WASHINGTON (7/24/14)--Threats seem to be contained to banks in Austria, Japan, Sweden and Switzerland so far, but researchers at the computer security company Trend Micro report that there is a sophisticated, multistage attack by cybercriminals that can get around two-factor authentication systems.
Two-factor authentication requires a user to enter a regular password and then a second, one-time password that has been emailed or texted to that user for that transaction. The intent of the second step is to make it harder to hack an account than stealing an online password.
Trend Micro found that hackers were able to bypass the two-factor systems at the European and Japanese banks through an attack that is launched by a phishing email that pretends to be from some popular retailer. The email offers bogus receipts that, if clicked, expose the user to malicious software. Then, when that consumer later tries to reach a real bank website, the software redirects the person to a site that is managed by the criminals (
The New York Times
Researchers at Trend Micro have given the new attack on online banking the name "Emmental." Like the Swiss cheese, they said, online banking protections may be "full of holes."
WASHINGTON (7/23/14)--The Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC) and 15 states have announced sweeping actions against foreclosure relief scammers that they say used deception to prey on struggling homeowners who were facing foreclosures.
In an announcement Wednesday, the CFPB said it was filing lawsuits against three such companies that collected "more than $25 million in illegal advance fees for services that falsely promised to prevent foreclosures or renegotiate troubled mortgages." The FTC said it was filing six other lawsuits. And, a joint release said, the states are taking 32 actions.
"We are taking on schemes that prey on consumers who are struggling to pay their mortgages or facing foreclosure," said CFPB Director Richard Cordray. "These companies pocketed illegal fees--taking millions of hard-earned dollars from distressed consumers, and then left those consumers worse off than they began. These practices are not only illegal, they are reprehensible."
The CFPB is seeking compensation for victims, civil fines and injunctions against the scammers.
In conjunction with its announcement of legal action, the CFPB also released an advisory to help consumers recognize the red flags of foreclosure relief scams, especially when someone is claiming to provide legal help.
Use the resource links to access the advisory and to read more on the agencies' and states' actions.
ALEXANDRIA, Va. (7/24/14)--Calling the National Credit Union Administration's risk-based capital proposal a solution in search of a problem, Sens. Richard Shelby (R-Ala.) and Mark Begich (D-Alaska) weighed in with letters to the agency.
Shelby, the past chair of the Senate Banking Committee, said the proposal would require Alabama credit unions to raise capital levels by approximately $129 million to remain well-capitalized, "with potentially no beneficial upside."
He also raised concerns that the proposal may exceed the authority granted by Congress in the Federal Credit Union Act, because the act only gives authority to the NCUA to establish a risk-based standard to weigh risk in circumstances where the net worth ratio does not provide adequate protection.
"The proposed rule, however, would impose a risk-based standard to be deemed well-capitalized, which is arguably beyond the scope of the Federal Credit Union Act," Shelby wrote.
Both senators noted that credit unions, along with the National Share Insurance Fund, performed properly during the financial crisis. Begich, in his letter, said credit unions "demonstrated remarkable strength and durability" during the financial crisis, and he praised credit unions for avoiding "the same risky practices as large banks," which allowed them to avoid the need for taxpayer assistance.
"Particularly in markets underserved by traditional financial institutions, as in Alaska, credit unions stepped in and filled the void that was left as credit from other institutions dried up," he wrote. "And they did so effectively and responsibly under current and existing regulations.
The letter goes on to request that the NCUA take into account the "overwhelming feedback" on its risk-based capital proposal as to not unfairly burden credit unions.
Begich, who was first elected in 2008, has been a vocal proponent for credit unions, advocating for credit unions to keep their tax status, and vowing to "twist arms" of other members of Congress to raise the member business loan cap to 27.5% of assets from the current $12.25%.
ALEXANDRIA, Va. (7/24/14)--The National Credit Union Administration is planning to unveil three regulatory relief proposals in upcoming open board meetings. They will include plans to eliminate the 5% cap on a credit union's fixed assets, to modernize the member business lending (MBL) rule, and to update appraisal provisions, NCUA Chair Debbie Matz said Wednesday.
In fact, Matz said one day before the agency is expected to release its July meeting agenda, the fixed-asset plan will be on the July 31 agenda. The proposal is intended to streamline the rules that implement the Federal Credit Union Act provisions governing the process for federal credit unions to occupy land or buildings.
"Our intent is to allow federal credit unions to manage their own fixed-asset purchases without having to seek permission or waivers from NCUA," Matz said. "When federal credit unions want to update facilities, upgrade technology or make other purchases that have no impact on safety and soundness, NCUA should not micro-manage individual business decisions."
Also on the radar for this year: a look by the NCUA board to determine how it might give greater flexibility to credit unions offering MBLs.
"At my Listening Sessions, we heard from credit union officials with innovative ideas to modernize the member business lending regulation in order to serve more small businesses," Matz said, adding, "We are working to incorporate new ideas while keeping in place appropriate safety and soundness measures."
She said look for changes to be proposed later this year.
The NCUA supports legislation that would increase the MBL cap. The Credit Union National Association maintains that there also are steps the regulator could take to aid credit unions approaching the MBL cap of 12.25% of assets.
The agency is planning to review all aspects of the rule, including the waiver process--the federal rules that exempt certain loans from the MBL cap.
CUNA has supported these changes and urged they be addressed. Among other changes CUNA advocates: Updating Federal Credit Union Act definitions that provide exemptions from the MBL cap for credit unions that have a history of primarily making MBLs to their members; expanding provisions addressing MBL loans made for the financing of one- to four-family dwellings; and removing limitations that are not required by the statute.
Matz also said the NCUA is scheduled to update the advertising rule for federal credit unions. She added that staff is studying the latest innovations in technology, including social media, to incorporate into the new proposal.
"CUNA welcomes these changes," said Deputy General Counsel Mary Dunn Wednesday. "We have repeatedly urged the NCUA to do more to lessen the regulatory burden on all credit unions.
"We have specifically raised these and many other issues with Chairman Matz and others at the agency, and we look forward to learning more details on NCUA's efforts concerning regulatory relief for credit unions."
Matz made her remarks at the National Association of Federal Credit Unions' annual conference currently being held in Las Vegas.
WASHINGTON (7/24/14)--Former Democratic Rep. Barney Frank said he supports raising the threshold for examination by the Consumer Financial Protection Bureau to financial institutions above the current $10 billion-in-assets cutoff.
Frank, a former House Financial Services Committee chairman and co-drafter of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, said this while testifying Wednesday before that panel at a hearing examining the four years since the passage of the Dodd-Frank Act.
The Credit Union National Association advocated the same position before the committee in a regulatory relief hearing last week. The higher exemption would be important to credit unions and community banks. For those with assets below the threshold, examination for compliance with consumer financial protection laws would remain with their prudential regulator, rather than with the Consumer Financial Protection Bureau. For credit unions that is the National Credit Union Administration.
The former congressman from Massachusetts did not propose any specific asset level for a higher exemption, stating that any number is "arbitrary."
The role of credit unions and other community financial institutions came up several times over the course of the hearing:
- Rep. Gregory Meeks (D-N.Y.) said the act has given credit unions and community banks a "foundation to build upon," and that these institutions are starting to lend more, but more carefully since the act was passed;
- Rep. Sean Duffy (R-Wis.) said that instead of ending "too big to fail," the act has helped larger institutions and hurt credit unions and other small institutions because families and businesses are finding it harder to access credit under the weight of excessive regulations;
- Rep. Dennis Ross (R-Fla.) said credit unions in his district have had a more difficult time doing residential mortgages with new regulations; and
- Rep. Randy Hultgren (R-Ill.) said credit unions are among the industries he counts as being disproportionally affected by Dodd-Frank, but that the parts relating to them can be fixed.
WASHINGTON (7/23/14)--Financial literacy has been a core mission of the Consumer Financial Protection Bureau, and the bureau outlined several of its strategies to further this mission in its second annual financial literacy report to Congress.
According to a study conducted by the National Center for Education Statistics, called the Program for International Student Assessment, American 15-year-olds are in the middle of the pack when it comes to financial literacy. Students scored worse than seven countries, better than three countries and "not measurably different" from the other seven countries measures (
The CFPB report notes that credit unions have participated in financial literacy by helping combat elder financial exploitation. The National Association of Community Development Credit Unions presented a webinar on elder financial abuse which featured speakers from the Office of Financial Protection for Older Americans, New York County District Attorney's Office and a former director of the Kansas Department of Social and Rehabilitation Services.
The report also discusses how the CFPB has expanded financial literacy programs to schools, libraries, the workplace, social service organizations and the military.
Use the resource link to access the report.
ATLANTA (7/23/14)--Chip-embedded credit and debit cards are gaining steam for financial institutions card issuers, merchants, acquirers and others, according to a post in the Federal Reserve Bank of Atlanta's Portals and Rails blog.
In October 2015, parties that make investment in deploying Europay-MasterCard-Visa (EMV) cards with embedded chips will be protected from financial liability from card-present counterfeit fraud losses.
The EMV standard would replace the previous cards with magnetic strips, which can leave financial institutions, particularly small ones, more vulnerable to fraud.
The EMV Migration Forum estimates that approximately 100 million EMV cards--9% of the card base--will be issued by the end of 2014. Javelin Strategy and Research estimates that 52% of point-of-sale terminals will be EMV-enabled by the end of 2015.
The Credit Union National Association continues to monitor developments and advocate for credit unions on payments and security issues.
WASHINGTON (7/23/14)--A study from George Washington University's Regulatory Studies Center estimates that the Consumer Financial Protection Bureau will add 462 new employees this year and another 172 in 2015.
The study, which reviewed budget requests from President Barack Obama for fiscal year 2015, also estimates that the bureau will increase its budget to $622 million in fiscal year 2015, up from $481 million in fiscal year 2014. The 27.1% increase from 2014 to 2015 is less than the 32.7% increase to 2014 from 2013, according to the study.
The bureau has grown steadily over the past few years, with more of an emphasis on becoming fully staffed. This study indicates that the Obama administration is contemplating additional growth over the next two years.
The Credit Union National Association continues to dialogue with the CFPB on many regulatory issues that impact credit unions, and has urged the bureau to exempt credit unions from many overly burdensome regulations designed to push back against the abuses that caused the financial crisis.
ALEXANDRIA, VA. (7/23/14)--The civil money penalty process and how it applies to late call-report filers are detailed in the July issue of
The NCUA Report
, which was published Tuesday. More than 100 credit unions filed their quarterly call reports late in the first quarter of this year, which could result in penalties of varying amounts.
According to the NCUA, 104 credit unions filed late in the first quarter of 2014. The represents and 80% decrease in late filers from the previous quarter.
After the filing deadline for each quarter's call reports, the NCUA generates a report identifying credit unions that missed the deadline, how many days late each institution is, and whether the credit union has been late previously.
Agency staff then manaully verifies the list of late filers, consulting with NCUA regions and state supervisory authorities for state-chartered credit unions. This helps to identify whether any extenuating circumstances contributed to missing the filing deadline.
Once an institution is confirmed, the civil money penalty matrix is applied. The agency's Office of Examination and Insurance sends letters to each credit union with the proposed civil money penalties. The letters are accompanied with legal documents allowing a late-filing credit union to consent to paying a reduced fine to avoid litigation, as well as contact information for an NCUA program officer who will listen to appeal from institutions that believe there are valid reasons for missing a deadline.
Examples of circumstances that may warrant a waiver of penalties include failure of a credit union's core processing system, natural disaster or incapacitation of a key employee.
A penalty is not final until a credit union has signed a consent order agreeing to pay a reduced penalty or an administrative judge has ruled in the NCUA's favor. The names of credit unions paying civil money penalties, along with the amount paid, will be made public, as mandated by federal law. These will be published approximately 11 weeks after the quarterly filing deadline.
All civil money penalties go to the U.S. Treasury, per federal law. No funds are retained by the NCUA for its own use.
According to the NCUA, the hope is that the process will allow examiners to spend time on safety and soundness, as opposed to chasing down late filers.
The deadline for second quarter call reports is Friday. Use the resource link below to access the June
WASHINGTON (7/23/14)--Rep. Blaine Luetkemeyer's (R-Mo.) bill known as the Access to Affordable Mortgages Act would provide regulatory relief for heavily burdened credit unions and increase access to mortgage credit for middle- and low-income borrowers, the Credit Union National Association said in a letter of support for H.R. 5148.
"By providing an exemption from the Truth in Lending Act appraisal requirements for properties with transaction values of $250,000 or less for loans held on portfolio for at least three years, the bill would provide both regulatory relief to mortgage lenders as well as increase access to mortgage credit availability for borrowers purchasing lower cost dwellings," the letter reads. "The bill would also amend the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 to exempt this same category of higher-risk mortgages from the standards prescribed by the federal interagency appraisal requirements, as long as such mortgage loans are held on a lender's portfolio for at least three years."
CUNA supports this bill because it would allow credit unions that offer mortgage loans secured by covered properties to better serve middle to lower income members.
The letter reiterates points made by CUNA witness Doug Fecher, president/CEO of $2.8 billion-asset Wright-Patt CU, Beavercreek, Ohio, at a hearing held by the House Financial Services subcommittee on financial institutions and consumer credit last week. CUNA has testified more than a dozen times in the past three years to fight for regulatory relief for credit unions.
Use the resource link below for more information.
WASHINGTON (7/23/14)--The U.S. Treasury's Community Development Financial Institutions (CDFI) Fund has announced five free webinars starting in August on the topic of financing community health centers (CHCs) in underserved communities.
According to the most recent CDFI Fund report, credit unions represent 177 of 811 CDFIs active at the end of 2013.
The webinars are scheduled as follows:
- "Trends in Health Care," 2 p.m. (ET) Aug. 6. An overview of the American health care delivery system and the role CHCs play within it. The session highlights the major shifts occurring in the health care industry, including affordability and cost, and the importance of CHCs providing access to affordable health care;
- "Defining the CHC Landscape," 2 p.m. (ET) Sept. 9. A historical perspective of the CHC movement and the essential elements to be a federally qualified health center. This webinar will help CDFIs understand the types of patients that health centers serve, the services provided, and the types of revenue and funds generated by community health centers;
- "Primary Credit Needs of CHCs and Sources of Credit," 2 p.m. (ET) Sept. 24. Highlights the primary types and uses of loan products that CHCs request and summarizes the major sources of capital for community health centers, including those provided by public, private and philanthropic entities;
- "CHC Financial and Operational Metrics and Trends," 2 p.m. (ET) Oct. 7. Provides an overview of community health centers' operating structures, composition of revenue streams and typical expenses (including staffing structures and how they impact revenues and productivity); and
- "Underwriting CHCs," 2 p.m. (ET) Oct. 22: Highlights common risks and mitigations in lending to community health centers and how CDFIs should incorporate the financial ratios discussed in the "CHC Financial and Operational Metrics and Trends" webinar in the credit analysis process.
The free webinars are open to the general public. Advanced registration is required to access the presentation. Registration may be completed up until the start time listed for each individual session.
Future webinar opportunities will be posted as they are finalized to the "Financing Community Health Centers" webpage.
Use the resource link below to register and for more information.
WASHINGTON (7/22/14)--The House Financial Services Committee will conduct a hearing Wednesday to examine specific provisions and the cumulative impact of the Dodd-Frank Act. Signed into law by on July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act was a response to the financial crisis that began in 2008.
The Dodd-Frank Act created approximately 35 new rules that affect credit unions, according to the Credit Union National Association's analysis. Throughout the legislative process, CUNA worked to minimize the legislation's regulatory burden on credit unions, reminding lawmakers that credit unions did not cause the problems that the Dodd-Frank Act was intended to address.
The hearing, titled "Assessing the Impact of the Dodd-Frank Act Four Years Later," will explore such provisions as the Volcker Rule, Orderly Liquidation Authority and consumer financial protection.
The following witnesses will speak at the hearing:
- Dale Wilson, chairman and president/CEO, First State Bank of San Diego;
- Anthony Carfang, partner, Treasury Strategies Inc.;
- Paul Kupiec, resident scholar, American Enterprise Institute; and
- Thomas Deas, vice president/treasurer, FMC Corp., on behalf of the Coalition for Derivatives End-Users.
The hearing will start at 10 a.m. (ET) Wednesday in the Rayburn House Office Building.
The House Financial Services Committee also released a 97-page report Monday examining the impact Dodd-Frank Act. Use the resource link below to access the report.
WASHINGTON (7/22/14)--The Consumer Financial Protection Bureau will now accept consumer complaints involving reloadable cards and nonbank services, it announced Monday. This includes gift cards, benefit cards and general purpose reloadable cards, along with debt settlement services, credit repair services, pawn and title loans and other nonbank products.
"By accepting consumer complaints about prepaid products and certain other services we will be giving people a greater voice in these markets and a place to turn to when they encounter problems," said CFPB Director Richard Cordray.
According to the CFPB, prepaid cards can have fewer consumer protections than debit or credit cards. In the coming months the bureau plans to issue a proposed rule aimed at increasing federal consumer protections for general purpose reloadable prepaid cards.
The CFPB also handles complaints about mortgages, bank accounts and services, private student loans, auto and other consumer loans, credit reporting, debt collection, payday loans, and money transfers.
Use the resource link below for more information.
NEW YORK (7/22/14)--U.S. District Judge John Gleeson declined to dismiss lawsuits filed by retailers against Visa and MasterCard last week. The lawsuits have been brought against the two credit card companies after retailers accused them of fixing the interchange fees charged to merchants for each transaction using a credit card.
Target, Amazon and WalMart are among the retailers that opted out of an approximately $5.7 billion settlement in December. The settlement, approved by Gleeson, also involved Visa and MasterCard and retailers nationwide that made similar allegations.
"This is the first step in the case for the retailers that have opted out of the settlement, but is not the last," said Eric Richard, executive vice president and general counsel for the Credit Union National Association. "The decision means that the retailer's pleadings were sufficient that Judge Gleeson felt bound by procedural rules to send the case to its next stage."
The retailers who opted out of the settlement in December said it was not adequate and that it offered meaningless reforms that would not help them control the costs of accepting credit cards, according to a report by
. Many of those retailers have filed their own lawsuits.
GEORGIA (7/22/14)--Mike Collins, Republican congressional candidate, trucking company owner and credit union board member, will attempt to take the next step toward November with a runoff election today. If elected, Collins, a board member of Associated CU, based in Norcross, Ga. wth $1.3 billion in assets, would be the first credit union board member ever elected to Congress from Georgia.
Click for larger view
Leading up to the May election, Cindy Connelly, senior vice president of government influence for the Georgia Credit Union Affiliates (GCUA), praised Collins' dedication to credit unions while on the campaign trail. She said Collins visited multiple branches throughout the district, and called him "a legislator who has spent years learning about the issues that impact credit unions and their members."
Seven different mailers were sent to 11,000 households with credit union members leading up to the runoff election (see one example to the right). These households contain members of six different credit unions.
GCUA also hosted Collins on a tour of six credit unions during the campaign, and several local credit unions included "get out the vote" style articles in newsletters and on their websites.
Collins and runoff opponent Jody Hice were the top two vote-getters out of a field of seven Republican candidates in the May 20 primary. Collins finished only 270 votes behind Hice. Since neither candidate received 50% of the vote, today's runoff will determine the Republican nominee.
Georgia's 10th District has elected Republican legislators since 1995. The seat is currently held by Rep. Paul Broun, who was defeated in the primary for a chance to fill the seat held by retiring Sen. Saxby Chambliss (R).
ALEXANDRIA, Va. (7/22/14)--With three Listening Sessions on the books, the National Credit Union Administration affirmed Monday that its next steps will include incorporating comments from the more 400 participants who attended. The agency's risk-based capital (RBC) proposal was the primary topic of discussion at the sessions, held in Los Angeles, Chicago and Alexandria, Va., but examinations, and the role of small credit unions were also addressed.
"As always, at this year's Listening Sessions there was spirited discussion on many topics, including the proposed risk-based capital rule," said NCUA Chair Debbie Matz said. "This dialogue is what makes these events so valuable. It's an opportunity for regulators and credit unions to talk frankly, face-to-face, about policy and examination issues and exchange ideas for constructive solutions. We all have the same goals: safety and soundness, prudent lending and effective regulation."
In its press release following the last Listening Session, the NCUA reported that "only 3% of credit unions would experience a change in Prompt Corrective Action status" under the proposal. CUNA has expressed concern that several hundred credit unions would find themselves uncomfortably close to PCA thresholds, and would collectively need to raise between $3 billion and $4.5 billion in additional capital to restore previous margins above those thresholds.
Matz said the "many valid questions and concerns" received at the sessions will be added to the more-than 2,000 comment letters received when the agency considers changes to its RBC proposal.
"We are listening carefully, and I anticipate the agency will make appropriate changes," she said. "For starters, we plan to lower the risk weights on investments, mortgages, member business loans, credit union service organizations and corporates, as well as extend the implementation period."
Matz said the NCUA will review the best way to address material interest rate risk in the Prompt Corrective Action framework as the Federal Credit Union Act requires, while evaluating whether more emphasis should be placed on the supervisory process rather than on risk weights in the final rule.
The proposed 18-month implementation period was among the major concerns with the proposal raised by the Credit Union National Association, as well as many of the credit unions and organizations that submitted comment.
Extending the implementation period will allow affected credit unions enough time to adjust operational plans and balance sheets, while giving the NCUA time to update the Call Report system and train field examiners.
According to the NCUA, the final rule will make clear that only the NCUA board, not any individual credit union examiner, can make a determination about whether a specific credit union needs to hold more capital.
"CUNA is pleased that these changes, which we have strongly advocated, are in progress," interim President/CEO Bill Hampel noted. He commended the agency for holding the sessions and for agreeing to make these importance changes. He added that CUNA continues to be concerned that the agency has not adequately explained the need for a higher RBC requirement for well-capitalized credit unions than that applied to adequately capitalized credit unions.
"The risk level of well-capitalized credit unions does not justify the proposed higher requirement. CUNA will continue to seek ways to work with NCUA to address this very significant concern,",he said.
The Federal Credit Union Act requires NCUA to maintain a "comparable" risk-based capital system to the federal banking agencies, which updated their risk-based capital rules in 2013. The Government Accountability Office and NCUA's Inspector General also have recommended that NCUA's rule be updated.
"I am confident that NCUA will produce a sensible final rule that meets the requirements of the Federal Credit Union Act and not disadvantage credit unions in the market," Matz said.
Audio recordings of each session are expected to be available soon on the NCUA's website.
ALEXANDRIA, Va. (7/21/14)--The video recording of the National Credit Union Administration's June open board meeting is now available on its website. Videos of past board meetings also are available.
The meeting's agenda included five items:
- A final rule reducing administrative burdens on credit unions that voluntarily liquidate;
- A proposed rule expanding the powers of federal credit unions by allowing qualified institutions to securitize loans they have originated;
- A proposed rule creating safe-harbor protection for certain securitized assets and protecting investors in cases of conservatorship or liquidation;
- A proposed rule to assist underwater borrowers by allowing federally insured credit unions to refinance or modify real estate loans without obtaining an additional appraisal; and
- A request by $355 million-asset Mainstreet CU, Lenexa, Kan., to convert to a federal charter.
Videos are generally posted several weeks after the meeting, due to required efforts to make them accessible for the hearing and visually impaired.
Use the resource link below to for videos of NCUA board meetings.
NEW YORK (7/21/14)--Since 2011, more than 250 distributed denial of service attacks have been perpetrated against American banks and credit unions, according to Treasury Secretary Jacob Lew, who spoke at the Delivering Alpha Conference in New York last week. The frequency of such attacks, as well as the personal and economic stakes in keeping information secure, lead many financial institutions to spend as much as $250 million per year to strengthen cybersecurity measures.
"The consequences of cyber incidents are serious. When credit card data is stolen, it disturbs lives and damages consumer confidence. When trade secrets are robbed, it undercuts America's businesses and undermines U.S. competitiveness," Lew said. "Successful attacks on our financial system would compromise market confidence, jeopardize the integrity of data and pose a threat to financial stability."
Lew pointed to attacks on businesses such as Target, Neiman Marcus and Michael's, as well as a recent hack into the Associated Press Twitter account. Hackers falsely tweeted about an attack on the White House, causing the Dow Jones industrial average to fall by more than 100 points within three minutes.
"One back door is all a malicious actor needs to transmit large scale damage. Look at the Target incident. Criminals entered Target's systems by first infiltrating the network of one vendor, a refrigeration services company in Pittsburgh," he said. "Once inside, these intruders reached in-store computer networks, stole credit card information from millions of Americans, and sold that information on the black market."
The U.S. Treasury Department has created an information sharing and analysis unit, the Financial Sector Cyber Intelligence Group, designed to deliver actionable information financial institutions can use to protect themselves. The unit, made up of cyberexperts and security analysis, searches through law enforcement and intelligence reports to find relevant activity and issue information bulletins.
"If you are the leader of a business, you should know how strong your company's defenses are, you should know if there are response plans in place in case a significant security breach occurs, and you should be getting regular reports on cybersecurity threats and what your company is doing to respond to those threats," he said.
Credit Union Magazine featured an article on cybersecurity this month, written by Mike Flouton, vice president of product marketing for SilverSky, a CUNA Strategic Services alliance provider.
The article, titled "Five Cybersecurity Considerations for CUs," lays out several strategies for strengthening cybersecurity while getting the best value for money spent, including:
- Looking for products and tools that cover multiple bases, such as a secure e-mail hosting provider that ensures compliance of any communications coming into or out of the organization;
- Finding a security provider who monitors threats and analyzes security alerts at all times; and
- Collaborating with other business units to ensure best practices are being exercised and members are not being negatively affected by security procedures.
Use the resource link below to see the full article.
WASHINGTON (7/21/14)--Meeting a July 18 deadline set by Rep. Patrick McHenry (R-N.C.), the National Credit Union Administration Friday sent the chair of the House Financial Services subcommittee on oversight and investigations the clarifications he requested on the agency's risk-based capital (RBC) proposal.
In his request for more detail and an explanation of the agency's reasoning when drafting the RBC plan, McHenry wrote that as "a matter of fairness and transparency," the public deserves the opportunity to understand the logic behind this "far-reaching" proposal.
The NCUA's proposal would require credit unions to hold capital at 8% of risk-based assets in order to be considered adequately capitalized and 10.5% to be considered well-capitalized. This is in addition to the 6% and 7% leverage ratio requirements to be adequately and well-capitalized. The NCUA would also reserve the right to require credit unions on a case-by-case basis to hold additional capital. The proposal would apply to federally insured "natural person" credit unions with more than $50 million in assets.
The agency response, signed by Chair Debbie Matz, includes a
Summary Table of Changes in Risk Weights
that flows over six pages. It names almost 40 asset categories and states the current risk weights inferred under the NCUA's net worth rules, those of the Federal Deposit Insurance Corp.'s rule for banks, and the risk weights under the NCUA's proposal. At the end of each asset line is the agency's rationale for risk weighting under the proposal.
The NCUA chair's letter--six pages even without the risk-weight charts--said the rationale behind the RBC plan overall is to require that credit unions with a higher appetite risk hold enough capital to match that risk. That requirement, Matz wrote, is intended to protect the National Credit Union Share Insurance Fund and the whole credit union system from losses.
Other areas covered in Matz's letter include the agency's view of the cost to credit unions in terms of maintaining a capital buffer, a cost-benefit analysis of the proposal, and an explanation of the extent to which NCUA examiners would be empowered to assess and make capital recommendations to credit unions that might deviate from the new RBC standards.
The NCUA, through a series of three Listening Sessions and other public statements, has made it clear its RBC proposal will be revised before a final rule is approved. One point of change--highlighted as a concern by McHenry in his letter and by many others--is that an implementation period will be longer than the currently proposed 18 months.
The Credit Union National Association, also a proponent of that change, has thanked the NCUA for its willingness to address problems within the current proposal. However, CUNA has also expressed concerns that the changes the agency is contemplating be significant enough to bring the kind of improvements credit unions need in a final regulation.
WASHINGTON (7/21/14)--Concerned that credit unions in his state will be facing increased capital requirements under the National Credit Union Administration's proposed risk-based capital (RBC) rule, Sen. James Risch (R-Idaho) became the latest lawmaker to submit a letter to the agency.
Risch's main concern is that the rule would be "unduly burdensome" to credit unions offering agricultural, small business and residential mortgage loans.
"Nationally, over 4,000 credit unions offer mortgage products that equate to a little over 6.5% of the entire mortgage market and enjoy loss rates well below the national average," he wrote. "The proposed rule could force credit unions to reduce the availability or affordability of loan products, restricting credit availability to their members, especially those that live in rural and low-income areas."
He went on to say that credit unions in Idaho would face increase capital requirements of approximately $44 million to remain well-capitalized. Several credit unions have suggested to Risch that the rule would prompt changes in the way they operate in order to maintain their capital buffers.
The NCUA concluded the last of three Listening Sessions Thursday, and RBC was the primary topic during every session. The agency said it will release wrap-up information on the sessions this week.
NCUA Chair Debbie Matz said during the sessions that "everything is on the table" as far as changes to the proposal, and has already indicated the 18-month implementation period spelled out in the proposal will change.
WASHINGTON (7/21/14)--The U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) has released the inaugural
technical bulletin, which examines data from Suspicious Activity Reports (SARs) filed by financial institutions. The bulletin is a successor publication to The SAR Activity Review: By the Numbers, which was issued once or twice a year starting in 2003.
The July issue features data from more than 1.3 million SARs filed from March to December 2013. This data is used for law enforcement investigations and regulatory compliance at the state and federal levels, as part of a larger set of data pertaining to the Bank Secrecy Act (BSA).
"In the first six months of 2014 alone, over 350 unique agencies representing a broad cross section of federal, state, and local law enforcement, regulators, self-regulated organizations and state attorney offices operating nationwide accessed Bank Secrecy Act data via FinCEN's portal," the report reads. "Thousands of agents, analysts and investigative personnel from each of these entities have conducted in excess of one million queries against the database during that period."
The SAR Narrative Spotlight this month examines bitcoin, a type of virtual currency. Because bitcoin isn't overseen by a central authority, its anonymous nature makes possible illegal activities harder to detect.
The bulletin notes that while bitcoin is a virtual currency, financial institutions of all types can play a role in the life cycle of the purchase, use and sale of bitcoin for standard currencies.
"This may include depository institutions that house the accounts of virtual currency users, administrators and exchangers; additionally, depending on the transaction, correspondent banks may also be involved," the report reads. "Each institution has a unique vantage point from which to observe these transactions and identify suspicious activity."
This puts financial institutions in position to observe everything from bitcoin dealers who may be acting as unregistered money service businesses to funds stolen from compromised accounts that are being converted into bitcoin.
"Altogether, SARs filed by the various filing entities may provide valuable information related to accounts, ownership, and other identifying information, and bitcoin addresses associated with suspicious activity," the report reads.
The Credit Union National Administration will host a BSA conference Oct. 26-29 in Las Vegas. The annual conference will bring together BSA compliance officers, state and federal examiners, industry experts and regulators to discuss BSA compliance issues.
Throughout the four days of session, FinCEN, the National Credit Union Administration and the Office of Foreign Assets Control will provide the latest information relevant to credit unions.
Use the resource links below for more information.
WASHINGTON (7/18/14)--The U.S. Senate Thursday voted to extend the Terrorism Risk Insurance program, which is currently set to expire at the end of this year.
The federal insurance backdrop was created by the Terrorism Risk Insurance Act, which requires property and casualty insurers to offer coverage for foreign acts of terrorism on U.S. soil.
The program was created in the aftermath of the Sept. 11 terrorist attacks when, after suffering steep losses, insurance companies ceased terrorism coverage as part of their commercial property policies. The program has since been reauthorized by Congress twice.
The Senate voted to extend the program through 2021.
A similar bill awaiting a House vote would execute some reforms to the TRIA program.
WASHINGTON (7/18/14)--Consumer advocates, industry representatives, academics and state and federal regulators will team up for a roundtable discussion on how debt collection issues affect Latino consumers, especially those with limited proficiency in English.
The event, set for Oct. 23, will be co-hosted by the Federal Trade Commission and Consumer Financial Protection Bureau in Long Beach, Calif.
Titled "Debt Collection and the Latino Community," the event is free and open to the public, and will be streamed online. It will take place at the Pointe Conference Center on the campus of California State University, Long Beach.
Ideas and comments for the event are currently being accepted, with submission information on the event page. Additional information, including a full agenda and registration information, will be posted to the page as well.
Use the resource link below for more information.
ALEXANDRIA, Va. (7/18/14)--Even after three discussion sessions--each running three hours or longer--credit unions were
CUNA Deputy General Counsel Mary Dunn urges the NCUA during its final Listening Session 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 Photo)
not "talked out" about their concerns regarding the National Credit Union Administration's risk-based capital proposal Thursday. And that energy and engagement, says Credit Union National Association Deputy General Counsel Mary Dunn, is what is needed going forward to ensure revisions the NCUA is contemplating will be significant enough to bring the kind of improvements credit unions need in a final regulation.
At the agency's final Listening Session of the year, held here from 1-4 p.m. (ET) Thursday, credit unions of all sizes continued to underscore that the RBC plan as written is seriously flawed and unworkable. NCUA Chair Debbie Matz continued to assure that there will be numerous changes to the proposal before a rule is made final.
She also stated, "The bottom line is, our goal is not to have a consensus. Our goal isn't to have everybody here think it's the best rule they've ever seen. Our goal is safety and soundness."
The NCUA has pledged to add time to the proposed 18-month implementation period and to adjust risk weights, especially in the areas of mortgages, member business loans, investments, credit union service organizations, and corporates credit unions.
Board member Rick Metsger said the proposed rule will not replace examinations or proper supervision; it is a tool the agency will use to try to more accurately assess an institution's capital situation.
"The fact is, under our current requirements, there are two credit unions that are undercapitalized. I don't think there's anybody here that believes out of all the credit unions in the country, that only two are struggling with capital," Metsger said at thre Listening Session. "Obviously the current rule isn't giving us a very good picture of what the capital requirement should be."
CUNA Deputy General Counsel Mary Dunn urged the agency during the session to co reduce the proposed RBC requirement for well-capitalized credit unions, which CUNA says is out of proportion with the level of risk that credit unions present. She commended positive comments from the chairman and others that the agency is considering changes to risk weights, revisiting its treatment of goodwill in a merger, reviewing the treatment of the 1% National Credit Union Share Insurance Fund deposit in the RBC calculation, how interest rate risk is addressed in the proposal and revising provisions regarding minimum additional capital.
NCUA's Larry Fazio says examiners will not make the call on what level of capital is required under a risk-based capital rule. Credit unions at the final 2014 Listening Session Thursday highlighted concerns that there is a "disconnect" between NCUA guidance and examiners' execution of rules. NCUA Chair Debbie Matz is seated to Fazio's left. (CUNA Photo)
For instance, to a credit union's expressed concern regarding how auditors will view the 1% NCUSIF deposit in RBC calculations, NCUA Director of Examinations and Insurance Larry Fazio responded that the agency staff continues to study options to deal with the deposit.
Also during yesterday's session, credit unions expressed many concerns about examiner subjectivity and poor communications with them. During her comments to NCUA at the meeting, Dunn urged the agency to work with the credit union system to address the disconnect between positive positions taken by the NCUA board and what is implemented by examiners.
One credit union official sought an assurance by the agency that examiners will not ask for more capital than required in a new RBC rule, stating he believes examiners currently ask for more capital than necessary. NCUA's Fazio responded that individual examiners will not "make that call."
Another credit union officer--who heads a $3 million-asset financial cooperative--urged the NCUA to act to reduce regulatory burden and said the examiner "disconnect" just exacerbates the problem: Examiners don't always understand what regulations apply to small credit unions and which ones don't--increasing unnecessary regulatory burden.
Other topics that arose during the Listening Session: goodwill calculations under an RBC rule, the need for credit union access to supplemental capital, and perceived problems with a variety of the risk weights proposed by the NCUA's plan.
The NCUA's RBC plan, as proposed in January, would replace existing risk-based net worth requirements with new risk-weighted asset and capital requirements. The rule would apply to federally insured "natural person" credit unions with more than $50 million in assets.
Under the proposed rule, an adequately capitalized credit union would need to maintain a net worth ratio of 6% and an RBC ratio of 8% of equity to risk assets, while a well-capitalized credit union would need 7% and a higher RBC ratio of 10.5%, meaning the RBC ratio for well-capitalized credit unions exceeds that for adequately capitalized credit unions. This violates the Federal Credit Union Act, the Credit Union National Association says.
The agency received a record 2,052 comments by the May 28 comment deadline, and letters of concern from Capitol Hill continue to be sent to the agency.
WASHINGTON (7/18/14)--The House of Representatives passed the Financial Services and General Government Appropriations Act (H.R. 5016) for fiscal year 2015 Wednesday, by a vote of 228-195.
The bill includes an increased amount of money for the Community Development Revolving Loan Fund (CDRLF) from previous drafts, up to $2 million from $1.071 million. The National Credit Union Administration's CDRLF provides grants and loans to low-income designated credit unions for financial services and to stimulate economic activities in local communities.
The Credit Union National Association advocated for the increased CDRLF amount.
The bill contains $230 million for the Community Development Financial Institutions (CDFI) Fund, a $4 million increase from last year. The fund supports CDFIs by supporting business growth, job creation and low-income community revitalization.
The CDFI Fund breakdown is:
- $177 million for financial and technical assistance, including up to $3,102,500 for the cost of direct loans;
- $15 million for financial assistance, technical assistance, training and outreach programs designed to benefit Native American, Native Hawaiian and Alaskan Native communities;
- $18 million for the Bank Enterprise Award program, which provides financial incentives to increase lending, investment and service activities within economically distressed communities; and
- Up to $20 million for administrative expenses, which includes up to $300,000 for administration expenses of a direct loan program.
According to the U.S. Treasury Department's CDFI report for fiscal year 2013, credit unions represent 177 of 811 CDFIs active at the end of last year.
The bill also passed with an amendment introduced by Rep. Bill Posey (R-Fla.) that transfers $1 million to the Internal Revenue Service Inspector General's office for an economic study of the Foreign Account Tax Compliance Act (FATCA).
FACTA created a tax information and withholding system for certain payments made to financial institutions. CUNA, along with the World Council of Credit Unions (WOCCU), sent a letter in support of the amendment just prior to it passing Monday.
CUNA and WOCCU stated that the study was necessary due to "myriad unintended consequences of the law on U.S. financial institutions and U.S. citizens living abroad," according to the letter, which was signed by CUNA interim President/CEO Bill Hampel and WOCCU President/CEO Brian Branch.
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.
Use the resource link below for more information.
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.
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
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."
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.
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
Donovan pointed to current credit union services aimed at reaching a variety of populations, including ASmaterChoice.org 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."
WASHINGTON (7/16/14)--International organized crime groups are increasingly turning to the lucrative business of cybercrime, the new head of the U.S. Justice Department's criminal division told
The Wall Street Journal
in a recent interview.
Justice's Leslie Caldwell noted that there are hundreds of millions of dollars to gain illegally from the exploding field of cybercrime, while being a lower-risk proposition. Comparing cybercrime to major international narcotics trafficking organizations, Caldwell said with cybercrime chances for success are high, chances of capture are lower and, if caught and proven guilty, sentences are not as long.
The interview ran July 14, the day before Caldwell was slated to discuss the threat of so-called "botnets" before a U.S. Senate subcommittee hearing. Botnets are described as networks of hijacked computers used to steal information, attack other systems or churn out spam.
The article noted that the Justice Department "struck a blow against a major botnet this spring," shutting down a malicious-software infected network that it said had been used to steal at least $100 million. But even that success appears fleeting in the fast-paced world of cybercrime. The article cites research by security firm Sophos Ltd., which says hackers are distributing a variant of that network, known as Gameover Zeus, in what appears to be an effort, Sophos says, of resurrecting the old botnet.
Cybercrime, says Caldwell, is a law-enforcment game-changer--forcing new tactics by prosecutors, too, such as how to use data from cellular phone towers and gain access to encrypted email for instance.
Caldwell testified before the Senate Justice subcommittee on crime and terrorism Tuesday in a hearing titled, "Crime and Terrorism Taking Down Botnets: Public and Private Efforts to Disrupt and Dismantle Cybercriminal Networks." See the resource link for the complete witness list.
WASHINGTON (7/16/14)--The Financial Crimes Enforcement Network (FinCEN) Tuesday said that a money services business (MSB) in Georgia committed "significant and willful violations" of the Bank Secrecy Act's (BSA) program and reporting requirements, prompting a $45,000 civil money penalty against it.
In a release, FinCEN said Mian Inc., doing business as Tower Package Store, "significantly" committed numerous violations even after being put on notice by its examiner of deficiencies in meeting its reporting obligations.
Under the BSA, MSBs are required to implement an effective written anti-money laundering (AML) program, which FinCEN alleges Mian failed to do. Among Mian's infractions cited by FinCEN:
- From December 2010 through November 2011, Mian failed to file Currency Transaction Reports (CTRs) on approximately 40% of transactions that required filing. During this time, the CTRs that Mian actually filed were late and inaccurate.
- Mian's failure to comply with its CTR obligations persisted even after it was notified by IRS Small Business/Self Employed Division of its CTR deficiencies. From December 2011 through November 2013, Mian failed to file timely CTRs on 91% of transactions that required filing.
FinCEN said that Mian "has further failed to meet its deadlines to renew its registration as an MSB" and that Mian has admitted that it violated the BSA's program, reporting and registration requirements, and has consented to FinCEN's assessment of a civil money penalty of $45,000.
Use the resource link to read more about the FinCEN enforcement action.
WASHINGTON 7/16/14)--Frederick J. Hanna and Associates, along with its three principal partners, has been accused of operating a debt lawsuit mill using illegal tactics, resulting in a lawsuit against it filed by the Consumer Financial Protection Bureau Tuesday.
The CFPB alleges the Georgia-based firm used illegal tactics to intimidate consumers into paying debts they may not have owed, and that the firm churns out hundreds of thousands of lawsuits that frequently rely on deceptive court filings and faulty or unsubstantiated evidence.
"The Hanna firm relies on deception and faulty evidence to drag consumers to court and collect millions," said CFPB Director Richard Cordray. "We believe they are taking advantage of consumers' lack of legal expertise to intimidate them into paying debts they may not even owe. Today we are taking action to put a stop to these illegal debt collection practices."
Between 2009 and 2013, the firm filed more than 350,000 debt collection lawsuits in Georgia. The CFPB alleges the defendants collected millions of dollars each year through these lawsuits, often from consumers who may not actually have owed the debts.
Violations alleged in the CFPB's complaint include:
- Filing collection suits signed by attorneys when the lawsuits are the result of automated processes and the work of non-attorney staff, without any meaningful involvement of attorneys. The resulting lawsuits misrepresent to consumers that they are "from attorneys." This process allows the firm to generate and file hundreds of thousands of lawsuits. One attorney at the firm, for example, signed more than 130,000 debt collection lawsuits over a two-year period; and
- Using sworn statements from clients attesting to details about consumer debts to support its lawsuits. The firm files these statements with the court even though in some cases the signers could not possibly know the details they are attesting to. In a substantial number of cases, when challenged, the firm dismissed lawsuits. Since 2009, the firm has dismissed more than 40,000 suits in Georgia alone.
The Hanna firm focuses exclusively on debt collection litigation, and its three principal partners, Hanna, Joseph Cooling, and Robert Winter, play an active role in the company's business strategies and practices.
The CFPB is seeking compensation for victims, a civil fine, and an injunction against the company and its partners.
Use the resource link below for the full complaint.
WASHINGTON (7/16/14)--The Credit Union National Association made its case on the costly effect of regulatory burden on credit unions before the House Financial Services subcommittee on financial institutions and consumer credit Tuesday. Doug Fecher, president/CEO of $2.8 billion-asset Wright-Patt CU, Beavercreek, Ohio, testified before the subcommittee on behalf of CUNA.
Rep. Shelley Moore Capito (R-W. Va.), chair of the House Financial Services subcommittee on financial institutions and consumer credit, greets CUNA witness Doug Fecher before he testifies on the burden credit unions bear because of increasing regulatory complexity. (CUNA Photo)
The hearing was a look at nine different bills aimed at regulatory relief. Having last testified before the House Committee on Oversight and Government Reform on financial regulation and its effect on access to credit two years ago, Fecher underscored the message he delivered then.
"Credit unions face a crisis of creeping complexity with respect to regulatory burden. It's not just one new law or revised regulation that challenges credit unions, but the cumulative effect of all regulatory changes," he said. "The frequency with which new and revised regulations have been promulgated in recent years and the complexity of these requirements is staggering."
Since 2008, CUNA estimates that more than 180 regulatory changes from at least 15 different federal agencies have affected credit unions. He said the costs to credit unions in terms of time and money diverts resources from member services.
CUNA commented on five bills and three legislative drafts that would have direct relief on credit unions' regulatory burdens. The Regulation D Study Act (H.R. 3240), which directs the Government Accountability Office to study the impact of the Federal Reserve Board's monetary reserve requirements, was strongly supported by CUNA.
Regulation D limits the number of automatic withdrawals from a member's savings account to six transactions per month. This can cause consumers to overdraft if their checking account falls below $0 and the six transactions already have been made for the month.
CUNA supports an increase in the cap, or for it to be eliminated altogether. Responding to a question from Rep. Robert Pittenger (R-N.C.) about why the bill is needed, Fecher explained the difficulty that comes with telling a credit union member they received a nonsufficient fund fee because they exceeded their six transfers.
Doug Fecher, president/CEO of $2.8 billion-asset Wright-Patt CU, Beavercreek, Ohio, testifies that credit unions have faced an estimated 180 regulatory changes since 2008 from at least 15 different federal agencies. (CUNA Photo)
"Their initial thought is to blame the credit union, but we have to explain that this is actually a federal regulation that we have to enforce, and frankly, that makes them madder," he said. "We advocate for the bill, and hope for the study. We also hope the outcome of the study is that the number of transactions can almost be tripled without impacting the use of that regulation in terms of monetary policy."
Fecher also commented on the National Credit Union Administration's proposed risk-based capital requirement, laying out for subcommittee members CUNA's significant concerns regarding the proposed rule. CUNA urges the NCUA to withdraw the proposal, due to the belief that it would "seriously constrict credit union growth and financial performance." If not withdrawn, CUNA urges significant changes to the plan as currently proposed.
Also during the hearing, Rep. Denny Heck (D-Wash.) expressed his support for the CUNA-backed American Savings Promotion Act (H.R.3374), which would allow financial institutions around the country to offer raffle-based, prize-linked savings accounts. Heck said he was "enthusiastic" about the bill, and asked Fecher about benefits of the act, based on his experience.
"The perceived value of the opportunity to win something more meaningful will cause many Americans to establish a savings program that they might not otherwise have done. We've seen that in the institutions that have done this," Fecher said. "As a matter of public policy that's why I support it. We want Americans to save more money, especially ones of more modest means."
The Community Bank Mortgage Servicing Asset Capital Requirements Study Act of 2014 (H.R. 4042) was another bill discussed. The bill would direct federal banking agencies to conduct a study of appropriate capital requirements for mortgage servicing for nonsystemic banking institutions.
"We request the subcommittee amend H.R. 4042 to include NCUA among the agencies conducting the joint study and to delay the implementation of the NCUA's proposed rule until an appropriate period of time after the study has been completed," Fecher said. "In any case, credit union capital requirements on mortgage servicing rights should be no higher than those imposed on small banks."
CUNA also provided testimony on three discussion drafts, most notably the Access to Affordable Mortgages Act of 2014, which amends the Truth in Lending Act to exempt higher-risk mortgages from property appraisal requirements.
Fecher concluded his testimony on behalf of CUNA by asking the subcommittee to work with regulators to ensure that effective dates for new rules provide credit unions and other financial institutions with sufficient compliance time.
ALEXANDRIA, Va. (7/16/14)--Credit unions that were late filing their first quarter call reports and have received letters from the National Credit Union Administration describing penalties the agency is planning to assess have until close of business today to submit an agreement of consent with the regulator.
Credit unions that do not file their 5300 reports on a timely basis and evade the consent agreement could possibly find they are subject to other agency sanctions
According to the NCUA, 104 credit unions filed late in the first quarter, down 80% from the previous quarter but unacceptable still to the NCUA with a stated goal of 100% compliance.
The NCUA announced civil money penalties for late filers in January, with several exceptions made for credit unions able to document filing hardships, such as a natural disaster or an unforeseen incapacitation of a key employee (
Jan. 16). However, for the most part penalties will be assessed per day according to ranges set out in the Federal Credit Union Act and based on a credit union's asset size.
The NCUA explains its zero-tolerance policy by noting late filings impact its ability to conduct effective off-site supervision and delay the release of quarterly industry data to the general public.
The NCUA is expected to have final information on late filers posted on its website within the next few days. Second quarter call report filings are due July 25.
WASHINGTON (7/16/14)--Should the U.S. Postal Service (USPS) offer financial services to low-income communities? During today's Pew Charitable Trusts conference--"Financial Services and the Post Office"--Ryan Donovan, the Credit Union National Association's senior vice president for legislative affairs, will be on a panel that will explore the implications of such a proposal.
The idea of the USPS providing non-bank financial services came up in January as the subject of a white paper published by the Office of the Inspector General of the Postal Service. The paper claimed that "the Postal Service is well positioned to provide non-bank financial services to those whose needs are not being met by the traditional financial sector."
Donovan joins panelists Dong Hong, regulatory counsel for the Consumer Bankers Association; Adam Levitin, professor at the 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 for Wal-Mart.
CUNA expressed strong reservations about the proposal when it was unveiled in January. CUNA General Counsel Eric Richard said some credit unions would be happy to explore possible creative partnerships with USPS or anyone else who can help bring financial services to more people at less cost (
"To the extent that the goal here is more profit for USPS, there could be some problems," he said. "The field of financial services is already extremely crowded and competitive, and credit unions already provide a cooperative, not-for-profit alternative that benefits consumers, including many who would otherwise be unbanked. This is not an area in which there is a lot of low-hanging fruit that others have not picked."
Sen. Elizabeth Warren (D-Mass.), Rep. Darrell Issa (R-Calif.) and Tom Davis, former congressman and past chair of the House Oversight and Government Reform Committee, will speak during the conference, as well as David Williams, inspector general of the USPS, and Ruth Goldway, chair of the USPS Regulatory Commission.
In addition to the panel on providing financial services to the underserved, there will be panels on economics, operations and efficiency and a presentation of the findings from two Pew national surveys on consumer attitudes toward postal banking and the proximity of post offices to the underbanked.
The panel will be streamed live. Use the resource link below for the complete agenda for the conference.
WASHINGTON (7/15/14)--Federal Reserve Chair Janet Yellen will address both houses of the U.S. Congress this week. Today she will address the Senate Banking Committee in an open session to deliver the semiannual Monetary Policy Report to Congress.
The session will feature remarks by Yellen, who will then answer questions from the full committee. The report is scheduled to run from 10 a.m. to noon (ET) and will be streamed live on the committee's website.
Yellen will make her appearance before the House in Wednesday during a hearing titled "Monetary Policy and the State of the Economy." She will be the sole witness for the hearing, which is scheduled to begin at 10 a.m. (ET).
There will be two separate hearings this week about Operation Choke Point, the Department of Justice (DOJ) program that is meant to allow the DOJ's Financial Fraud Task Force to investigate financial institutions and payment processing companies looking for fraud. Critics have claimed it separates consumers from access to financial services and has caused financial institutions to terminate relationships with lawfully operating businesses.
Today's hearing will be conducted by the House Financial Services oversight and investigations subcommittee and will feature the following witnesses: Stuart Delery, assistant attorney general with DOJ; Scott Alvarez, general counsel of the Federal Reserve Board; Richard Osterman, acting general counsel for the Federal Deposit Insurance Corp.; and Daniel Stipiano, deputy chief counsel of the Office of the Comptroller of the Currency.
The hearing will begin at 10 a.m. (ET) in Room 2128 of the Rayburn House Office Building.
On Thursday, the House Judiciary subcommittee on regulatory reform, commercial and antitrust law will host a hearing on Operation Choke Point, titled "Guilty Until Proven Innocent? A Study of the Propriety and Legal Authority for the Justice Department's Operation Choke Point."
The list of witnesses has not been published by the subcommittee. The hearing will be Thursday at 9:30 a.m. (ET) in Room 2141 of the Rayburn House Office Building.
The Senate is also expected to consider legislation that would re-authorize the Terrorism Risk Insurance Act, which is set to expire after this year. The House is working on a similar bill. The Senate version would extend the act for seven years, while the House version would extend it by five years.
The Credit Union National Association will also testify on regulatory relief efforts regulatory relief matters today to the House Financial Services Committee. (See related story: CU CEO to tell of 'crisis of creeping complexity' during House hearing.)
WASHINGTON (7/15/14)--Two credit union-friendly candidates will attempt to move closer to the November election in runoff elections today. Phil Berger Jr. in North Carolina and Paul DeMarco in Alabama will each face a fellow Republican in today's elections.
Berger, who is running for North Carolina's 6th District seat, is currently the district attorney of North Carolina's Rockingham County, a position he has held for the past seven years. Along with opponent Mark Walker, he emerged as one of the top two vote-getters among a field of eight candidates in the May primary.
Berger has received support from the Credit Union Legislative Action Council (CULAC) during his campaign, as well as from the Carolinas Credit Union League, due to his support of credit unions in and around the district.
"Phil has a lot of connections to credit unions in the Sixth District, and he has expressed a real appreciation for the services they offer," said Dan Schline, league senior vice president of association services.
North Carolina's 6th District includes parts of Greensboro and Durham. It leans Republican, so the winner of today's runoff is likely to succeed in November, according to a report by
leading up to the primary.
In the Republican runoff in Alabama's 6th District, state Rep. Paul DeMarco (R-Homewood) will face off against Gary Palmer, chief development officer for the Alabama Policy Institute think tank. DeMarco, who has introduced credit union-friendly legislation during his nine-year tenure in the Alabama House of Representatives, has been endorsed by the League of Southeastern Credit Unions (LCSU).
LCSU and CULAC have reached out to approximately 26,000 households with credit union members with several rounds of mailers designed to increase turnout for the runoff.
Alabama's 6th District seat has been held by Rep. Spencer Bachus (R) since 1993. Bachus announced his retirement in September.
WASHINGTON (7/15/14)--The Credit Union National Association has submitted a comment letter to the Consumer Financial Protection Bureau regarding its proposed amendment to the Annual Privacy Notice Requirement (Regulation P), saying the change would significantly reduce the costs to credit unions of providing the annual notices.
The proposal would allow financial institutions that do not engage in certain types of information sharing to stop mailing an annual disclosure as long as certain alternative delivery requirements are met (
"At the same time, the proposal would have a minimal impact on consumers who would have access to privacy disclosures through the proposed alternative delivery method," reads CUNA's letter. "As a result, the proposal would add efficiency to financial institutions' process of providing annual privacy notices to consumers without decreasing consumers' access to such disclosures."
The alternative delivery method includes notifying consumers of the availability of the annual privacy notice, then providing consumers with the notice through a website or a toll-free phone number consumers can call to request the mailing of a hard copy of the notice.
CUNA has requested several changes to the alternative delivery method to make it more cost-effective for small financial institutions. Most notably, CUNA questions the need for a dedicated toll-free number.
"If a financial institution has a toll-free number in place, then it should be able to use the existing number to meet the alternative delivery requirement," the letter reads. "We also suggest that the agency look at alternatives to the toll-free number for small institutions that do not already have a toll-free number. Many small credit unions operate in geographically restricted areas. These credit unions often do not have toll-free numbers due to the expense involved in procuring one, and because the credit union's members are contained in such a small area."
While CUNA supports the intent of the proposal, the comment letter suggests several changes, most notably that the CFPB allow for all privacy notices to be delivered via the alternate delivery methods for all financial institutions that use the Regulation P model form.
According to a recent CUNA survey of credit union members regarding the receipt of privacy notices, of the 79% of people who recall receiving an annual privacy notice, 10% disposed of the notice without opening it, 15% opened it without reading, 53% skimmed it quickly and only 22% reported reading the notice in its entirety.
WASHINGTON (7/15/14)--The Credit Union National Association will testify on various regulatory relief matters today at a House Financial Services Committee hearing titled "Examining Regulatory Relief Proposals for Community Financial Institutions." The hearing will feature discussion of nine bills and testimony from six individuals.
Doug Fecher, president/CEO of $2.8 billion-asset Wright-Patt CU, Beavercreek, Ohio, will testify on behalf of CUNA.
"Credit unions face a crisis of creeping complexity with respect to regulatory burden. It is not just one new law or revised regulation that challenges credit unions, but the cumulative effect of all regulatory changes," he said. "The frequency with which new and revised regulations have been promulgated in recent years and the complexity of these requirements is staggering."
CUNA has estimated credit unions have been subjected to more than 180 regulatory changes since 2008.
"When a regulation is changed, there are certain upfront costs that must be incurred no matter the size of the institution: staff time and credit union resources must be applied in determining what is necessary in order to comply with the change; forms and disclosures must be changed; data processing systems must be reprogrammed; and staff must be retrained," Fecher said.
CUNA will testify on the following bills at the hearing:
- The Regulation D Study Act (H.R. 3240), which directs the Government Accountability Office to study the impact of the Federal Reserve Board's monetary reserve requirements, implemented through Regulation D, on depository institutions, consumers and monetary policy;
- The American Savings Promotion Act (H.R. 3374), which seeks to offer parity to financial institutions wishing to offer raffle-based prize-linked savings accounts to consumers;
- The Community Bank Mortgage Servicing Asset Capital Requirements Study Act of 2014 (H.R. 4042), which directs the federal banking agencies to conduct a study of appropriate capital requirements for mortgage servicing assets for non-systemic banking institutions;
- The SAFE Act Confidentiality and Privilege Enhancement Act (H.R. 4626), which would allow state and federal regulatory officials with mortgage or financial services industry oversight authority access to any information provided to the Nationwide Mortgage Licensing System and Registry without the loss of confidentiality protections provided by federal and state laws; and
- The End Operation Choke Point Act of 2014 (H.R. 4986), which would amend the appropriate federal banking statutes, including the Federal Credit Union Act, to bar regulators from prohibiting, restricting or discouraging insured depository institutions from serving entities that are licensed or authorized to provide products and services, is a registered money transmitting business or has a reasoned legal opinion that demonstrates the legality of the entity's business.
CUNA has also been asked to provide comment on the discussion draft of the Access to Affordable Mortgages Act of 2014, which would amend the Truth in Lending Act to exempt certain higher-risk mortgages from property appraisal requirements.
Fecher will emphasize the importance of reducing the strain of regulatory burden on smaller financial institutions.
"If Congress wants credit unions and other small community based financial institutions to survive, the avalanche of regulatory change must end," he said.
The other bills that will be discussed at the hearing do not directly impact credit unions; CUNA does not have a position on them presently.
Fecher will also testify on the National Credit Union Administration's risk-based capital proposal, the Credit Union Residential Loan Parity Act (H.R. 4226), the Consumer Financial Protection Bureau's examination thresholds and exemption authority, and the impact of effective dates for new regulations.
WASHINGTON (7/15/14)--An amendment that transfers $1 million to the Internal Revenue Service Inspector General's office for an economic study of the newly implemented Foreign Account Tax Compliance Act (FATCA) passed the House of Representatives by a voice vote Monday evening, hours after the Credit Union National Association and the World Council of Credit Unions submitted a letter to U.S. Rep. Bill Posey (R-Fla.).
Posey's amendment to the Financial Services and General Government Appropriations Act of 2015 (H.R. 5016) would transfer the funding from the IRS enforcement division.
"We believe this study is necessary given the complexity of implementing FATCA, the complex rulemaking that has taken place, and the myriad unintended consequences of the law on U.S. financial institutions and U.S. citizens living abroad," says the letter signed by CUNA interim President/CEO Bill Hampel and World Council President/CEO Brian Branch.
FATCA created a tax information reporting and withholding system for certain payments made to financial institutions. The 2010 FATCA statute passed by Congress requires foreign financial institutions to register with the IRS and detect taxable activity by U.S. citizens in foreign countries.
The IRS FATCA regulation also requires U.S.-based financial institutions to conduct due diligence and tax withholding on international funds transfers. This requirement is not present in the FATCA statute passed by Congress.
CUNA believes that these requirements are making it difficult for U.S. citizens living overseas, including credit union members, to maintain access to financial services in America.
WASHINGTON (7/14/14)--The Credit Union National Association has made available a full audio recording of the National Credit Union Administration's June 26 Listening Session held in Los Angeles, as well as key audio clips of that session. The audios have been posted to CUNA's website.
The primary focus of the session was the NCUA's risk-based capital plan, with a lively back-and-forth dialogue between participants and NCUA representatives (
About midway through the session NCUA Chair Debbie Matz made it clear that "everything is on the table" regarding possible changes to the RBC plan proposed in January. While she said the agency is not required to put a revised version of the proposal out for a separate comment period--beyond the one that concluded May 28--she also said very clearly that there is "no rush" to the finish line on this rule.
A second Listening Session occurred in Chicago July 10, and a third is scheduled for Thursday in Alexandria, Va. CUNA will post audios for those sessions also.
Use the resoure link to access the audio.
WASHINGTON (7/14/14)--Rep. Jeff Miller (R-Fla.) introduced a bill to amend the Federal Credit Union Act to exempt veterans' business loans from counting against a credit union's member business lending (MBL) cap.
The bill, presently known only as H.R. 5061, would officially exclude extensions of credit made to veterans from the definition of a member business loan.
"The idea to exempt veterans from counting against a credit union's MBL cap makes a lot of sense," Miller has said to the League of Southeastern Credit Unions and Affiliates, which represents credit unions in Florida and Alabama. "This bill would make the decision to offer veterans access the capital much easier because it will no longer count against their business lending cap. It will provide opportunities for many more veterans."
The Credit Union National Association supports the bill, which was introduced Thursday.
Currently the MBL cap is set at 12.25% of a credit union's assets. CUNA supports legislation to increase the MBL cap to 27.5% of assets as a means to allow credit unions to better serve members by providing businesses with a much needed increase in access to capital.
CLEVELAND (7/14/14)--The Community Development Financial Institution (CDFI) Fund is successfully increasing lending in low-income areas, according to a study by the Federal Reserve Bank of Cleveland.
Assessing returns on government projects spending can be difficult, the report states, because of "double bottom lines" found in many programs. These projects are not solely concerned with profits, but also with a socially oriented goal, such as strengthening the economy of a community or improving economic opportunities for a disadvantaged group.
Established by the Riegle Community Development and Regulatory Improvement Act of 1994, the CDFI Fund awards grants to CDFIs operating in low-income areas. Awards are intended to strengthen the institutions and increase the amount of lending to borrowers in those areas. In 2013, the fund awarded more than $172 million to CDFIs.
Credit unions make up 177 of the 811 CDFIs active at the end of 2013, according to a CDFI Fund annual report released earlier this month. According to U.S Treasury Department data, credit unions that receive awards lend more than their similarly sized counterparts over the three years following the award.
"Additionally, CDFIs' net worth ratio is positively correlated with receiving an award. This means that CDFI Fund awards go toward recapitalizing credit unions as well," the report reads. "This will allow credit unions to continue to make loans in the future because credit unions require a 7% capital-to-asset ratio to be able to expand their loan portfolio. On average, credit unions have capital ratios near 10% to 11%, but CDFIs hover around 8% or 9%."
The report goes on to say that the CDFI program seems to work because the awards are direct enough to increase lending in the areas that need it the most. The guidelines that define CDFIs prevent money from being allocated to areas that aren't in need.
"CDFI Fund is increasing lending in low-income areas, thus achieving one of the goals Congress set for it. This is, however, only one part of the double bottom line," the report reads. "But since the technical assistance and financial assistance programs are small, it is difficult to tease out their effects on aggregate employment, incomes, or other indicators of the economic viability of the community, which would reflect the other half of the double bottom line."
Use the resource link below for the full report.
WASHINGTON (7/14/14)--The House subcommittee on commerce, manufacturing and trade voted 13-6 Thursday to advance a bill designed to combat abusive patent demand letters. The Targeting Rogue and Opaque Letters (TROL) Act of 2014 would crack down on unfair or deceptive practices in connection with the assertion of a U.S. patent.
The bill would prevent the following:
- The sending of communications where the sender falsely represents that they have the right to enforce the patent, a civil action has been filed against the recipient for a violation, a civil action has been filed against other recipients, legal action will be taken, the sender is the exclusive licensee of the patent or an investigation into infringement of the patent has occurred;
- A sender seeking compensation for an unenforceable patent claim, activities undertaken by the recipient after the patent has expired or authorized activity regarding the patent by the recipient; and
- The sender failing to provide the identity of the person asserting the right to the patent, the patent that is alleged to have been infringed upon, an identification of the alleged patent infringement or contact information for a person making the infringement claims.
Violations of the bill would be enforced by the Federal Trade Commission (FTC), under its powers to enforce rules against unfair or deceptive acts or practices.
The Credit Union National Association has been a longtime advocate of meaningful patent reform and submitted a joint letter with other trade associations representing more than 14,000 financial institutions Thursday in support of some of the provisions the TROL Act.
"Financial institutions of every size have been targeted by Patent Assertion Entities, often referred to as patent trolls, who in most cases assert patents of dubious quality through vaguely worded demand letters or intentionally vague complaints," the letter reads. "Indeed, patent trolls' recent focus on credit unions and community banks threatens to pose additional, unwarranted costs on lenders and the communities they serve."
The letter also praised the bill for clarifying the FTC's authority to fight these deceptive practices while not infringing upon the rights of legitimate patent holders to assert their rights.
The bill will now be sent to the full House Energy and Commerce Committee.
WASHINGTON (7/11/14)--New voices from both the House Ways and Means Committee and the Senate Banking Committee have joined the chorus of concerns regarding the National Credit Union Administration's proposed risk-based capital (RBC) plan. Republicans Rep. Kenny Marchant (Texas) and Sen. Dean Heller (Nev.) sent letters to the agency July 10 .
Ways and Means' Marchant asked the NCUA to:
- Identify the statutory authority upon which the agency is relying to impose a higher risk-based capital requirement on well-capitalized credit unions;
- Explain why the NCUA is attempting to regulate concentration and interest-rate risk thorough the addition on new capital requirements as opposed to relying on NCUA examiners to monitor risks of individual credit unions;
- Identify the statute that gives the NCUA any authority to impose individual capital requirements on credit unions; and
- Explain why 18 months, as proposed, is an adequate implementation time.
Senate Banking's Heller warns in his letter that the risk weights in the proposed rule may be "unduly burdensome" and could "reduce the availability or affordability of loan products and restrict credit" available through credit unions.
Heller added that credit unions in his state have warned him that the RBC plan, as written, will force a change in how they operate and require more time spent on regulatory compliance at a cost to helping the state's "struggling economy."
Other members of the Senate Banking Committee who have weighed in with concerns include its chairman, Sen. Tim Johnson (D-S.D.); its ranking member, Sen. Mike Crapo (R-Idaho); and Sen. Heidi Heitkamp (D-N.D.). From House Ways and Means, Rep. Erick Paulsen (R-Minn.) also has warned that credit unions in his state would be adversely affected by the NCUA's RBC proposal.
(See related story: NCUA gets more specific on RBC plan review at Chicago Listening Session.)
ALEXANDRIA, Va. (7/11/14)--The National Credit Union Administration announced late Thursday that it has liquidated IBEW Local 816 FCU, Paducah, Ky., after determining the credit union was insolvent and had no prospect for restoring viable operations.
The $6.3 million-asset credit union served 929 members. It is the sixth federally insured credit union liquidation in 2014.
The NCUA's Asset Management and Assistance Center will issue correspondence in the near future to individuals holding verified share accounts in the credit union. Members with additional questions about their insurance coverage may contact the center toll-free at 800-715-0777 between 8 a.m. and 5 p.m. (CT) Monday through Friday.
Member deposits are federally insured by the National Credit Union Share Insurance Fund. Administered by NCUA, the Share Insurance Fund insures individual accounts up to $250,000, and a member's interest in all joint accounts combined is insured up to $250,000. The fund separately protects IRA and Keogh retirement accounts up to $250,000 and has the backing of the full faith and credit of the United States.
WASHINGTON (7/11/14)--One of the largest payday lenders in the country is the subject of an enforcement action announced Thursday by the Consumer Financial Protection Bureau, forcing it to provide $5 million in refunds and a $5 million penalty.
The CFPB found that Irving, Texas-based ACE Cash Express has been using illegal debt collection tactics, including harassment and false threats of lawsuits and criminal prosecution to pressure overdue borrowers into taking out additional loans.
"ACE used false threats, intimidation, and harassing calls to bully payday borrowers into a cycle of debt," said CFPB Director Richard Cordray. "This culture of coercion drained millions of dollars from cash-strapped consumers who had few options to fight back. The CFPB was created to stand up for consumers, and today we are taking action to put an end to this illegal, predatory behavior."
ACE offers payday loans, check-cashing services, title loans, installment loans and other consumer financial products and services online and at many of its 1,500 retail storefronts in 36 states and the District of Columbia.
The CFPB found that ACE used the following "aggressive and unlawful" collections practices:
- ACE debt collectors led consumers to believe they would be sued or subject to criminal prosecution if they did not make payments, even though ACE did not actually sue consumers or attempt to bring criminal charges against them for non-payment of debts;
- Debt collectors told consumers in-house and third-party collection fees would be collected, despite corporate policy that states collectors cannot charge collection fees and cannot report non-payment to credit reporting agencies; and
- Some ACE in-house and third-party collectors abused and harassed consumers by making an excessive number of collection calls, and in some cases, ACE repeatedly called the consumers' employers and relatives and shared the details of the debt.
These tactics were used to create a false sense of urgency to lure overdue borrowers into payday debt traps, according to the CFPB. ACE would encourage overdue borrowers to temporarily pay off their loans and then quickly re-borrow from ACE.
Even after consumers explained to ACE that they could not afford to repay the loan, ACE would continue to pressure them into taking on more debt. Borrowers would pay new fees each time they took out another payday loan from ACE.
The $5 million in consumer refunds will go to overdue borrowers harmed by the illegal debt collection tactics during the period covered by the order. These borrowers will receive a refund of their payments to ACE, including fees and finance charges.
The $5 million fine will be made to the CFPB's Civil Penalty Fund.
Use the resource link for more information.
CHICAGO (7/11/14)--The room was packed and the concerns were earnest at the National Credit Union Administration's Listening Session in Chicago Thursday. As expected, the primary topic of the day was the NCUA's proposed risk-based capital rule. NCUA board member Michael Fryzel helped open the meeting by reminding the more than 160 people in attendance that the current RBC rule is just a proposal, and that when it comes to changes, "everything is on the table."
"We want a rule that provides safety and soundness without unduly limiting credit union operations," he said.
NCUA Chair Debbie Matz said both the Office of the Inspector General and the Government Accountability Office have pushed the NCUA to get an RBC system in place. "We are going forward with risk-based capital, but we will address the issues that have been identified," she said.
After initial remarks by the regulators, credit union attendees--sitting at round tables--were asked to identify by group what their primary concerns are.
Several credit union representatives requested a re-issue and new comment period for the proposal, since a number of significant changes are likely. In response, Matz said that if after the NCUA reviews the proposed rule, if the rule's intent changes significantly it will require a new comment period. She also the 18-month implementation period for the new rule will likely be changed. A longer implementation period is one of CUNA's requests if the NCUA goes forward with a final rule.
Another credit union remarked that there would be a greater benefit if examiners were better trained than imposing an "unnecessary" new RBC rule. The NCUA responded by saying that a lot of resources go to examiner training, but the effectiveness is limited because of high rates of turnover. The agency also invited credit unions' ideas on how to improve examiner training.
Several credit unions raised issues with the risk weights, particularly those that would be applied to member business loans, mortgages, and longer term investments. One expressed concern that his credit union's members might be misled into believing his credit union was more risky than a bank with the same balance sheet because the bank's risk-based capital ratio would be higher under Basel rules than under NCUA's proposal.
It was also a credit union concern that the RBC rule was trying to create a "no-risk-allowed system," which would devalue the credit union charter option.
A credit union with a significant business lending activity pointed out that applying higher risk weights to greater concentrations of MBLs ignored the wide diversity that can exist in a business loan portfolio. NCUA Director of Examination and Insurance Larry Fazio said there was no way to make the RBC rule as precise as some credit unions have requested. He added that there will be more risk weight analytics available for credit union review in the final version of the rule.
Fazio also told the credit union crowd that the more robust the RBC system is, the more comfortable will examiners be with net worth ratios not substantially above 7%.
NCUA Chair Debbie Matz stated during the back-and-forth discussion that the agency has no intention to eliminate the separate 10.5% risk-based capital requirement for a credit union to be well capitalized. The Credit Union National Association and other critics of the current RBC proposal have argued that the Federal Credit Union Act prohibits the NCUA from setting a higher capital requirement for well-capitalized credit unions than for those that are deemed adequately capitalized.
Other topics addressed at the session included fines for late Call Report filers and interest rate risk. Matz said the number of late filers is going down, but the NCUA has been too lenient in the past. She added that if there is a valid excuse for late filing, the credit union in question will not be penalized.
Matz also addressed the issue of interest rate risk. She said the NCUA went through the first quarter call reports to identify credit unions with more than $1 billion in assets, and while some had adequate interest rate risk, "there is still some work to do."
She followed that up by saying that the NCUA is focused primarily on credit unions that are large enough to pose risks that are too high.
Recordings of the session will be posted on the CUNA website when available. The NCUA's third and final Listening Session of the year will be July 17 in Alexandria, Va.
WASHINGTON (7/11/14)--The Credit Union National Association has asked Ohio credit union CEO Doug Fecher to speak for the credit union movement on regulatory relief before Congress Tuesday.
Fecher, president/CEO of Wright-Patt CU in Beavercreek, Ohio, with $2.8 billion in assets, will testify before the House Financial Services Committee's subcommittee on financial institutions and consumer credit at a hearing titled "Examining Regulatory Relief Proposal for Community Financial Institutions."
Fecher will address regulatory burden and its effect on credit unions. He will address topics such as the Federal Reserve's Regulation D, which places limits on pre-authorized withdrawals and transfers, risk-based capital, the Credit Union Residential Loan Parity Act, Consumer Financial Protection Bureau examination thresholds and more.
CUNA has testified more than a dozen times in the past three years on regulatory relief matters, and Fecher has testified on behalf of CUNA multiple times. The hearing is scheduled to start at 2 p.m. (ET).
WASHINGTON (7/11/14)--Credit Union National Association interim President/CEO Bill Hampel wrote to three U.S. representatives Wednesday asking for consideration for credit unions during the housing finance reform process.
The letter is addressed to Reps. John Delaney (D-Md.), John Carney (D-Del.) and James Himes (D-Conn.), sponsors of the Partnership to Improve Homeownership Act (H.R. 5055), which was introduced Thursday.
The bill would establish an insurance program through Ginnie Mae. All government-guaranteed, single-family and multi-family mortgage-backed securities would be supported by a minimum of 5% private sector capital, standing in a first-loss position. The remaining 95% of the risk would be shared equally between Ginnie Mae and a private reinsurer.
It would also wind down Fannie Mae and Freddie Mac, revoking their charter but allowing them to be sold and recapitalized as entities with different business plans without any of their current unique powers.
In CUNA's letter, Hampel thanks the congressmen for their support of housing finance reform, and praises their act for continuing the dialogue that will lead to the future mortgage finance system.
"As we have said throughout the housing finance reform debate, any legislation to reform the secondary mortgage market should ensure that credit unions have equal access to a well-regulated and well-capitalized secondary market, and should preserve the ability of borrowers to get mortgage products with predictable payments, like the 30-year fixed rate mortgage," Hampel's letter reads. "The new system should be durable enough to withstand economic distress and the transition to the new system should be reasonable and orderly."
Use the resource link below for the full text of the bill.
WASHINGTON (7/10/14)--Federal Reserve Board Chair Janet Yellen is scheduled to deliver the Fed's semiannual monetary policy report to the Senate Banking Committee on Tuesday and then to the House Financial Services Committee Wednesday.
The hearings are scheduled to begin at 10 a.m. (ET) and, at each, the Fed chair will present her report and then answer lawmakers' questions.
Yellen made her first semiannual report to Congress as Fed chair in February, at which time she said substantial progress had been made in restoring the economy to health and in strengthening the financial system, but there was still more to do.
"Too many Americans remain unemployed, inflation remains below our longer-run objective, and the work of making the financial system more robust has not yet been completed," she said, just weeks after taking the helm.
The public airing of the chairman's assessment of monetary policy is required under the Humphrey-Hawkins Act.
WASHINGTON (7/10/14)--The U.S. Senate Intelligence Committee passed the Cybersecurity Information Sharing Act by a 12-3 vote Wednesday. The bill would expand information shared about cybersecurity threats and defense mechanisms between the government and private sector.
"Every week we hear about the theft of personal information from retailers and trade secrets from innovative businesses, as well as ongoing efforts by foreign nations to hack government networks. This bill is an important step toward curbing these dangerous cyber attacks," said Sen. Dianne Feinstein (D-Calif.), chair of the committee, in statement. "To strengthen our networks, the government and private sector need to share information about attacks they are facing and how best to defend against them. This bill provides for that sharing through a purely voluntary process and with significant measures to protect private information."
Committee Vice Chair Sen. Saxby Chambliss (R-Ga.) said the bill would allow businesses and the government to share information "without fear of frivolous lawsuits and without unnecessary bureaucratic obstacles."
The act calls for:
The director of national intelligence to increase sharing of classified and unclassified cyberthreat information to the private sector;
Individuals and companies to monitor their own computer networks and those of consenting customers for cyberthreats and to implement countermeasures to block threats;
Authorization of the voluntary sharing of cyberthreat information by individuals and companies with each other and with the government. Sharing is for cybersecurity purposes only and companies must take appropriate measures to protect against the sharing of personal information;
Liability protections to be put in place for individuals and companies that appropriately monitor their networks or share cyberinformation;
Federal government procedures for the receipt, sharing and use of cyberinformation;
A limit to the government's ability to use information it receives to cyber-related purposes to ensure it does not engage in inappropriate investigations or regulation; and
Reports on the implementation of these authorities by the heads of federal departments, the Privacy and Civil Liberties Oversight Board and relevant inspectors general.
The committee's adopted version of the act is expected to be introduced later this week.
WASHINGTON (7/10/14)--The U.S. Senate confirmed Julian Castro to become the new head of the Department of Housing and
Urban Development Thursday. Castro, the mayor of San Antonio, was confirmed by a vote of 71-26.
Castro, 39, was nominated in May by President Barack Obama, who called Castro a "proven leader, a champion for safe, affordable housing and strong, sustainable neighborhoods" in a statement released after the confirmation hearing.
"I know that together with the dedicated professionals at HUD, Julian will help build on the progress we've made battling back from the Great Recession--rebuilding our housing market, reducing homelessness among veterans, and connecting neighborhoods with good schools and good jobs that help our citizens succeed," Obama said.
Castro has been mayor of San Antonio since 2009. His twin brother, Joaquin, is a Democratic congressman from Texas, representing the state's 20th District.
CHICAGO (7/10/14)--The National Credit Union Administration's second of
three Listening Session of 2014 starts today at 1 p.m. (CT) in Chicago.
Almost 170 people are registered for the event.
The session is
intended to give credit unions a forum to discuss what is on their minds
directly with their federal regulators. The agency's risk-based capital
proposal was the primary topic during the previous session in Los
Angeles in June, and is expected to be front and center today as well.
NCUA Chair Debbie Matz, board members Michael Fryzel and Rick Metsger
are expected to attend. Other top-level NCUA staff will be on hand.
The California and Nevada Credit Union Leagues have posted audio clips
of the California session to their website (see resource link). CUNA
will also post the California session audio on CUNA.org--and NCUA will
post recordings of each listening event over the coming weeks. (News Now July 9).
A third and final Listening Session will take place July 17 in
Alexandria, Va. The event is currently full, but a waitlist is available
on the NCUA website.
WASHINGTON (7/10/14)--As a House Energy and Commerce subcommittee moves forward with a vote on a patent reform bill today, the Credit Union National Association sent a joint financial trade group letter to urge lawmakers to strengthen its provisions to fight
The bill is intended, in part, to address the problem of Patent Assertion Entities (PAEs), often referred to as patent trolls, who in most cases assert patents of dubious quality through vaguely worded demand letters or intentionally vague complaints to force settlements or payments.
Financial institutions of every size have been targeted by PAEs, the joint letter states. It warns patent trolls' recent focus on credit unions and community banks threatens to pose "additional, unwarranted costs on lenders and the communities they serve."
"In our industry alone, there are hundreds of examples of a patent troll attempting to sell a product--the patent license--to a bank or credit union using tactics resembling fraud or extortion," the letter says. It is addressed to Rep. Lee Terry (R-Neb.), chairman of the House Energy and Commerce subcommittee on commerce, manufacturing and trade, and its ranking member, Rep. Jan Schakowsky (D-Ill.).
While calling the lawmakers' bill "a step in the right direction," CUNA encourages them to do more to ensure the bill can be an effective tool for financial institutions. The bill should limit the number of exceptions provided to patent trolls, such as through affirmative defenses to fraudulent behavior, and should allow states with effective laws to continue to enforce them.
The subcommittee began a markup of the bill Wednesday and votes continue today. In addition to CUNA, the letter is signed by the National Association of Federal Credit Unions, the American Bankers Association and the Independent Community Bankers of America.
CUNA has repeatedly urged lawmakers to act to curb the patent system abuses. "Reforms are desperately needed. This growing problem will not be solved until Congress passes bipartisan legislation that makes clear patent trolls can no longer get away with abusing the system," CUNA has said in letters of support for such legislation.
CUNA and the state credit union associations have been active on every level urging lawmakers and the Obama administration that patent reform is needed.
WASHINGTON (7/10/14)--The Financial Action Task Force (FATF) called virtual currencies both "the wave of the future" and a powerful new tool for criminals to move and store illicit funds, in a paper released last month. The FATF is an intergovernmental body that develops and promotes policies to protect the global financial system from money laundering and terrorist financing. The United States is one of 37 member countries.
For the FATF's purposes, a virtual currency is defined as "a digital representation of value that can be digitally traded and functions as a medium of exchange; and/or a unit of account; and/or a store of value, but does not have legal tender status of payment in any jurisdiction."
The FATF lists several benefits of virtual currencies, particularly the potential to improve payment efficiency and reduce transaction costs.
"For example, Bitcoin functions as a global currency that can avoid exchange fees, is currently processed with lower fees/charges than traditional credit and debit cards and may potentially provide benefit to existing online payment systems, like Paypal," the report reads.
However, the anonymous nature of many such currencies create many opportunities for money laundering and terrorist financing, two activities which the FATF exists to combat. The FATF's primary mission is to develop recommendations that are recognized as the global anti-money laundering (AML) and counter-terrorist financing (CFT) standard.
"Virtual currency's global reach likewise increases its potential AML/CFT risks. Virtual currency systems can be accessed via the Internet, including via mobile phones, and can be used to make cross-border payments and funds transfers," the report reads. "In addition, virtual currencies commonly rely on complex infrastructures that involve several entities, often spread across several countries, to transfer funds or execute payments. This segmentation of services means that responsibility for AML/CFT compliance and supervision/enforcement may be unclear."
The report also lists several high-profile cases that have come up in recent years, all of which involve abuse of virtual currency for money-laundering purposes:
In May 2013, the U.S. Department of Justice charged Liberty Reserve, a Costa Rica-based money transmitter, and seven of its principals and employees with facilitating the movement of more than $6 billion in illicit proceeds. This is the largest online money-laundering case to date.
In September 2013, the U.S. Department of Justice seized the website known as Silk Road, which included approximately 173,991 bitcoins, worth more than $33.6 million. The site operated as a "global black-market bazaar" used by thousands of drug dealers and other vendors distributing unlawful goods.
An eight-year investigation of Western Express International, a multinational Internet-based cybercrime group, resulted in convictions or guilty pleas from 16 individuals. It was an enterprise composed of individuals buying and selling nearly 100,000 stolen credit card numbers and other personal information using virtual currencies.
Use the resource link below to access the full report.
WASHINGTON (7/9/14)--A clarification has been issued to mortgage lending rules that states when a borrower dies, the name of the borrower's heir generally may be added to the mortgage without triggering the Consumer Financial Protection Bureau's ability-to-repay rule. The clarification, issued by the CFPB, is meant to help surviving family members who acquire title to a property to take over their loved one's mortgage.
"Losing a loved one should not mean also losing your home. Today's interpretive rule makes it clear that when family members inherit property, they can take over the mortgage without jumping through unnecessary hoops," said CFPB Director Richard Cordray. "This gives heirs an opportunity to work with the lender to pay off the loan or seek a loan modification."
If a property is legally transferred from family members to their heirs with an outstanding loan still on the property, there can be consequences if the heir cannot add their name to the mortgage. For example, a creditor can deny a loan modification on the grounds that the heir is not officially named on the mortgage.
Since an heir has already acquired the title to the home, the new rule allows the heir's name to be added to the title without triggering the ability-to-repay requirements. The ability-to-repay rule requires lenders make a reasonable, good-faith determination that prospective borrowers have the ability to repay their loans.
In addition, the rule does not require the creditor to determine the heir's ability to repay the mortgage before formally recognizing the heir as the borrower. As the named borrower, the heir may more easily be able to obtain account information, pay off the loan, or seek a loan modification.
The rule can also apply to other family-related transfers, including transfers to living trusts, transfers during life from parents to children and transfers resulting from divorce or legal separation.
Cordray also issued a memo Tuesday clarifying that the CFPB, to the extent permitted by federal law, "recognizes all lawful marriages valid at the time of the marriage in the jurisdiction where the marriage was celebrated."
This rule means any terms used in laws, regulations and policies administered by the CFPB related to family and marital status shall now include lawful same-sex marriages and lawfully married same-sex spouses. This includes the Equal Credit Opportunity Act, Fair Debt Collection Practices Act, Truth in Lending Act and Real Estate Settlement Procedures Act.
Use the resource links below for more information.
WASHINGTON (7/9/14)--The U.S Department of the Treasury's Community Development Financial Institutions (CDFI) Fund seeks comment on a new reporting form designed to reduce the burden on CDFIs during the recertification process.
The CDFI Annual Certification and Data Collection Report Form would replace the extensive process currently conducted every three years with a shorter annual report.
CDFIs traditionally serve economically distressed target markets and provide a range of financial products, such as mortgage financing for low-income and first-time homebuyers and not-for-profit developers; flexible underwriting and risk capital for needed community facilities; and technical assistance, commercial loans and investments to small start-up or expanding businesses in low-income areas. Credit unions represented 177 out of the 811 CDFIs active at the end of 2013, according to a CDFI Fund annual report released last week.
The new reporting form will collect annual financial and impact data from all CDFIs, regardless of whether they have received monetary awards in their last fiscal year. This information will be used to provide the CDFI Fund and the community development finance industry with more insight into the state and accomplishments of CDFIs.
According to the CDFI Fund, comments are specifically invited on:
- Whether the collection of information is consistent with the stated background and proposed use necessary for proper performance of the CDFI Fund;
- The accuracy of the CDFI Fund's estimate of the burden of the collection of information;
- Ways to enhance the quality, utility and clarity of collected information;
- Ways to minimize the collection burden, including through the use of technology; and
- Estimates of operational or maintenance costs to provide information.
Comments are due on Sept. 9 and should be directed to Brette Fishman, Management Analyst at the Community Development Financial Institutions Fund, U.S. Department of the Treasury, 1500 Pennsylvania Avenue NW, Washington, D.C. 20020; by e-mail to
; or by fax to 202-508-0083.
Use the resource link below for more information.
ALEXANDRIA, Va. (7/9/14)--The National Credit Union Administration's Office of Small Credit Union Initiatives (OSCUI) is hosting two training sessions during the month of July. Registration for these sessions is still available for credit union staff, managers and leadership.
A training workshop will be held July 23 in Pittsburgh at the Four Points by Sheraton Pittsburgh North Hotel. Industry leaders will lead a discussion on a number of financial operations and strategic management issues.
Sessions include "Protecting Your Credit Union From the Rising Trend of Employment Practices Lawsuits," "Marketing in the Digital Age," "Bank Secrecy Act--Money Services Businesses" and "Examination Modernization."
A leadership boot camp for senior leaders and management will be held July 26 at the Hilton Newark Penn Station Hotel in Newark, N.J. The daylong training program is designed for current and new credit union CEOs.
The program features breakout sessions for managers and directors, providing a chance for credit union leaders to network with their peers. Participants will receive OSCUI's new Credit Union Leadership Resource Guide (see link below).
WASHINGTON (7/9/14)--Washington, D.C.-based newspaper
featured an op-ed by Credit Union National Association interim President/CEO Bill Hampel that underscored that credit union membership is right for all Americans.
, with a circulation of more than 24,000, reaches many legislators and other federal policymakers.
Hampel's letter is a response to a June 24 op-ed by the American Bankers Association that attacked plans to create a credit union to serve professional athletes and their families.
The proposed credit union, sponsored by the ex-spouse and the mother of professional baseball players, would have financial education as its mission and aim to meet the unique needs of professional athletes at all levels.
Hampel went on to say that while superstars with eight-figure contracts receive most of the attention--especially from the bankers--the proposed Players Choice FCU would serve all athletes.
"Our understanding is that the new credit union referred to by the leader of the trade group for big banks would provide financial management resources to athletes and their families, and serve a number of organizations focused primarily on professional and amateur sports," Hampel wrote. "Their membership would include associations and businesses, and would serve both active and retired athletes.
"Most pro athletes are not millionaires. Also on the list are minor league baseball, basketball and soccer players, many of whom have quite low incomes. A much greater portion of these lower-income athletes are likely to avail themselves of a credit union than would the high-paid superstars, most of whom are probably served by private bankers," Hampel wrote.
"A credit union makes sense for everyone, offering a place for the members to pool their resources and save for their futures and help their colleagues meet their own financial challenges in the meantime."
Hampel's op-ed comes a week after National Credit Union Administration board member Michael Fryzel weighed in on the same topic in
, saying credit unions are part of a financial system that offers a wide variety of services to meet the needs of consumers of all types (
CUNA's Hampel also refuted the ABA's claim that that professional athletes don't deserve membership to a credit union specific to their needs in a June 29 editorial by Wayne Green in the
Tulsa (Okla.) World
WASHINGTON (7/9/14)--The National Credit Union Administration will begin
posting audios of its June 26, July 10 and July 17 Listening Sessions
within the next few weeks. Although the forums are open to any topic,
the NCUA's risk-based capital proposal dominated the discussion at the
June gathering in Los Angeles and promises to do so at the final two
Originally, the agency had not planned to record the
sessions. However, the NCUA has subsequently said that within a few
weeks of each gathering--which is the amount of time the agency expects
it will take to transcribe the audios to comply with federal laws on
closed captioning for the hearing impaired--the recordings will be
posted to the NCUA website.
This week's session in Chicago
will be attended by NCUA Chair Debbie Matz, as well as board members
Rick Metsger and Michael Fryzel. The sessions are scheduled to run from 1
to 4 p.m. (CT) Thursday. Watch News Now for coverage.
WASHINGTON (7/9/14)--Rep. Patrick McHenry (R-N.C.), chair of the House Financial Services subcommittee on oversight and investigations, has asked National Credit Union Administration Chair Debbie Matz for several clarifications to the agency's risk-based capital (RBC) proposal.
The letter requests that the NCUA submit answers to a series of questions to the subcommittee no later than 5 p.m. July 18.
The NCUA's proposal would require credit unions to hold capital at 8% of risk-based assets in order to be considered adequately capitalized and 10.5% to be considered well-capitalized. This is in addition to the 6% and 7% leverage ratio requirements to be adequately and well-capitalized. The NCUA would also reserve the right to require credit unions on a case-by-case basis to hold additional capital.
"It is my understanding that this rule would institute far-reaching changes in the Prompt Corrective Action regime, including replacing the agency's current risk-based net worth requirements with new requirements for federally insured credit unions with over $50 million in assets," McHenry's letter reads.
"Given the breadth and scope of the changes the proposed rule would make, the implementation stage will be critical. As a matter of fairness and transparency, the public deserves the opportunity to understand the logic behind this proposal."
McHenry requested that the NCUA provide the subcommittee with the following information:
- Any cost-benefit analyses performed by the NCUA or that otherwise form part of the administrative record in this matter;
- The metrics used to determine what asset classifications required revisions;
- A justification for the revised weighing associated with each individual asset class; and
- An explanation of the extent to which NCUA examiners would be empowered to assess and make capital recommendations to credit unions that might deviate from the new RBC standards.
WASHINGTON (7/8/14)--The Inspector General of the Federal Housing Finance Agency released a report raising concerns that nonbank financial firms that processing delinquent mortgage payments may lack adequate funding.
This raises the risk for government-sponsored enterprises Fannie Mae and Freddie Mac. The FHFA oversees Fannie Mae and Freddie Mac, and its report was done to assess the ability of Fannie and Freddie to mitigate risks and monitor performance of the nonbank entities.
The report states that of the 30 largest mortgage servicers, nonbank servicers held 17% of the mortgage servicing market by the end of 2013, up from 9% at the end of 2012. Nonbank special servicers currently hold approximately $1.4 trillion in mortgage servicing rights out of a market of nearly $10 trillion.
Banks that traditionally service mortgages backed by Fannie Mae and Freddie Mac have been selling the rights to service delinquent or defaulted loans in bulk to companies that specialize in handling them. The FHFA reports that these transactions can often go to the nonbank servicers, due to the often labor-intensive nature of the loans.
"Overall, [the Office of the Inspector General] concluded that while FHFA and the Enterprises have responded well to specific problems at nonbank special servicers, the agency has not established a risk management process or overall oversight framework to handle some general risks posed by nonbank special servicers," the report reads.
A primary risk highlighted in the report was nonbank entities' use of short-term financing to buy servicing rights for troubled mortgage loans that may only pay out after long-term work to resolve their difficulties.
The report cites an example of one nonbank special servicer that used this procedure. The servicer lacked adequate infrastructure to handle the loans, leading to consumer complaints and delayed payments to the enterprises. The servicer in question was also operating with limited credit availability.
"Such risks are amplified by nonbank special servicers operating without the same standards and regulation as banks that service mortgage loans. Specifically, the nonbank special servicers do not have the same capital requirements as a bank, which means they are more susceptible to economic downturns," the report reads.
The FHFA is among several regulatory agencies that have identified these concerns about the spiking volume of mortgage loans acquired by nonbank special servicers.
The report recommends that the FHFA issue guidance on "a risk management process for nonbank special servicers and develop a comprehensive, formal oversight framework to examine and mitigate the risks these nonbank special servicers pose."
Use the resource link below for the full report.
WASHINGTON (7/8/14)--The Federal Reserve Board of Governors published a report on the Independent Foreclosure Review (IFR) and its replacement payment agreement Monday. The agreement requires large mortgage servicers to provide about $10 billion in payments to eligible borrowers and in other foreclosure prevention assistance.
The Fed and the Office of the Comptroller of the Currency issued enforcement actions against 16 mortgage loan servicers between April 2011 and April 2012. These actions were a result of alleged deficient practices in mortgage loan servicing and foreclosure processing. The actions required correction of servicing practices, and the servicers had to hire independent consultants to determine if borrowers suffered financial injury and were eligible for financial remediation.
The report provides information on the process for the review of the foreclosure files during the IFR and file review results, including servicer error rates during the IFR, up to the time the IFR was replaced. The report also contains updated information on direct borrower payments and discusses the Federal Reserve's ongoing supervision of corrective actions.
According to the report, 50.5% of errors found were classified as "general errors," while 9.3% are related to the Servicemembers Civil Relief Act, 9.1% were erroneous denials of modifications, 8.9% were related to bankruptcy and 8.5% were as a result of the servicer having failed to provide legally sufficient notice.
Fifteen of the mortgage servicers entered into the payment agreement to provide $3.9 billion in direct cash payments to borrowers, as well as another $6.1 billion in foreclosure prevention assistance, which includes loan modifications and forgiveness of delinquency judgments.
According to a statement from the Fed, the payment agreement "provides the greatest benefit to consumers in a timelier manner than would have occurred under the IFR and ensures that servicers cannot ask or require borrowers to waive any legal claims against their servicer as a condition of payment."
Use the resource link below to view the report in its entirety.
WASHINGTON (7/8/14)--With both legislative houses back from the Fourth of July break, several full committees will host hearings this week including the Senate Banking Committee and the House Financial Services Committee.
During a hearing today from 10 a.m. to noon (ET), two panels of witnesses will address "The Role of Regulation in Shaping Equity Market Structure and Electronic Trading" for the Senate Banking Committee.
The first panel will feature Jeffrey Sprecher, founder/chairman/CEO, Intercontinental Exchange Inc.; Kenneth Griffin, founder/CEO, Citadel LLC; Kevin Cronin, global head of trading, Invesco Ltd.; and James Angel, associate professor of finance, Georgetown University McDonough School of Business.
The witnesses on second panel will be Thomas Wittman, executive vice president/global head of equities, NASDAX OMX Group Inc.; and Joe Ratterman, chairman/president/CEO, BATS Global Markets Inc.
The House Financial Services Committee is scheduled to hold a full committee hearing titled "Legislation to Reform the Federal Reserve on its 100-year Anniversary" Thursday.
A notice published on the committee's website did not list any specific legislation to be proposed, nor did it list any witnesses scheduled to speak at the hearing.
The committee chair, Rep. Jeb Hensarling (R-Texas), took aim at the Federal Reserve last December, when he announced the Federal Reserve Centennial Oversight Project, which he said would "undertake the most rigorous examination of the Fed's purposes, policies and track record in its history."
The hearing is scheduled to start at 10 a.m. Thursday with a webcast available on the committee's website.
WASHINGTON (7/8/14)--The Credit Union Legislative Action Council (CULAC) has raised more $3.25 million for the 2013-14 election cycle as of June 30 according to its Federal Election Commission filing to come later this month.
CULAC is the federal political action committee for the Credit Union National Association, with a mission to support credit union-friendly candidates running for federal office.
So far almost $2.5 million has gone directly to candidates, split almost evenly between parties, with 50.01% on contributions going to Democratic candidates, 49.85% to Republican candidates and 0.14% to independent candidates.
"If current trends continue, CULAC will again set another fundraising record this year," said Trey Hawkins, CUNA vice president of political affairs.
CULAC was listed by
as one of the top giving PACs this election cycle (
According to its Articles of Association, CULAC's purpose is to ""provide the opportunity for individuals interested in the future of the credit union movement to contribute to the support of worthy candidates for federal office who believe, and have demonstrated their belief, in the principles to which the industry is dedicated."
CHICAGO (7/8/14)--A capacity crowd of 169 will be at the National Credit Union Administration's second 2014 Listening Session, which will be held in Chicago Thursday after demand boosted registration past its original 150 seats.
The first session took place June 26 in Los Angeles, and while the floor was open to any topic, the NCUA's risk-based capital proposal dominated the discussion. Responding to dozens of questions from credit union advocates at the Los Angeles session, NCUA Chair Debbie Matz said that "everything is on the table" regarding changes to the proposal, and that there is no rush to the finish line when it comes to the proposed rule (News Now June 27).
The Chicago session will be attended by Matz, as well as board member Rick Metsger. Board member Michael Fryzel, who will be succeeded by the recently confirmed J. Mark McWatters, is also expected to be in attendance.
The session will run from 1 to 4 p.m. (CT). It will not be broadcast online, but the NCUA does plan to post recordings of the proceedings on its website over the next few weeks.
A final Listening Session is scheduled 1 to 4 p.m. (ET) July 17 at the NCUA headquarters in Alexandria, Va.
WASHINGTON (7/7/14)--A settlement website has been set up for borrowers who were affected by alleged abuses specific to foreclosure proceeses conducted by Ocwen Financial Corp. and Ocwen Loan Servicing.
Last December the Consumer Financial Protection Bureau, along with attorneys general from 49 states and the District of Columbia announced a settlement with three mortgage servicers that will provide approximately $125 million in direct payments to borrowers.
State and federal investigations claimed Ocwen Financial Corp. and Ocwen Loan Servicing signed foreclosure-related documents without the presence of a notary public and without personal knowledge that the facts contained in the documents were correct. In addition, investigators claimed that Ocwen committed various errors and abuses in their mortgage servicing processes.
A National Ocwen Settlement administrator has been appointed and is responsible for handling settlement claims. The administrator has contacted foreclosed borrowers and mailed notice packages. Borrowers are eligible to submit their claims online once the materials arrive and can submit claims online before Sept. 15.
Borrowers need a personalized claimant ID number, located on the form received in the mail, to complete a submission. Claims can also be submitted by mail, postmarked before Sept. 15.
All eligible borrowers who submit valid claims will receive an equal share of the $125 million. Borrowers who receive payments will not have to release any claims and will be free to seek additional relief in the courts.
The CFPB reminds consumers that filing a claim is free, and that scammers may be contacting borrowers claiming to help with claims. The scammer may charge a fee or try to steal personal information.
Use the resource link below for more information.
WASHINGTON (7/7/14)--The U.S. Department of the Treasury has released the annual report for its Community Development Financial Institutions (CDFI) Fund, covering fiscal year 2013.
CDFIs and Community Development Entities (CDEs) made $6.8 billion in loans and investments last year, which helped finance 7,000 business, create or maintain almost 50,000 jobs and finance more than 19,500 affordable housing units.
Credit unions represent 177 out of the 811 CDFIs active at the end of 2013. The National Federation of Community Development Credit Unions and the Credit Union National Association jointly released a white paper in May to assess the impact of CDFI certification on credit unions (
The CDFI Fund is designed to foster business growth and job creation and revitalize low-income communities. Dennis Nolan, acting director of the CDFI fund, wrote in the Treasury Department's blog that 2013 was an eventful year for the program.
"It was with an eye to the future that last year the CDFI Fund began a rigorous, evidence-based evaluation of our cornerstone CDFI program to better understand its impact and to inform policy in the future," he wrote. "In 2013, we also launched the CDFI Bond Guarantee Program, which has the potential to transform the CDFI industry by injecting substantial new long-term capital into our nation's most distressed communities."
"[E]ach CDFI and CDE certified, each business financed, each job created and each housing unit, daycare center, charter school, or health center developed represents a critical step in the transformation of one life, one family and one community," Nolan wrote.
The federation/CUNA white paper compares CDFI-certified credit unions with peer groups of low-income designated and mainstream credit unions. It found, among other things, that CDFI credit unions tend to focus most of their loans in economically disadvantaged communities, yet financial growth and performance tends to meet or exceed mainstream institutions.
The paper also found that CDFI certification is within reach of thousands of credit unions that "make a strategic decision and take decisive action to address the needs of these underserved communities can become eligible for CDFI certification."
Use the resource links below for more information.
WASHINGTON (7/7/14)--Mike Schenk, interim chief economist and vice president at the Credit Union National Association called Thursday's jobs report from the U.S. Department of Labor a "bounce back effect" indicating that consumer confidence is rising.
The jobs report showed the economy added 288,000 jobs in June and that unemployment dropped to its lowest rate since September 2008.
"The first quarter numbers were not all that encouraging, especially in terms of the economic growth numbers," Schenk said. "People seemed to be sitting on the sideline in terms of purchasing behavior. Clearly the consumer is back in the marketplace."
Schenk also mentioned CUNA's latest monthly survey of credit unions, which showed credit unions' loan portfolios increased 1.2%, the largest growth since 2005 (
"Consumers are engaged. They are not only buying more, but buying big ticket items so a lot of that pent-up demand is being expressed," he told
The jobs report also indicated June was the fifth consecutive month with job growth of at least 200,000, and that the jobs created in June mean a total of 9.7 million new private-sector jobs were created over the last 52 months, the longest such streak on record.
According to the department, this is the most total jobs added in the first half of a year since 1999.
ALEXANDRIA, Va. (7/3/14)--The National Credit Union Administration has terminated its Letter of Understanding and Agreement (LUA) with Valley Pride FCU of Plains, Pa., with $7.1 million in assets. The LUA was dated June 11, 2013.
The NCUA's LUA defined "significant adverse conditions and unsafe and unsound practices" it identified as a result of a March 2013 examination.
Valley Pride agreed to take steps to correct those practices under terms of the letter. These steps involved engaging qualified individuals to reconcile accounts, perform an opinion audit and implement internal control procedures.
The credit union was also required to develop a matrix to monitor results from all audits, reviews and examinations, with the matrix containing all information pertaining to each finding, how it would be remedied, who would be responsible for corrective actions and any updates on progress toward completing the corrective action.
The LUA remained in effect until all conditions set by the NCUA were fulfilled. The credit union remained open while it took the corrective actions.
WASHINGTON (7/3/14)--Canada's anti-spam law took effect Tuesday, and while the statute is a Canadian law, it affects any commercial electronic message (CEM) sent to Canadian recipients. A CEM can be defined as any electronic message sent with the purpose of encouraging participation in a commercial activity.
Valerie Moss, senior director of compliance analysis for regulatory affairs for the Credit Union National Association, writes on CUNA's
that a CEM can include e-mails, text messages and some social media messaging.
"We have been asked whether Canada's new anti-spam requirements will affect U.S. credit unions that send marketing messages to members who reside in Canada. The answer appears to be yes," she wrote. However, there is a grandfather clause for existing credit union members and a safe harbor for emails that comply with the U.S. CAN-SPAM Act that should help limit compliance burdens on U.S. credit unions.
Moss lists three general requirements for sending a CEM to an electronic address (defined as an email account, a telephone account, an instant messaging account and any other similar account) in Canada: the recipient's consent to receive CEMs; the sender's identification and contact information; and an unsubscribe mechanism that can be "readily performed."
Consent to send CEMs is implied for a period of at least 36 months following the law's implementation where there has previously been an existing business relationship.
Significantly for credit unions, the "implied consent" period likely extends beyond 36 months in the case of a person who is a member of the credit union on July 1, 2014, until he or she leaves the credit union's membership, because the existing business relationship remains continuous so long as the member maintains his or her membership share.
The law also contains a safe harbor if the sender is located outside of Canada, the sender reasonably believed that the recipient would access the commercial electronic message outside of Canada in a jurisdiction on the
ECPR List of Foreign States
schedule, which includes the United States, and the CEM was in compliance with that jurisdiction's "substantially similar" anti-spam law, that is, the CAN-SPAM Act in the case of a U.S. credit union.
The law and its implementing regulations generally prohibit:
- Sending of commercial electronic messages without the recipient's consent;
- Alteration of transmission data in an electronic message resulting in the message being delivered to a different destination without consent;
- Installation of computer programs without the express consent of the owner of the computer system or its agent;
- Use of false or misleading representations while promoting products or services;
- Collection of personal information through accessing a computer in violation of Canadian law; and
- Collection of electronic addresses by the use of computer programs or the use of such addresses, without permission.
Use the resource link below to access CUNA's
entry on the new law.
Also, the World Council of Credit Unions has produced an extenstive summary of Canada's Anti-Spam Legislation (CASL) for non-Canadian credit unions. Use the resource link for access.
WASHINGTON (7/3/14)--Outgoing National Credit Union Administration board member Michael Fryzel responded in
Wednesday to recent banker criticisms of credit unions and a proposed credit union to serve professional athletes. In his commentary, Fryzel said the existence of credit unions alongside banks provide an environment rich with options for consumers of all income levels.
"[W]hen Congress authorized the establishment of credit unions in 1934 lawmakers must have determined banks were not providing financial services to all citizens," he said. "And now, 80 years later, this system remains in place and credit unions continue to provide valuable financial services to American families...I always believed credit unions challenged the banking industry to do a better job and that together they could provide our citizens with outstanding financial alternatives."
The proposed Players Choice FCU is the brainchild of Stacey Fielder August, former wife of baseball player Cecil Fielder and mother of current Texas Rangers player Prince Fielder. The NCUA gave preliminary approval for a field of membership for Players Choice FCU in May.
This led to accusations from American Bankers Association President/CEO Frank Keating that taxpayers would suddenly be on the hook for subsidizing financial services to professional athletes.
Credit Union National Association interim President/CEO Bill Hampel responded in a column in
June 25, saying that not all professional athletes pull in millions of dollars each year--in fact, many in the major sports' minor leagues are low-income consumers.
August said her experiences watching her ex-husband lose most of his approximately $47 million in career earnings showed her that even eight-figure contracts aren't a guarantee of financial security without financial education, which the proposed credit union intends to make part of its mission.
"There is no denying that not only do people of modest means often like credit unions better, but those who have accumulated savings over the years often prefer them as well. Better service, better rates, lower fees, greater convenience," Fryzel said. "Who wouldn't want to use a financial institution like that regardless of what you earn and your financial status?"
Use the resource link below for the full commentary.
WASHINGTON (7/2/14)--The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) has announced its largest settlement to date--a $963 million agreement with BNP Paribas SA (BNPP) to settle its potential liability for apparent violations of U.S. sanctions regulations.
In an announcement of this week's settlement, Treasury said the agreement resolves an investigation into BNPP's "systemic practice of concealing, removing, omitting, or obscuring references to information about U.S.-sanctioned parties in 3,897 financial and trade transactions routed to or through banks in the United States between 2005 and 2012" in apparent violation of a series of regulations.
"Today's settlement is OFAC's largest-ever and reaffirms OFAC's determination to aggressively enforce U.S. sanctions rules and regulations," said OFAC Director Adam J. Szubin in a release. "The settlement is the result of an interagency effort to investigate institutions that abuse the U.S. financial system and undermine U.S. sanctions programs. OFAC will continue to coordinate these efforts with other federal and state agencies in order to protect the U.S. financial infrastructure from the risks inherent in this type of illicit activity."
Under the settlement agreement, BNPP is required to put in place and maintain policies and procedures to minimize the risk of the recurrence of such conduct in the future.
Use the resource link to read the Treasury's announcement.
WASHINGTON (7/2/14)--A U.S. District Court ruling has halted a Georgia-based operation from attempting to collect $3.5 million in phantom payday debts. The ruling was handed down at the request of the Federal Trade Commission (FTC), who charged that John Williams and two companies he controls used deception and threats to collect payday loan debts that consumers did not owe.
The FTC claims that Williams, a resident of Norcross, Ga.; Williams, Scott & Associates LLC; and WSA LLC falsely claimed to be affiliated with federal and state agents, investigators and members of a government fraud task force, as well as pretended to be a law firm. The defendants allegedly told consumers their drivers' licenses were going to be revoked, and that they were criminals facing imminent arrest and imprisonment.
In addition, the FTC alleges many consumers contacted by the defendants had previously submitted contact information while inquiring about a payday loan online, information that was later used by the defendants.
"Many consumers in this case were victimized twice," said Jessica Rich, director of the FTC's Bureau of Consumer Protection. "First when they inquired about payday loans online and their personal information was not properly safeguarded, and later, when they were harassed and intimidated by these defendants, to whom they didn't owe any money."
The FTC alleged that the defendants violated the Federal Trade Commission Act and the Fair Debt Collection Practices Act by telling consumers' family members, employers and co-workers about the debt; failing to identify themselves as debt collectors; using profanity; making repeated inconvenient or prohibited calls; failing to provide information in writing about the debt; and making unauthorized withdrawals from consumers' bank accounts.
The court had previously ordered the defendants' assets frozen to preserve the possibility that they could be used to provide redress to consumers, and appointed a receiver.
WASHINGTON (7/2/14)--The National Credit Union Administration, along with other federal financial regulatory agencies and the Conference of State Bank Supervisors, issued guidance Tuesday regarding home equity lines of credit (HELOCs).
The guidance concerns HELOCs nearing the "end-of-draw" period, which is when the principal amount of the line of credit must begin to be repaid. The guidance encourages financial institutions to communicate with borrowers about the pending reset and provides principles for managing risk as HELOCs reach their end-of-draw periods.
These risk-management principles are:
- Prudent underwriting for renewals, extensions, and rewrites;
- Compliance with pertinent existing guidance, including but not limited to the Credit Risk Management Guidance for Home Equity Lending and the Interagency Guidelines for Real Estate Lending Policies;
- Use of well-structured and sustainable modification terms;
- Appropriate accounting, reporting, and disclosure of troubled debt restructurings; and
- Appropriate segmentation and analysis of end-of-draw exposure in allowance for loan lease losses estimation processes.
As borrowers near their end-of-draw periods, many will continue to meet their obligation when their loan resets to an amortizing payment or reaches a balloon maturity; however some may find it difficult to make higher payments or to refinance their existing loans due to changes in their financial circumstances or declines in property values.
The guidance offers how financial institutions can understand and effectively manage potential exposures under these circumstances and descibes responses to HELOC borrowers unable to meet their contractual obligations. The appropriate accounting and reporting procedures for HELOCs nearing their end-of-draw periods are also discussed.
Use the resource link below for more information.
ALEXANDRIA, Va. (7/2/14)--While data breaches at retailers have made headlines recently, financial institutions of all sizes are vulnerable to cyberattacks. With that in mind, the Federal Financial Institutions Examinations Council (FFIEC) has launched a pilot program to assess 500 financial institutions' supervisory policies and processes when it comes to cybersecurity.
The assessments will be used to develop a preliminary assessment of how community financial institutions manage cybersecurity, said National Credit Union Administration spokesman John Fairbanks. Credit unions represent about half of the institutions being examined. These credit unions range from small to very large asset sizes.
"This pilot is one of several FFIEC assessments that will ultimately benefit community financial institutions by assisting regulators in strengthening and standardizing our supervisory programs and being responsive to industry requests for supervisory guidance," Fairbanks said. "The assessments under the FFIEC pilot program are being done during the normal exam cycle using existing rules and regulations."
Should the assessments lead the NCUA to identify policies and procedures that do not meet legal requirements or supervisory expectation, the institution will be notified and concerns will be handled as they would normally be during a standard exam.
In announcing the pilot program in May, the FFIEC said its members want to provide additional support to community banks, which may not have access to the resources available to larger institutions.
NCUA Chair Debbie Matz recalled one incident in her February address at the Credit Union National Association's Governmental Affairs Conference in which hackers broke into a medium-sized credit union and used that credit union's passwords to access a large credit bureau, allowing them to steal credit reports from hundreds of consumers.
"These attacks are like poison-tipped darts. Where they hit doesn't matter. Once that poison hits your bloodstream, it moves quickly through the system," she said.
The FFIEC, which in addition to the NCUA counts as its members the Office of the Comptroller of the Currency, Consumer Financial Protection Bureau, Federal Deposit Insurance Corp., Federal Reserve Board and a liaison committee of state regulators, has said that the pilot program will not result in any new examination rating.
ALEXANDRIA, Va. (7/1/14)--Six individuals have been prohibited from participating in the affairs of any federally insured financial institution, according to orders issued by the National Credit Union Administration Monday.
These individuals are:
- Charlene Arva, a former employee of Canandaigua (N.Y.) FCU, with $22.3 million in assets, pleaded guilty to the charge of grand larceny. Arva was sentenced to a prison term of no less than 30 months and no more than 90 months;
- Crystal Ferreira, a former employee of Columbus CU, Providence, R.I., with $67 million in assets, pleaded guilty to the charge of embezzlement. Ferreira was sentenced to three years supervised release and ordered to pay restitution in the amount of $437,250;
- Robert Foster, a former employee of United Neighbors FCU, Watertown, N.Y., with $4.8 million in assets, pleaded guilty to the charge of falsifying business records. Foster was fined $795;
- Felisa Kazimierczak, a former employee of Greylock FCU, Pittsfield, Mass., with $1.1 billion in assets, pleaded guilty to the charges of kidnapping, misleading a police officer, filing a false crime report, making false entries and larceny. Kazimierczak was sentenced to four years in prison;
- Renee Thomas, a former employee of Community CU, Tacoma, Wash. with $12 million in assets, pleaded guilty to the charges of misapplication of credit union funds and wire fraud. Thomas was sentenced to 18 months in prison, three years supervised release and ordered to pay restitution in the amount of $126,469; and
- Karen York, a former employee of VA Hospital FCU, Little Rock, Ark., with $8.4 million in assets, pleaded guilty to the charge of embezzlement. York was sentenced to one month in prison, two years supervised release and ordered to pay restitution in the amount of $51,920.77.
readers will recall Kazimierczak's name from articles in 2013. She initially claimed that an unidentified individual left a note on her car threatening to harm her daughter unless Kazimierczak delivered a substantial amount of cash to a nearby location. But police said the story was fabricated and that Kazimierczak embezzled the money by taking cash allocated for area ATMs and delivering it to a false drop off site after coercing a co-worker into standing watch while she was gone. Pittsfield police allegedly found a bag of cash in Kazimierczak's car totaling the amount missing from the vault, less $58,000, and learned she allegedly had moved money between ATMs shortly after an impending audit was announced by Greylock managers.
Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million.
Use the resource link below for a list of NCUA enforcement orders.
ALEXANDRIA, Va. (7/1/14)--National Credit Union Chief Economist John Worth discussed several economic factors in his monthly video address, including interest rate risk, employment statistics and automobile sales. Interest-rate risk (IRR) was identified as a potential emerging threat by the Financial Stability Oversight Council in its annual report in May.
Worth cautions that IRR should "be a concern for all credit unions that might, through potential Share Insurance Fund premiums, have to pay for the difficulties brought on by the decisions of a minority of institutions."
"In March 2005, there were 277 credit unions at which net long-term assets exceeded their combined net worth and core deposits," he said. "These 277 credit unions represented 9% of industry assets. In March 2014, that had risen to 350 credit unions, representing 27% of assets."
Worth also called the housing market indicators "mixed," since home sales are currently at 6.3% below where they were at this time last year. However, new homebuilding activities are up 4.2%.
"Some of the weakness reflects a poor start to the year due to weather, higher mortgage rates have played a role. Still, housing prices continues to rise, and nationwide we're up 6.4% according to the [Federal Housing Finance Agency's] purchase-only price index."
Unemployment numbers are more promising, with the 6.3% unemployment rate for April and May representing a 1.2% improvement over the numbers from the second quarter of 2013. The labor market has gained approximately 210,000 jobs per month in 2014 to date, an improvement from the 194,000 monthly average gains during 2013.
Auto sales, an important channel for credit union lending, have spiked, Worth said. In May, auto sales reached 16.8 million at an annual rate up more than 8% from a year earlier.
"Motor vehicle sales have jumped," Worth said, "and consumer income for the first four months of the year is up. Consumer balance sheets continued to improve in the first quarter."
Use the resource link below for the video of Worth's address.
WASHINGTON (7/1/14)--Virtual currencies, while heralded by some as part of an innovative new financial system, bring with them a host of challenges and risks to financial institutions, consumers and law enforcement. The U.S. Government Accountability Office (GAO) has released a report on virtual currencies, outlining several of these issues, and urging the Consumer Financial Protection Bureau to take an active role in facing consumer issues that might arise with its use.
Virtual currencies are digital representations of value that are not government-issued, and systems operate over the Internet and use computer protocols and encryption to conduct and verify transactions. Some can be used to buy real goods and services and exchanged for dollars or other currencies.
But these currencies have also been associated with illicit activity and security breaches, which raises possible regulatory, law enforcement, and consumer protection issues.
Several of the main issues outlined in the June 26 GAO report are:
- Virtual currency systems may provide anonymity over traditional payment systems and can lack a central intermediary to maintain transaction information. This can lead to difficulties in detecting money laundering and other crimes;
- Many virtual currency systems can be accessed globally to make payments and transfer funds across borders. Consequently, law enforcement agencies investigating crimes that involving these currencies have to rely upon cooperation from international partners who may operate under different regulatory and legal principles; and
- The emergence of virtual currencies has raised a number of consumer and investor protection issues, including: reported loss of consumer funds maintained by bitcoin (one type of virtual currency) exchanges, volatility in bitcoin prices, and the development of virtual-currency-based investment products. For example, in February a Tokyo-based bitcoin exchange filed for bankruptcy after reporting it had lost more than $460 million.
The U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) released guidance in March 2013 requiring virtual currency exchanges to register with FinCEN. Federal agencies also have begun to collaborate on virtual currency issues through informal discussions and interagency working groups.
These working groups have focused on law enforcement aspects of virtual currencies, but not on emerging consumer protection issues. The GAO report states that the CFPB has "generally not participated" in these groups.
"Therefore, interagency efforts related to virtual currencies may not be consistent with key practices that can benefit interagency collaboration, such as including all relevant participants to ensure they contribute to the outcomes of the effort. As a result, future interagency efforts may not be in a position to address consumer risks associated with virtual currencies in the most timely and effective manner," the report reads.
The GAO recommended that the CFPB "take steps to identify and participate in pertinent interagency working groups addressing virtual currencies, in coordination with other participating agencies."
According to the report, the CFPB has agreed with this recommendation.
Use the resource link below for the full report.
WASHINGTON (7/1/14)--The National Credit Union Administration reports that it has identified possible financial penalties against 84 credit unions under its "zero tolerance" policy for credit unions that filed late first-quarter call reports.
The NCUA has only notified late filers of the penalty that may be assessed, but since the process is not complete, no credit union has been 'fined' at this point, the agency emphacizes.
The Northwest Credit Union Association noted in its June 24 Anthem newsletter that one of the credit unions being notified is in Oregon and four are in Washington. If the five Northwest credit unions sign consent orders, their penalties will range from $243 to $1,900. The league also notes that the steepest penalty of the possible 84 could exceed $10,000 according to the NCUA, should the credit union choose not sign the consent order.
The NCUA told News Now that it soon will be releasing national data related to the civil money penalties.
In May, the NCUA anticipated it would begin the process of assessing civil money penalties from 104 credit unions that filed 2014 first-quarter call reports late (News Now May 23).
The regulator makes exceptions to its "zero tolerance" policy for credit unions able to document certain filing hardships, including a breakdown in the credit union's core operating system, a natural disaster taking place in the credit union's community, or the incapacitation of a key employee who would be responsible for filing the report.
If a credit union encountered a problem and contacted the agency help desk to report an issue with filing the report, the NCUA generally took this into account and waived the penalties, an agency spokesman told the NWCUA.
Any fines collected by the NCUA will be remitted to the U.S. Treasury Department and do not supplement the agency budget.
The NWCUA says it is asking the NCUA to better to address issues with online filing.
"We're asking the NCUA to remind credit unions a couple of days before the reports are due that the filing deadline is approaching," said John Trull, director of the regulatory advocacy. "Furthermore, we are advocating for technical improvements to the system that would notify credit unions immediately upon hitting the submit button if there is an issue, or to confirm the report was received."
If credit unions provide evidence of previous on-time filing, Trull noted, they may be able to appeal the fine with the NCUA's Office of Examination and Insurance. If the cost of the fine would materially harm the financial health of the credit union, Trull said, that would be another circumstance for the regulator to consider.
Since January, an NCUA spokesman noted, credit unions were notified many times of the policy, and warning letters were sent to credit unions that filed their December 2013 reports late. The regulator also posted articles in the NCUA Report.
Overall, the zero tolerance policy is close to having its intended effect, with 98.4% of credit unions filing on time--the highest percentage since online filing began, according to the NCUA.
ALEXANDRIA, Va. (7/1/14)--The second new credit union of 2014 has been approved by the National Credit Union Administration: First Unity FCU in McComb, Miss. The new credit union will serve individuals who live, work, worship, attend school and participate in associations located in Mississippi's Pike, Walthall and Amite counties.
The three counties have a total population of 68,978, according to the 2010 census.
The new institution will also serve individuals participating in programs to alleviate poverty or distress in the three counties; incorporated or unincorporated organizations located in or maintaining a facility in any of the counties; employees of the credit union and members of their immediate households; and spouses of persons who died while within the field of membership and organizations of such persons.
"Residents and workers in three underserved rural counties in southwestern Mississippi will certainly benefit from the affordable financial services First Unity will be able to provide," said NCUA Chair Debbie Matz. "I commend all the people who worked so hard on First Unity's federal charter application. This is an important investment in the people and the communities they will serve."
According to the NCUA, the new credit union will offer regular shares, share certificates, direct deposit, club accounts, notice accounts, share-secured loans, auto loans, non-member deposits, unsecured loans, other collateral loans, money orders, cashier's checks, travelers checks and savings bonds during the first year of operation.
First Unity FCU will be a community credit union and qualifies for a low-income designation, allowing it to accept secondary capital and non-member deposits, obtain grants and loans from NCUA's Community Development Revolving Loan Fund and qualify for certain exemptions from statutory limits on member business lending.
According to the NCUA, First Unity plans to apply for certification in the U.S. Department of the Treasury's Community Development Financial Institution program, giving it access to ongoing grant funding opportunities.
First Unity is the first new federal charter in Mississippi since 1995 and plans to open its doors in August.
The NCUA announced in April that it granted the first new federal charter of the year--a community charter to CommunityWorks FCU to serve people who live, work, worship or attend school in Greenville County, North Carolina, as well as businesses and other legal entities in the county.
The credit union's field of membership is nearly 475,000 people. The credit union plans to offer affordable financial services to individuals who currently are limited to high-cost alternatives.
CLEVELAND (7/1/14)--Steve Behler, president/CEO of $599 million-asset Kemba CU, West Chester, Ohio, is among four individuals newly appointed by the Federal Reserve Bank of Cleveland to its Community Depository Institutions Advisory Council. The 10-person council consists of representatives from credit unions, commercial banks and thrift institutions from the fourth Federal Reserve District.
The council provides information and to the Cleveland Reserve Bank from the perspective of community depository institutions.
The four new members are:
- Diane Hoops, president/CEO, Corn City State Bank, Deshler, Ohio;
- Ronald J. Seiffert, president/CEO, Delaware County Bank and Trust Co., Lewis Center, Ohio; and
- Paul S. Siebenmorgen, president/CEO, Farmers and Merchants State Bank, Archbold, Ohio.
Council members meet with senior Fed leaders at least twice every year to provide anecdotal information to shape consideration of monetary policy direction and economic research activities.
The new board members assumed their positions June 1.