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Washington Archive

Washington

Fed Interchange Rule Case Resumes Today

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WASHINGTON (8/21/13)--The next developments in an ongoing court challenge to the Federal Reserve's debit interchange fee cap will take place today when Fed attorneys, merchant representatives and Judge Richard Leon meet in the U.S. District Court for the District of Columbia. Credit Union National Association staff will monitor the hearing.

Leon in a scheduling hearing last week requested that Fed officials discuss the feasibility of releasing an interim final interchange regulation, and develop a timeline for implementation of such a rule. The judge urged the Fed to move expeditiously, and expects them to have discussed these issues by today. He also last week asked whether the court should order issuers to "disgorge revenue" obtained due to the Fed regulation. (See Aug. 14 News Now story: Judge Fierce On Fed Interchange Rule.)

Last week's hearing followed Leon's July 31 decision to strike down the Fed's price caps on debit interchange fees. He ruled at that time that the Fed did not follow narrow congressional intent when it implemented the cap and other changes imposed by what is known as the Durbin amendment. He also said in that ruling that the Fed would have some time to redraft its rules--but did not specify how much time.

The Fed today could appeal this ruling, or ask the judge for more time to consider an appeal or other actions.

For now, briefs on a potential Fed interim interchange rule must be submitted by Aug. 28, and briefs on the issue of potential damages must be submitted by Sept. 16. However, these deadlines could be changed today.

CUNA is doing all it can to protect credit union interests in this case, and CUNA is already devising legal strategies should the judge move forward on his theory of "damages."

Watch News Now this afternoon for live, updated coverage of today's hearing.

FinCEN Mortgage SARS Down 25% In 2012

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WASHINGTON (8/21/13)--The total number of mortgage fraud suspicious activity reports (SARs) filed declined by 25% between 2011 and 2012, the Financial Crimes Enforcement Network (FinCEN) reported Tuesday.

FinCEN received 69,277 mortgage loan fraud (MLF) SAR filings in 2012, and 92,561 in 2011.

Click to view larger image FinCEN Chart
The 25% decline in 2012  stands out when compared with the high rate of 2011 filings. The 2011 filings were mainly due to mortgage repurchase demands on banks, FinCEN said.

While the number of MLF SARs received by FinCEN dropped in 2012, the agency noted that SAR filings increased steadily each year between 2001 and 2011. Overall, 46% of all the mortgage fraud reports FinCEN received in the last decade were filed in 2010, 2011 and 2012. The bulk of MLF SARs, regardless of filing date, reference suspicious activity that financial institution filers believe began in 2006 and 2007, FinCEN said.

Suspicious activity is often recognized and reported years after a given loan is originated, FinCEN emphasized. Loan defaults, repurchase demands and other factors can often help uncover instances of fraud, FinCEN said. The repurchase demands seen in 2011 prompted review of mortgage loan origination and refinancing documents, where filers discovered fraud, which was then reported on SARs, FinCEn added.

Around 84% of the MLF SARs reported involved amounts below $500,000, said the FinCEN report. Foreclosure rescue scams accounted for 4,427 of the MFL SARs filed in 2012 while appraisal fraud accounted for 13% that year. Foreclosure fraud (3%), loan modification fraud (6%), and reverse mortgage fraud (less than 1%) were also reported. Most of MLF SARs (87%) filed fell into the "other" category, in which the filer described the alleged fraudulent activity but did not attempt to fit it into a pre-set category.

California led the country in per capita MLF subjects and total MLF volume. Nevada, Florida, Arizona and Washington, D.C., rounded out the top five states for mortgage fraud filings.

For the full FinCEN report, use the resource link.

NEW: Fed to Appeal Interchange Ruling, Request Stay Extension

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WASHINGTON (8/21/13, UPDATED 2:35 P.M. ET)--Fed General Counsel Scott Alvarez today said the Federal Reserve Board plans to appeal a recent district court decision that turned the agency's debit interchange fee rule on its head and instructed the Fed to rewrite and/or revise regulations that require a cap on fees card issuers may charge merchants for their debit transaction services.

Alvarez said the Fed would also request a stay of U.S. District Court for the District of Columbia Judge Richard Leon's July 31 interchange decision.

Leon on that date struck down the Fed's rules on debit interchange fees and routing procedures under the Durbin Amendment. At a scheduling hearing held last week, Leon asked whether the court should order issuers to "disgorge revenue" obtained due to the Fed regulation.

Alvarez today said the Fed wishes to bring this case to finality quickly, and would work expeditiously to address interchange case issues once the appeal is filed.

Leon said he is not inclined to let the interchange issue linger.

Today's hearing is ongoing.

CUNA Seeks Comment On NCUA Minority CU Preservation Program

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WASHINGTON (8/21/13)--Could the National Credit Union Administration's plan to create a Minority Depository Institution (MDI) Preservation Program have unintended consequences for credit unions? Could program requirements be modified to make the program more successful? Credit unions can answer these and other questions regarding the program in a new Credit Union National Association comment call.

The comment call follows the agency's July 25 release of an Interpretive Ruling and Policy Statement (IRPS 13-1) that lays out the design of a potential MDI Preservation Program, and its eligibility criteria, initiatives and benefits.

Under the program, credit unions with high percentages (50% and above) of minority members and management would be eligible to receive minority credit union status from the agency.

This status would grant them access to NCUA Office of Small Credit Union Initiatives resources, including grant program eligibility.

The goal of the program, which is mandated by the Dodd-Frank Act, is to promote and preserve minority ownership in the credit union industry. The program should not create any new burdens or requirements for credit unions.

Comments are due to CUNA by Sept. 20.

The NCUA is also accepting comments on the MDI Preservation Program. Credit unions and other interested parties have until Sept. 30 to make their views known to the agency.

For the full CUNA comment call, use the resource link.