2009 CUNA Comment Letters

CUNA Comments on Flood Insurance, Interagency Questions and Answers
September 21, 2009
In our comment letter to NCUA, CUNA raises no objection with regard to the proposed flood insurance Q&As that address replacement cost valuations and force-placed insurance. However, CUNA does have concerns with the Q&As with regard to loan participations as they represent an inappropriate shifting of risk and responsibility from the original lender to those acquiring the participations.

Proposed Interagency Guidance--Funding and Liquidity Risk Management
August 31, 2009
In our comment letter to NCUA with regard to the proposed interagency guidance on funding and liquidity risk management, we urge the agency not to adopt the guidance for credit unions at this time. CUNA supports robust, ongoing liquidity risk management at all credit unions. However, we believe adequate guidance exists in NCUA's Examiner's Guide, and the agency has not provided sufficient rationale for imposing additional requirements. Furthermore, the proposed guidance attempts to impose uniform liquidity risk management procedures on all financial institutions, regardless of their size or charter type. As indicated in our letter, we do not believe credit unions should be subjected to more onerous, additional liquidity risk management procedures as a result of problems within the banking system.

Proposed Changes to the FACT Act Rules and Guidelines on the Accuracy of Credit Information.
August 31, 2009
In our comment letter to NCUA with regard to the FACT Act proposal, we support the requirement to provide account-opening dates to credit bureaus and believe it will not be unduly burdensome. Such information is very useful for credit unions and others when making lending decisions.

NCUSIF Premium and One Percent Deposit
August 25, 2009
In our comment letter to NCUA with regard to the NCUSIF Premium and One Percent Deposit proposal, we urge NCUA to increase transparency of its actions regarding the fund. We support several proposed changes, including implementation of the "premium/distribution ratio" which will more accurately determine the costs to a credit union that leaves the NCUSIF system in a year in which a premium is assessed. The proposal will add broad language to the current regulations stating that contributions to the NCUSIF can be used to cover the fund's expenses. Although such language is similar to that found in the Federal Credit Union Act, our letter notes that the regulations should "flesh out" the statute. Therefore, rather than include such broad language, we encourage NCUA to instead clarify that the NCUSIF will provide federally insured credit unions with a full accounting as to the cause, nature, and extent of the NCUSIF's expenses when it directs them to replenish their one percent deposit and/or pay a premium.

Exception to the Maturity Limit for Second Mortgages
August 24, 2009
In our comment letter to the NCUA, we support the interim final rule that will create a limited exception to the 20-year maturity limit on second mortgages. In addition, we believe the exception outlined in the interim final rule should apply to all loan modifications, regardless of whether they are undertaken as part of the Making Home Affordable Program.

Notice of Proposed Rulemaking Part 761, Registration of Mortgage Loan Originators
July 9, 2009
In our comment letter to NCUA with regard to the SAFE Act proposal, we urge the allowing of CUSOs to be considered as subsidiaries to the extent that these rules apply to other types of subsidiaries. This will ensure that CUSOs will also not have to be licensed under State law. We also request that privately-insured credit unions have access to the Registry even though they are not covered under these rules. In addition, the letter suggests changes to the threshold for determining which financial institutions would be covered by these rules and requests that there be an exception for loan modifications. We also suggest additional modifications to the registration process and request clarifications with regard to automated lending processes.

CUNA Comments on Proposed Rule Part 706 – Unfair or Deceptive Acts or Practices
June 3, 2009
In our comment letter to NCUA, we raise the issue as to whether the rule issued last year should be rescinded as a result of the credit card law that was enacted shortly before Memorial Day. As for the proposal, we indicate that it is common for credit unions to make promotional offers to their existing members and they are continuing to assess their operations to determine how the new rules will affect these offers. Also, the proposal defines “category of transactions” as a type or group of transactions in which an annual percentage rate (APR) applies that is different than the APR that applies to other transactions. Our letter indicates that credit unions establish categories based on factors other than the APR. We also stress that when a consumer transfers a credit card account to another account with the same creditors, these rules should not impose a specific time period in which both may be opened in order for this transfer to not be considered an opening of a new account and, therefore, not subject to the requirements that terms cannot be changed during the first year.

Part 707, Truth in Savings Act
May 26, 2009
As outlined in our letter to NCUA in response to proposed changes to the Truth in Savings Act rules, CUNA generally supports the changes, with the exception of the disclosure of overdraft fees and fees for bounced checks on the periodic statements. CUNA questions expanding this to all credit unions, as opposed to those that “promote the payment of overdrafts,” as currently required. CUNA requests that NCUA collect more information as to the need to expand these requirements.

Credit Union Reporting
May 26, 2009
The National Credit Union Administration (NCUA) has issued a proposal that would amend the existing regulations on reporting procedures and record retention requirements, and would require federally-insured credit unions (FICUs) to submit reports and other important information to NCUA through a new web-based system. CUNA supports the objective to increase the efficiency and ease of reporting information to NCUA. However, we are concerned that training for FICU staff will be necessary and may be more extensive than anticipated. NCUA plans to implement the new system during the third quarter of this year for natural person credit unions, and sometime next year for corporate credit unions. If a final rule is ultimately adopted, CUNA urges NCUA to allow sufficient time between adoption of the final rule and implementation of the new reporting system for FICUs to make necessary logistical changes as well as to have staff properly trained.

Federal Credit Union Operating Fees
May 4, 2009
The notice of proposed rulemaking would amend NCUA’s rule on the assessment of the federal credit union operating fee to exclude investments credit unions have made under the CU System Investment Program (CU SIP) and the CU Homeowners Affordability Relief Program (CU HARP) from the calculation of total assets for purposes of determining their operating fees. CUNA encouraged NCUA to take this action as it applies to CU SIP and we support the proposal as it relates to CU HARP. CUNA believes that excluding these investments from the calculation of the operating fee will facilitate participation in the programs by removing the disincentive related to the calculation of the operating fee.

NCUA's Corporate ANPR
April 6, 2009
CUNA's comment letter in response to NCUA's ANPR on corporate credit unions urges that corporate credit union services focus on settlement, payment, short-term investment and liquidity needs of natural person credit unions. The letter, developed by CUNA's Corporate Credit Union Task Force, urges that long-term investment be curtailed and that corporate credit unions have at least 4% capital. The letter does not recommend a specific number of corporate credit unions but indicates, with the limitations on services, the number should be dramatically reduced. The letter supports a national field of membership for remaining corporates as well as up to 20% outside directors. The letter also expresses concerns about the costs of NCUSIF assistance to corporates that will be born by federally insured credit unions. CUNA supports NCUA's proposal to establish a Stabilization Fund as well as legislation that will help mitigate the impact of the insurance costs by spreading them out over time.

Proposed Interagency Appraisal and Evaluation Guidelines
January 21, 2009
In our letter to NCUA in response to the proposed Interagency Appraisal and Evaluation Guidelines, CUNA offers numerous suggestions and clarifications in response to this proposal. This includes clarification of the definition of “appraisal,” requesting flexibility to consider lower costs and speeds with regard to the appraiser’s scope of work, not requiring substantial discussions between the lender and appraiser, allowing automated tools to be used for all “low-risk” transactions, eliminating differences in requirements between credit unions and other financial institutions, and providing financial institutions with more flexibility to decide if an appraisal is necessary for a loan modification.

Proposed Rules for Student Loans
August 24, 2009
In our comment letter to the DOE with regard to proposed amendments to the Perkins, FFEL, and Direct Loan Programs, we do not have significant issues with the proposal, including the provisions that will impose additional disclosure requirements on lenders, both because they implement required statutory provisions and because the proposal reflects substantial input from credit unions. However, in the letter CUNA encourages the DOE to provide lenders with at least one year to comply with the rule after it is issued in final form.

Hope for Homeowners Interim Final Rule
March 9, 2009
In our comment letter in response to the proposal to amend the Hope for Homeowners (H4H) program, CUNA supports the enhancements outlined in the interim final rule that are intended in increase the attractiveness of the H4H Program for both borrowers and lenders, especially the provisions that will allow for up-front payments to subordinated lienholders. However, credit unions view the process of qualifying as an FHA-approved lender to be very burdensome, and the comment letter expresses CUNA’s strong desire to work with the FHA to determine how the process may be streamlined.

Federal Home Loan Bank Membership for Community Development Financial Institutions
July 14, 2009
In our comment letter to the Federal Housing Finance Agency, CUNA strongly supports the proposal to extend Federal Home Loan Bank (FHLB) membership to privately-insured community development financial institutions (CDFIs). Also, all privately-insured credit unions should be allowed the opportunity to become members of an FHLB, in addition to CDFIs. Although this will require a change in current law, CUNA would welcome the opportunity to work with the Federal Housing Finance Agency in these efforts.

Interim Final Rule on Implementation of the CARD Act
September 21, 2009
In the eighth letter to the Federal Reserve Board on the Credit Card Act this summer, CUNA urges the Board to support efforts to achieve a legislative remedy regarding the 21-day rule. It addresses concerns regarding the required minimum payment disclosures, effective February, 22, 2010 and urges the Board to limit those disclosures to credit cards only. CUNA does not support the 45-day advance notice rule nor the toll-free number requirement related to consumers' options to reject change-in-terms. We urge that smaller financial institutions should be exempt from this requirement. CUNA generally supports the proposed provisions for accounts used for transactions more than 14 days after a change-in-terms notice is provided.

Interim Final Rule on Implementation of the CARD Act
August 20, 2009
In our letter to the Federal Reserve Board, CUNA outlines significant concerns with regard to meeting the August 20, 2009 effective date of the 21-day rule. The letter urges the Board to clarify that failure to comply with the 21-day requirement will not prohibit creditors from taking certain non-punitive actions, such as routine collection activities, which may actually benefit consumers by providing notification prior to additional finance charges are imposed. In addition, the letter seeks clarification on how to comply with the 21-day requirement when periodic statements are delivered electronically.

Section 106 of the Credit Card Accountability Responsibility and Disclosure Act of 2009
July 7, 2009
In our letter to the Federal Reserve Board, CUNA outlines significant concerns with regard to Section 106 of the Credit Card Accountability Responsibility and Disclosure Act of 2009. These provisions prohibit credit from treating payments as late unless the creditor adopts reasonable procedures to ensure that periodic statements are mailed or delivered to the consumer no later than 21 days before the due date. Our concerns focus primarily on the broad scope of these provisions, which extend beyond credit cards, and the compliance difficulties that credit unions are facing with regard to the upcoming August 20, 2009 effective date.

Proposed Rule on Regulation Z Open-end Disclosures
June 3, 2009
In our comment letter to the Federal Reserve Board, we request further guidance as to how the final rules issued last year will change as a result of the credit card law that was enacted shortly before Memorial Day. Also, as a result of the final rules issued last year, certain credit unions that use multifeatured, open-end lending programs may decide to change the disclosures that they use. In our letter, we strongly urge the Board to allow these credit unions to use their current disclosures until the Board completes its overall review of the Regulation Z, which will likely not occur until 2011 or 2012. Otherwise, these credit unions will need to change their current disclosures by July 1, 2010, as required under this rule, and again in 2011 or 2012. We also oppose the application of the December 2008 rules to any type of credit that is secured by real property, and we support the clarification with regard to the new disclosures of interest and fees on periodic statements, which will apply when a creditor acquires an account from another creditor.

Proposed Rule on Regulation Z Disclosures for Private Student Loans
May 26, 2009
In our letter to the Fed in response to the proposal to amend the Regulation Z rules for private student loans, CUNA requests that the scope of the rule be restricted to only those that are considered traditional student loans. This would include loans that are used to pay for specific education- related expenses in which payments are not due until the student’s attendance is completed, or shortly thereafter. CUNA also requests more guidance with regard to the disclosures and the consumer’s ability to cancel the loan. CUNA supports the provisions that exempt credit unions that use the name of an educational institution from the requirement to provide additional disclosures to indicate the institution does not endorse the credit union and that the credit union is not affiliated with the institution.

Proposed Rule to Amend Regulation E for Overdraft Protection Plans
March 30, 2009
In our comment letter to the Fed in response to the Regulation E proposal on overdraft protection plans, CUNA expresses support for an opt-in approach for new accounts for ATM and debit card transactions, but urges the Fed to continue to allow financial institutions to use an opt-out approach for existing accounts. CUNA also supports not requiring consumers to elect overdraft protection for these transactions in exchange for receiving overdraft protection for checks and other transactions; providing consumers with equivalent accounts, regardless of whether they have overdraft protection; allowing consumers 30 days to decide whether to opt-out; and allowing consumers to opt-out orally. CUNA opposes any requirement to provide a toll-free telephone number that consumers may use to opt-out; to segregate the required disclosures; or to include opt-out notices on periodic statements. As for overdrafts in connection with debit holds, CUNA believes that merchants should be required to submit transactions promptly for settlement.

Proposed Amendments to Regulation D Regarding Excess Balance Accounts
March 2, 2009
This proposal would amend Regulation D, Reserve Requirements of Depository Institutions, to authorize the establishment of limited-purpose "excess balance accounts" (EBAs) at Federal Reserve Banks. EBAs would allow depository institutions (including credit unions) to place funds, through an intermediary institution, in Reserve Banks even though the depository institution does not have an account with that Reserve Bank. In our comment letter to the Fed, CUNA supports the overall proposal, but has concerns with certain provisions. CUNA suggests the limit of one institution through which a depository institution can deposit funds in a Reserve Bank be increased or eliminated. CUNA also asks the Fed to clarify accounting treatment of EBAs.

Proposed Rule to Amend the Regulation Z Mortgage Loan Disclosures
February 9, 2009
This proposed rule will allow a consumer to modify or waive the timing requirements for certain mortgage loan disclosures if due to a bona fide personal financial emergency. In our comment letter to the Fed, CUNA urges the Fed to provide significant, additional clarification as to the other situations that may also qualify and to limit these to unusual and unforeseeable circumstances. Also, under the proposal, corrected disclosures will be required if there is a change in certain terms after the application is submitted, which may delay settlement. In our letter, CUNA suggests that there should be no delay if the change is a decrease in the interest rate on the loan since it is a benefit to the borrower. CUNA also suggests that there should be a consistent definition of the term “business days” and that the timing requirements under the proposal should not apply to home equity lines of credit.

Mortgage Acts and Practices Rulemaking
July 30, 2009
In our comment letter to the Federal Trade Commission (FTC), CUNA agrees that the FTC should move forward in this process to determine if additional rules should be implemented to the extent they target predatory lending practices. However, these rules should not be imposed on state-chartered credit unions that are subject to the FTC’s jurisdiction under the FTC Act as credit unions have not been the source of the problems that these rules would address. These rules should focus on practices that are not currently addressed under current law. However, they should not prohibit specific types of loans, although we would support the prohibition of loans with negative amortization features.

Mortgage Assistance Relief Services Rulemaking.
July 15, 2009
In our comment letter to the Federal Trade Commission (FTC) in response to an advance notice of proposed rulemaking that would apply to those who offer loan modification and foreclosure rescue services to consumers, CUNA urges that any new rules in this area should not be imposed on state-chartered credit unions that are subject to the FTC’s jurisdiction under the FTC Act as they have not been the source of these problems.

Supplemental Proposed Rule for FDICIA Disclosures – Matter No. R411014
June 5, 2009
This comment letter responds to the Federal Trade Commission’s (FTC’s) proposed rule that will require disclosures for financial institutions that do not have federal deposit or share insurance. As outlined in our letter, CUNA believes that this rule should not require credit unions or other financial institutions to obtain signed acknowledgment of the required disclosures from existing members or accountholders. With regard to shared branches, the FTC should give deference to NCUA’s rule that addresses these types of disclosures.

Recognition and Presentation of Other-Than-Temporary Impairments
April 1, 2009
The Financial Accounting Standards Board (FASB) has issued a proposed staff position on the recognition and presentation of other-than-temporary impairments (OTTI), which CUNA generally supports. This staff position would essentially separate out the amount of impairment of certain debt and equity securities due to credit loss from loss due to other factors—including liquidity—for financial presentation purposes. FASB has another proposed staff position out for comment on fair value and, if adopted, it would minimize the need for this proposal on OTTI. However, CUNA believes there would still be some benefit in this proposal and encourages FASB to adopt it. CUNA asks FASB to make this proposal retroactive to December 31, 2008.

Proposed FSP FAS 115-a, FAS 124-a, and EITF 99-20-b: Recognition and Presentation of Other-Than-Temporary Impairments

Determining Whether a Market is Not Active and Transaction Is Not Distressed (Proposed FSP FAS 157-e)
April 1, 2009
The Financial Accounting Standards Board (FASB) has issued guidance on determining whether a market is not active and a transaction is not distressed. CUNA supports the proposed staff position, as well as FASB’s underlying objective to increase the accuracy of fair value measurement. Instead of the proposed effective date of March 15, 2009, CUNA suggests FASB make the guidance retroactive to December 31, 2008 for those entities choosing to do so. We believe the proposed two-step model is understandable, and the factors listed in step one that indicate that a market is not active are appropriate. Lastly, CUNA believes that these proposed amendments are necessary and would prove very helpful in more accurately applying fair value measurement in an inactive market.

Proposed Interpretive Guidance on Sharing Suspicious Activity Reports by Depository Institutions with Certain U. S. Affiliates
June 8, 2009
FinCEN's proposed interpretitive guidance interprets the general statement in the proposed SAR confidentiality rules that a depository institution may share a SAR or SAR information within its corporate organizational structure and certain U.S. affiliates subject to SAR regulations, as long as it is consistent with Title II of the BSA. CUNA generally supports FinCEN's interpretation of the SAR confidentiality rules, however, CUNA believes FinCEN should extend an institution's ability to share SARs or SAR information with it's branches located outside of the United States to better facilitate the overall goal of enterprise-wide Bank Secrecy Act (BSA) compliance.

Proposed Rulemaking on the Confidentiality of Suspicious Activity Reports
June 8, 2009
FinCEN is proposing to clarify the Bank Secrecy Act's non-disclosure provision regarding SARs and broadens the statutory prohibition against notifying a SAR target of a SAR filing. The proposal prohibits the disclosure of a SAR form or information revealing the existence of a SAR to any person, barring certain limited exceptions. FinCEN also proposes to modify the safe harbor provision to reflect amendments made by the USA Patriot, as well as incorporate a number of minor technical revisions to facilitate consistency among the various rules. CUNA generally supports the proposed rules. However, CUNA suggested that FinCEN develop standardized verification procedures to be used by the industry when providing SAR information to law enforcement officials, as well as provide additional guidance explaining the distinction between SAR information protected by the non-disclosure prohibition and underlying facts and/or information subject to disclosure.

Agency Information Collection for the Suspicious Activity Report by Depository Institutions
June 1, 2009
FinCEN, NCUA and the Federal Banking Supervisory Agencies (“the agencies”), as part of their continuing effort to reduce paperwork and respondent burden, request comment on the information collection process. Specifically, they are seeking comments concerning the currently approved Suspicious Activity Report by Depository Institutions (SAR-DI) that is being reissued without change.

CUNA commends the agencies for their efforts thus far to minimize respondent burden in information collection requests. However, we've suggested some minor amendments in our comment letter that can be made to the Suspicious Activity Report for Depository Institutions (SAR-DI) that would make the completion and filing process more efficient for financial institutions.

Proposed Rule to Transfer and Reorganize the Bank Secrecy Act Regulations
March 9, 2009
FinCEN proposes to move the Bank Secrecy Act Regulations to a new chapter (Chapter X). Chapter X will be organized in a manner that specifies the regulatory obligations applicable to particular industry sectors. The new chapter will also feature consistent numbering and section divisions intended to make the regulatory requirements more accessible. In our comment letter to FinCEN, CUNA supports FinCEN's efforts to create more user-friendly BSA regulations and agrees that these proposed changes will facilitate use of the regulations.

New Executive Order on Federal Regulatory Review
March 16, 2009
CUNA's comment letter to the Office of Management and Budget (OMB) concerns President Obama's anticipated new executive order on Office of Information and Regulatory Affairs (OIRA) regulatory review of non-independent executive branch agency rulemakings and guidance documents. CUNA suggests that OMB should encourage broader public participation in the OIRA review process. Further, CUNA suggests that a formal OIRA review comment procedure should be adopted and that OIRA review should be expanded to cover more agencies within the executive branch, such as the Internal Revenue Service.

Interim Final Rule to Increase the Size of Businesses Eligible for the Section 7(a) Loan Program
August 3, 2009
In our comment letter to the Small Business Administration (SBA), CUNA supports the temporary change in the size criteria of businesses eligible for the 7(a) Business Loan Program and urges that this change be made permanent. The letter also emphasizes that CUNA and credit unions want to continue to work with the SBA on other means to facilitate SBA lending.

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