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CUNA: Relief Bill A Good Step Toward CU Charter Modernization

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WASHINGTON (7/1/13)--Rep. Gary Miller's (R-Calif.) Regulatory Relief for Credit Unions Act (H.R. 2572), introduced on Friday, "is a good first step toward modernizing the credit union charter," Credit Union National Association President/CEO Bill Cheney said.

In a letter to Miller, Cheney said the bill "recognizes that while credit unions were created for the specific purpose of promoting thrift and providing access to credit for provident purposes, the statute and regulations that govern how credit unions operate are in desperate need of modernization."

Regulatory improvements included in Miller's bill include:

  • Updating credit union investment authorities;
  • Amplifying the National Credit Union Administration's authority to implement a risk-based capital regime;
  • Providing the agency with flexibility to adjust leverage requirements;
  • Allowing the NCUA to adjust capital requirements as needed; and
  • Clarifying the insurance coverage of funds held in trust accounts at credit unions.
The bill would also request the NCUA to perform a cost-benefit analysis of rules, past and present. The Government Accountability Office would also study the need for improvements and modernization to the Central Liquidity Facility under the terms of the bill.

"Credit unions wholeheartedly thank Rep. Miller for acting on their great need for regulatory relief so fewer resources are diverted from their true business of serving their members," Sam Whitfield, Credit Union National Association vice president of legislative affairs, said as CUNA welcomed the bill. He added CUNA's appreciation that Miller included CUNA in the development of his legislation.

Miller's bill will likely be joined by other regulatory relief legislative initiatives coming out of the financial services panel this year.

Other Financial Services Committee members are said to be preparing to offer bipartisan regulatory relief bills and are working to find for areas where credit union and community bank interests may intersect in a bill. CUNA has assured lawmakers that such areas exist; for instance, one such area is examination fairness legislation.

During a hearing in March, CUNA delivered a 35-point plan for credit union regulatory relief to federal lawmakers. Among changes promoted by CUNA are:

  • Increasing NCUA budget transparency;
  • Adjusting the treatment of non-owner occupied one- to four-family dwelling loans for credit unions from business loans to residential real estate loans;
  • Increasing the maturity limit for higher education loans made by federal credit unions; and
  • Expanding investment authority in credit union service organizations.

Cheney Report: CUNA Ready To Work Toward Housing Reforms

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WASHINGTON (6/29/13)--The Credit Union National Association is "ready to work with lawmakers to enact changes that will ensure smaller institutions, such as credit unions, will continue to have fair and affordable access to a vibrant, well-regulated and affordable housing market" as housing market reform efforts move forward, CUNA President/CEO Bill Cheney said Friday in the latest edition of The Cheney Report.

Several senators last week joined to cosponsor bipartisan legislation that would wind down government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac and replace them with a new mortgage guarantor, the Federal Mortgage Insurance Corporation (FMIC). Cheney notes that there are positive aspects of the bill, known as the Housing Finance Reform and Taxpayer Protection Act of 2013.

The bill reflects a number of points that CUNA has worked for--"in particular, assuring access to all financial institutions, especially credit unions, to a functioning mortgage market," Cheney wrote. The CUNA CEO noted that "this is the beginning of what will likely be a long process," and noted that "other important housing finance legislation may soon be surfacing on the U.S. House side."

CUNA Chief Economist Bill Hampel discussed credit union priorities for housing finance market reform during a Friday panel discussion organized and moderated by Rep. Maxine Waters (D-Calif.), the ranking Democrat of the House Financial Services Committee. (See News Now story: Hampel Lays Out Housing Reform Principles In Hill Event)

This week's Cheney Report also includes:

  • Details on NCUA board nominee Richard Metsger's testimony before Congress;
  • An update on the Don't Tax My Credit Union! campaign; and
  • A preview of this week's America's Credit Union Conference.
Each Friday, The Cheney Report provides a valuable window into CUNA's actions on behalf of member credit unions and reinforces the value of CUNA membership. To sign up for The Cheney Report, click the resource link below and use the "subscribe" tab on the right of the page.

Past issues of The Cheney Report are also archived on

Hampel Lays Out Housing Reform Principles In Hill Event

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WASHINGTON (7/1/13)--The Credit Union National Association, participating in Rep. Maxine Waters' (D-Calif.) housing finance market reform policy discussion session Friday, made it clear that needed reforms must not hinder the ability of credit unions to meet their members' housing finance needs in a member-friendly, cooperative way.

Click to view larger image CUNA Cheif Economist Bill Hampel, left, facing camera, discusses housing reform with Rep. Maxine Waters (D-Calif.), far right, during Friday's Capitol Hill event. (U.S. House photo)
CUNA Chief Economist Bill Hampel represented CUNA at the session, which was the second in Waters' housing finance reform series. Waters is the ranking Democrat of the House Financial Services Committee.

In his opening remarks, Hampel noted that credit unions have been engaged in mortgage lending since the 1970s, and originated $123 billion in first-lien mortgage loans in 2012. Those loans accounted for 6.5% of total market share.

"Credit unions are now significant players in residential real estate finance," and "the fact that many loans will be held on credit unions' books makes them prudent lenders," he added.

"The fact that interest rate risk management often requires selling a significant portion of loans, means an effective and accessible secondary market is vital to credit unions." Equal access to the secondary market for lenders of all sizes is a must, he said. Hampel noted that the need to maintain space in the market for credit unions and other small financial institutions is referenced several times in the Housing Finance Reform and Taxpayer Protection Act of 2013, which was introduced in the Senate last week. (In the latest edition of The Cheney Report, CUNA President/CEO Bill Cheney notes that there are positive aspects of the bill. See News Now story: Cheney: CUNA Ready To Work Toward Housing Reforms.)

Most credit unions have plenty of excess funds to lend, but need a way to hedge interest rate risks and keep the loans on their books, Hampel said.

In his comments, he also outlined a series of principles that CUNA hopes a new housing market finance system will accommodate. Those principles include:
  • Ensuring that even in troubled economic times, mortgage loans will continue to be made to qualified borrowers;
  • Emphasizing consumer education and counseling as a means to ensure that borrowers receive appropriate mortgage loans;
  • Maintaining consumer access to products that provide predictable, affordable mortgage payments to qualified borrowers, such as the 30-year fixed rate mortgage;
  • Setting reasonable conforming loan size limits that adequately take into consideration variations in local real estate costs; and
  • Allowing credit unions to continue to service their member mortgages.
Overall, he said, the transition from the current system to any new housing finance system must be reasonable and orderly, and the transition deadline needs to be flexible.

ASI FCU Assumes Ochsner Clinic FCU Shares

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ALEXANDRIA, Va. (7/1/13)--The National Credit Union Administration has liquidated New Orleans, La.-based Ochsner Clinic FCU, the agency announced Friday.  ASI FCU of Harahan, La., has assumed Ochsner Clinic FCU's members, deposits and loans.

It is the 10th federally insured credit union liquidation in 2013, NCUA said.

NCUA said it decided to liquidate the $9.25 million asset credit union and discontinue operations after determining the credit union was insolvent, with no prospect of restoring viable operations.

The new ASI FCU members will experience no interruption in services, NCUA said. Their accounts remain insured up to $250,000 by the National Credit Union Share Insurance Fund.

Ochsner Clinic FCU, which was chartered in 1973, served a number of select group centered primarily in the medical profession in the New Orleans area.  It served 3,099 members.

Neither Ochsner Clinic Foundation nor Ochsner Health System owns, manages or oversees the credit union, which is an independent entity, said NCUA.

NCUA Bans 11 From CU Work

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ALEXANDRIA, Va. (7/1/13)--The National Credit Union Administration Friday issued prohibition orders banning eleven individuals from participating in the affairs of any federally insured financial institution.

The NCUA reported the orders involve the following former credit union employees and charges:

The NCUA reported the orders involve the following former credit union employees and charges:

  • Kaleigh Davis, a former employee of VyStar CU, Jacksonville, Fla., pleaded guilty to the charge of defrauding a financial institution;
  • Gabriel Escandon, a former vice president of operations for White Sands FCU, Las Cruces, N.M., and former CEO of Tip of Texas FCU, El Paso, Texas., consented to the issuance of a prohibition order to avoid the time, cost and expense of administrative litigation;
  • Linda Fite, a former employee of Cinco Family Financial Center CU, Cincinnati, Ohio, pleaded guilty to the charge of theft;
  • Tyrone Hunt, a former employee of County CU, Clayton, Mo., pleaded guilty to the charge of forgery;
  • Mary Kjersem, a former employee of United Neighbors FCU, Watertown, N.Y., pleaded guilty to the charge of grand larceny in the third degree;
  • George Kolias Jr., a former employee of Flag CU, Tallahassee, Fla., pleaded no contest to the charge of providing alcohol to a minor and aggravated assault with the intent to commit a felony;
  • Jody Kravat, a former employee of Security CU, Flint, Mich., pleaded guilty to the charge of embezzlement;
  • Anthony Loayza, a former employee of Gulf Coast Educators FCU, Corpus Christi, Texas, pleaded guilty to the charge of theft;
  • Ysnayana Carolina Patino, a former employee of Miami Firefighters FCU, Miami, Fla., was convicted of grand theft in the second degree;
  • Patricia Piscioneri, a former employee of North Adams M E FCU, North Adams, Mass., pleaded guilty to the charge of embezzlement and false entries; and
  • Betty Lou Williams, a former employee of VyStar CU, Jacksonville, Fla., pleaded guilty to the charge of defrauding a financial institution.
Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.

Use the resource link for more information on the NCUA enforcement orders.