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CUs' final public forum on RBC is today: Next steps for NCUA and CUNA

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WASHINGTON (7/17/14)--As the National Credit Union Administration launches its final credit union Listening Session today, it is to a back drop of assurances that the agency's risk-based capital proposal will undergo changes in key areas before it is made final.
The NCUA confirmed to  News Now  that when today's session in Alexandria, Va., ends around 4 p.m. (ET), the agency's process going forward will be continued review of the proposed rule--particularly in the area of risk weights--and of the comments that have been made.  Further, the agency said it will take "the time necessary" for a thorough review. 
As NCUA Chair Debbie Matz said in the earlier Listening Sessions held in Los Angeles and Chicago and as confirmed Wednesday, credit unions can anticipate changes in the proposed risk weights, especially in the areas of mortgages, member business loans, investments, credit union service organizations, and corporates credit unions. Also, the agency spokesman said the implementation period for the rule will be extended beyond the 18-months currently proposed.
"Any final rule will be clear on the point that the NCUA board, not individual credit union examiners, will make determinations about whether a specific credit union needs to hold more capital," the spokesman added.
"Nonetheless," interim President/CEO Bill Hampel stated, "while CUNA welcomes those changes,  CUNA remains concerned as to whether the revisions NCUA is contemplating will be significant enough to result in the kind of improvements credit unions need and that they, the leagues, and CUNA are seeking." For example, CUNA will continue to urge the NCUA to reduce the proposed risk-based capital requirement for well-capitalized credit unions, which CUNA says is out of proportion with the level of risk that credit unions present.  CUNA also supports the inclusion of the 1% National Credit Union Share Insurance Fund deposit in the RBC calculation.    
Like the previous two gatherings, today's session has a capacity crowd of 150 people registered. Although open to any topic of credit union interest, the agency's risk-based capital proposal has been the chief concern in the past assemblies and is expected to retain its place on center stage today.
Several credit union representatives at the Chicago session requested a new comment period, due to the significant changes that are likely to come as a result of the more than 2,000 comments received and the Listening Sessions. CUNA also supports allowing credit unions to comment again on a revised proposal.
Matz said if significant changes are made to the rule's intent it will require a new comment period.
Credit Union National Association Deputy General Counsel Mary Dunn was in attendance at both sessions, and said the agency seems committed to "roll up their sleeves on this proposal and make changes." She and other CUNA staff will be attending today.
Earlier this week, CUNA testified before the House Financial Services subcommittee on financial institutions and consumer credit, laying out its case against the RBC proposal, and calling for the agency to withdraw the proposal and instead pursue RBC standards as part of a multi-faceted reform strategy.
In its testimony Tuesday, CUNA made note of objections to the proposal's interest rate risk scheme, the discounting of the 1% deposit credit unions place in the NCUSIF and with the proposed rule's asset-based definition of a "complex" credit union. 
Matz said at last week's session in Chicago that the RBC proposal would be implemented, but the agency would "address the issues that have been identified."

CUNA at Pew postal banking debate: CUs in superior position to serve

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WASHINGTON (7/17/14)--The Pew Charitable Trusts hosted a full-day conference Wednesday to examine the effectiveness of the U.S. Postal Service offering financial services to underserved communities. The idea, first envisioned in January in a white paper by the USPS Office of the Inspector General, was analyzed by a variety of financial professionals and legislators.

Click to view larger image Ryan Donovan (right), senior vice president of legislative affairs for CUNA, and Adam Levitin, a professor at Georgetown University Law Center and member of the Consumer Financial Protection Bureau's Consumer Advisory Board, greet as they prepare for Pew Charitable Trusts' full-day conference to examine the effectiveness of the U.S. Postal Service offering financial services to underserved communities.  (CUNA Photo)
Ryan Donovan, senior vice president of legislative affairs for the Credit Union National Association, participated in one panel discussion that looked at ways to provide financial services to the underserved. Donovan was joined by Dong Hong, regulatory counsel for the Consumer Bankers Association; Adam Levitin, a professor at Georgetown University Law Center and a member of the Consumer Financial Protection Bureau's Consumer Advisory Board; and Jana Barresi, director of federal government relations at Wal-Mart.

Donovan said he was skeptical about the idea of the USPS providing financial services to the underserved, particularly when credit unions are already in place to meet those needs.

"We need to increase awareness among the unbanked that affordable financial services options are available and convenient through the credit union system," he said. "A part of increasing awareness of credit unions is erasing the misconceptions about credit unions. Everyone cannot join the same credit union, but there is a credit union for everyone to join. Most people don't know this, and that needs to change."

Sen. Elizabeth Warren (D-Mass.), during her keynote address, reinforced Donovan's point.

"If post offices teamed up with their closest credit unions or community banks, they could provide a pathway for millions of people into the traditional banking system," she said, as reported by American Banker Wednesday.

Donovan pointed to current credit union services aimed at reaching a variety of populations, including and its app, recent efforts highlighting 100 million credit union memberships, a system of shared branching and a wide-ranging surcharge-free ATM network.

CUNA has advocated for solutions to help credit unions expand further, including less regulatory burden, access to supplemental forms of capital to help credit unions expand services and a re-examination of field of membership requirements, which Donovan said has contributed to slowing credit union growth.

"If the doors to credit unions were open wider, the penetration into the underserved market would be even greater," he said.

Levitin weighed in several reasons why a postal banking system might be needed, but several, such as living in a country with no deposit insurance, aren't applicable.

While a public banking option through the USPS might help drive "abusive products" from the marketplace through competition, Levitin said that there's little evidence to suggest this would help people who are currently unbanked.

In addition, if the services were to be used as a way to solve the Postal Service's budget issues, that would create a conflict between goals of taking in needed revenue and the desire to offer better services to the underserved, according to Levitin.

Donovan did say CUNA could envision some form of partnership with the USPS at a local level. There are currently 191 credit unions in 47 states that are or have been affiliated with post offices.

"We could envision the possibility of other credit unions leasing spaces at post office to open branches, kiosks or ATMs," he said. "Beyond that, it's hard to envision how much further such a partnership might go. We would be willing to engage the Postal Service in this conversation."

House vote: Where pot is legal, FIs can provide services

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WASHINGTON (7/17/14)--Marijuana-based businesses in states where it is legal should be able to access financial services, according to a vote by the House Wednesday. The House voted 236-186 to let stand a U.S. Treasury Department guidance on marijuana-related businesses, which clarifies expectations for financial institutions seeking to provide services to those businesses.

The guidance, issued in February by the Treasury's Financial Crimes Enforcement Network, specifies that U.S. Department of Justice attorneys and law enforcement officials should focus resources on preventing such things as:
  • Marijuana sales to minors;
  • Pot-sale proceeds from going into criminal enterprises;
  • Diversion of marijuana from states where it is legal to states where it is not;
  • Marijuana activity from covering up other drug trafficking;
  • Drug-related violence;
  • Impaired driving;
  • Growing of marijuana on public land; and
  • Marijuana use or possession on federal property.
Earlier Wednesday the House approved an amendment sponsored by Rep. Denny Heck (D-Wash.) that would block the Securities and Exchange Commission and Treasury Department from spending money to penalize financial institutions serving marijuana-based businesses in states where it has been legalized.

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Consumers could flesh out complaint details under CFPB proposal

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WASHINGTON (7/17/14)--The Consumer Financial Protection Bureau is seeking public comment on a plan to expand its complaint database to include consumer narratives. The additional information would describe in detail the problem a consumer had with a financial product, service or company, the unsuccessful steps taken to date to find resolution, the service providers' actions and the impact to the consumer.
The plan is intended to have three major benefits to consumers, as well as foster quality products and services in the financial marketplace.
As Director Richard Cordray says in remarks prepared for today's CFPB consumer response field hearing in El Paso, Texas, the bureau has handled approximately 400,000 consumer complaints in its three-year history. He said that publishing the narratives would enrich the information available in the complaint database so consumers, consumer groups and companies are better able to spot trends and problems. Reviewers would be able to see patterns of abuse and identify issues that may not have been uncovered before.
It would also, he said, provide important context that better explains the significance of the consumer's complaint--beyond the current high-level category buckets, such as "transaction issue" or "advertising and marketing." Cordray said, "The narrative supplies vital information about why the consumer believes they were harmed, and how the problem has affected the consumer's life."
Ultimately, the CFPB director said, the expanded information would help consumers and consumer groups make informed financial decisions. "Consumers often go online to do their homework before deciding what to buy, and including the details of a complaint would help inform them as they are considering a particular product or service." Reviewers could use the narrative to decide for themselves, he said, if the problems experienced by other consumers would stop them from purchasing the same product or service.
Cordray said the CFPB also believes the narratives could spark a consumer-satisfaction competition among financial services providers and encourage companies to improve the overall quality of their goods and services to more vigorously compete over good consumer service.
He said the increased disclosure plan has the potential to improve the "functioning, transparency, and efficiency of the market."
The bureau is accepting public comment for 30 days after the proposal is published in the Federal Register.
The Credit Union National Association has worked with the CFPB to address credit union concerns regarding the complaint database.

While underscoring with the bureau that credit unions are not likely be the subject of a sizable number of consumer complaints, CUNA also has warned that sensitive or confidential business or consumer information could be inadvertently disclosed when consumer complaints are filed in the database and has urged the bureau to minimize privacy risks and other unintended consequences.