the tools CUNA and state leagues are providing to help credit unions join the tax status fight.
The U.S. House and Senate have made broad-based tax reform a major priority. In the face of these reform efforts, CUNA and 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 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.

There is no cost to attend the CUNA webinar.

To sign up, use the resource link.

CFPB Vote, Hearing Set Ahead Of Memorial Day Break

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WASHINGTON (5/21/13)--A Consumer Financial Protection Bureau confirmation vote and hearings on tax reform, qualified mortgages, the Dodd-Frank Act and other economic issues are expected in the U.S. Congress this week.

The Senate vote on Richard Cordray's nomination for the position of CFPB director could happen Thursday, Ryan Donovan, CUNA's senior vice president of legislative affairs, said. Cordray's nomination did not receive a Senate vote in 2011, and President Barack Obama appointed Cordray to the CFPB director position during a brief congressional recess in 2012.

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

Cordray's term as director would end this year if he is not confirmed.

Hearings on tap today include:

  • A House Financial Services financial institutions and consumer credit subcommittee hearing entitled: "Qualified Mortgages: Examining the Impact of the Ability to Repay Rule";
  • A House Financial Services monetary policy and trade subcommittee hearing focusing on the Securities and Exchange Commission rules for public companies to disclose their use of minerals that originated in the Democratic Republic of Congo; and
  • The Senate Banking, Housing and Urban Affairs Committee hearing on the Financial Stability Oversight Council's (FSOC) annual report to Congress.
The yearly FSOC report will be discussed before the House Financial Services Committee on Wednesday. Other Wednesday hearings include:

  • A Joint Economic Committee hearing on Federal Reserve Chairman Ben Bernanke's views of the current economic outlook;
  • A House Financial Services oversight and investigations subcommittee hearing entitled: "Who Is Too Big to Fail: Are Large Financial Institutions Immune from Federal Prosecution?"; and
  • A Senate Budget Committee hearing entitled "Supporting Broad-Based Economic Growth and Fiscal Responsibility through Tax Reform."
The House Financial Services capital markets and government sponsored enterprises subcommittee on Thursday will discuss a range of regulatory relief measures for investors and job creators.

Members of Congress are scheduled to leave Washington at the end of the week for the Memorial Day district work period. They are set to return on June 3.