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Washington Archive

Washington

GAO asks CFPB for internal control improvements

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WASHINGTON (5/23/12)--The U.S. Government Accountability Office (GAO) has recommended that the Consumer Financial Protection Bureau (CFPB) improve aspects of its own accounting policies, and identified a number of other ways the CFPB could improve its internal controls.

In its report entitled "Opportunitiers for Improvement in the Bureau of Consumer Financial Protection's Internal Controls and Accounting Procedures," the GAO recommended that CFPB Director Richard Cordray direct his CFO to:

  • finalize and approve CFPB's documented accounting policies and procedures to include requirements for thoroughly documenting all key accounting policies and procedures;
  • augment the agency's internal control review procedures to include all components of CFPB controls, including controls over financial reporting services provided to the CFPB and key laws and regulations governing the CFPB's financial reporting functions; and
  • make changes to portions of the CFPB's travel reimbursement and contractor/employee payment policies.
The GAO also recommended the CFPB establish an agency-wide information security program in accordance with Federal Information Security Management Act (FISMA) guidance.

The GAO said the weakness identified did not represent material weaknesses or significant deficiencies in relation to CFPB's financial statements, but still warrant CFPB management's attention and action.

CFPB staff said the agency concurred with the GAO findings and recommendations, and added that the CFPB is working to address the issues identified in the report. The CFPB did not, however, specifically answer how the issues would be addressed.

For the full GAO report, use the resource link.

CUs CUNA N.C. league at Durham CFPB meeting

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DURHAM, N.C. (5/23/12)—Representatives from Premier FCU, Greensboro, N.C., Piedmont Advantage CU, Winston Salem, N.C., the Credit Union National Association (CUNA), and the North Carolina Credit Union League (NCCUL) will be among those attending today's Consumer Financial Protection Bureau (CFPB) field hearing on prepaid cards in Durham, N.C.

CFPB Director Richard Cordray, CFPB Deputy Director Raj Date, Rep. David Price (D-N.C.), and North Carolina Attorney General Roy Cooper will speak during the hearing. A witness panel of consumer groups, industry stakeholders, and financial experts will also get the chance to speak their minds in a discussion moderated by Date.

Martin Eakes, cofounder and CEO of community investment nonprofit Self-Help, which runs branches of N.C.'s Self Help CU in that state and branches of Self Help FCU in California, will be one of the panelists.

Prepaid cards are one of the many products the CFPB is focusing its early work on, and the CFPB has accepted public comment on how best to regulate prepaid credit card firms.

CUNA Regulatory Counsel Dennis Tsang, who will be in attendance, said today's hearing will present an excellent chance for credit unions to present their views on prepaid card issues.

The field hearing is scheduled to begin at 12:00 p.m. (ET) in the Durham Convention Center. The hearing will also be webcast live on the CFPB's homepage, consumerfinance.gov.

CUs have time to be heard on overdraft issues

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WASHINGTON (5/23/12)—There is still time for credit unions that wish to share information regarding their overdraft protection programs, and overdraft transfer and marketing practices, to do so through the Credit Union National Association's (CUNA) quick 12-question survey, but they must do so by this Friday, May 25.

The CUNA survey asks for basic information on the credit union's asset size, and what types of overdraft programs are offered to members.

More specific questions addressing how members are made aware of available overdraft protection programs and how members are alerted to the possibility that a transaction may trigger an overdraft fee are also among the survey questions.

The CUNA survey does not collect any identifying information, and credit union participation will be strictly anonymous.  The responses received through the survey will be critical as CUNA develops its comments to the CFPB on overdraft protection, CUNA Assistant General Counsel Luke Martone said.

CUNA developed the survey in response to a request for information by the Consumer Financial Protection Bureau (CFPB) earlier this year when it announced that it is seeking input from financial institutions and others to help evaluate how those institutions' overdraft policies affect consumers.

The CFPB's overdraft questions are particularly focused on marketing and disclosure of overdraft protection programs and practices and on how differences in the way institutions explain and promote overdraft programs may affect opt-in rates.

The CFPB has said it plans to use overdraft comments from consumers, the financial services industry, and other interested parties to craft new overdraft fee disclosures and rules, assist with policymaking on overdraft practices, and to prioritize the bureau's regulatory and education work. The agency will accept comment on overdraft practices until June 29.

For the CUNA survey, use the resource link.

Montgomery Co. Teachers FCU ordered to desist in three areas

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ALEXANDRIA, Va. (5/23/12)—Montgomery County Teachers FCU of Derwood, Md., was the subject of an Order to Cease and Desist issued by the National Credit Union Administration on Tuesday.

The order requires the credit union to take the following actions:

  • Comply with regulatory and supervisory requirements pursuant to Prompt Corrective Action;
  • Ensure the financial statement audit is completed and all accounts are reconciled by May 31, 2012; and
  • Address operational deficiencies and strengthen internal controls.
The credit union's officials have agreed to the terms of the order. The credit union serves nearly 59,000 members and was chartered in 1950.

Use the resource link to read the cease and desist documents.

NCUA opens applications for grants and low-rate loans

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ALEXANDRIA, Va. (5/23/12)--The National Credit Union Administration (NCUA) on Tuesday began accepting low-income credit union (LICU) applications for loans and grants under the 2012 round of the Community Development Revolving Loan Fund (CDRLF).

Eligible credit unions may apply for as much as $25,000 in grant funding and loans of as much as $300,000, the agency said. Loans exceeding $300,000 may also be approved on a case-by-case basis, the NCUA said.

Applications must be received by the agency by June 29.



The agency is offering a total of $1.3 million in grants and $11 million in low-rate loans this year. Grant funds can be used to support LICU's financial literacy, staff and board member training, internship, and tax prep assistance efforts.

According to the NCUA, loan funds may be used to:

  • expand share draft or credit card programs;
  • create partnerships with community-based service organizations and government agencies;
  • acquire, expand, or improve office space or equipment;
  • initiate or expand micro-business, education, and real-estate loan programs; and
  • offer consumer-friendly, short-term alternatives to payday loans.
NCUA Chairman Debbie Matz said LICUs "fill a crucial role by providing needed access to financial products and services for individuals of modest means," adding that the CDRLF loans and grants "are designed to provide vital assistance to low-income credit unions so they will be available to serve their members for many years to come."

Eligible credit unions may file a single application for all funding initiatives, and reimbursement requests for multiple grant initiatives can be bundled together, the NCUA said earlier this year. These changes will allow the NCUA to process grant requests more quickly, and will also speed the disbursement of grant related funds, the agency added.

For the full NCUA release, use the resource link.

Inside Washington (05/22/2012)

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  • ALEXANDRIA, Va. (5/23/12)--The National Credit Union Administration has issued a revised agenda for its May 24 closed meeting.  A second supervisory activity was added for consideration. The agenda is available here: http://www.ncua.gov/about/BoardActions/Pages/BDMtg2012.aspx ...

  • WASHINGTON (5/23/12)--James H. Freis, the director of the U.S. financial intelligence unit, was dismissed Thursday by the U.S. Treasury Department. Treasury officials had asked Freis to step down Thursday morning without explanation and Freis declined to do so, according to the May 22 issue of American Banker. When Freis refused, he was notified by e-mail of his dismissal, a source told the Banker. Although a reason for the dismissal was not provided, the source said Treasury, FinCEN's parent agency, thought the financial intelligence unit was slow to implement regulations, and that more attention should have been paid to the enforcement of international financial crimes. Freis' dismissal ends a five-year tenure in which he oversaw the drafting of the toughest anti-money laundering regulations since the passage of the U.S. Patriot Act …
  • WASHINGTON (5/23/12)--President Barack Obama used his weekly radio address to once again defend the Dodd-Frank Act. The president cited  JPMorgan Chase's $2 billion-plus loss as an illustration of  the need for reforms. He criticized congressional Republicans and  "an army of financial industry lobbyists" delaying Wall Street reform. While JPMorgan Chase could withstand the blow, U.S. taxpayers are put at risk when financial institutions experience such losses, Obama said. "That's why it's so important that members of Congress stand on the side of reform, not against it; because we can't afford to go back to an era of weak regulation and little oversight; where excessive risk-taking on Wall Street and a lack of basic oversight in Washington nearly destroyed our economy," he added. "We can't afford to go back to that brand of 'you're-on-your-own' economics. Not after the American people have worked so hard to come back from this crisis" …