CUNA Regulatory Advocacy Report – 7-20-12
July 20, 2012
Good afternoon. It has been another hectic week, and here is an update on some of the issues that we worked on this week.
- CUNA Urges NCUA to Exercise Restraint At the July Meeting
- CFPB Posts its Semi-annual Regulatory Agenda
- GAO Study on Servicemembers Civil Relief Act (SCRA) Compliance
- CUNA Comments on CFPB Proposal re Disclosure of Consumer Complaint Data
- CUNA Comment Letter to CFPB on Non-Depository Institutions that Pose Risks to Consumers
- FSOC “Systemically-Important” Financial Market Utilities; Fedwire and Payments System Risk
- NACHA Resource on FFIEC Internet Banking Authentication
CUNA Urges NCUA to Exercise Restraint at the July Meeting
CUNA has reinforced its strongest support for NCUA’s delay of the CUSO and loan participation proposals, and we appreciate that these items are not on the July 24, 2012 Board Meeting agenda. We will continue advocating that the agency abandon these proposals. A number of important issues are on the agenda and we are communicating our concerns to the agency on several of them.
The agency will consider the Temporary Corporate Credit Union Stabilization Fund assessment for this year. NCUA already announced that the Stabilization Fund assessment for 2012 will be in the range of 8-11 basis points of insured shares, and we are urging that the assessment be at the lower end of the range.
NCUA will also consider its budget at mid-year. Last July, the agency was able to adjust its 2011 budget downward by about $2 million. Consistent with credit unions’ serious concerns about the agency’s costs and staff position additions over the last three years, and a continued steady decline in the number of troubled credit unions as the nation recovers from the financial crisis, we are urging the agency to take significant steps to reduce the budget for the remainder of this year as well as for 2013.
The agency will review the statutory usury ceiling for federal credit unions and CUNA strongly supports maintaining the ceiling at 18%.
Finally, the agency will review a new proposal on liquidity and CUNA is urging the agency to consider whether a new proposal on liquidity is really necessary for credit unions at this time. CUNA will provide a summary of the Board’s decisions meeting, as usual, shortly after the meeting concludes.
CFPB Posts its Semi-annual Regulatory Agenda
Early this week, the Consumer Financial Protection Bureau (CFPB) posted its semi-annual update of its rulemaking agenda. The last one that was published was the Fall 2011 agenda, which was made public in January.
The agenda is a useful tool for credit unions to review in planning for upcoming proposed and final rules that will be issued by the CFPB. For a link to this document, click here.
Most of the content in the CFPB’s agenda is related to requirements that were mandated by Congress under the Dodd-Frank Act. Specifically, many of the rulemaking activities relate to the area of mortgage lending. According to the CFPB, we can expect a proposed interagency rule on appraisal requirements for “higher-risk” mortgages sometime in August. Note that this new term, brought to us as part of the Dodd-Frank Act, is different than what we currently know as “high-cost” and “higher-priced” mortgages.
The agenda also indicates that the CFPB expects to issue proposed regulations in August which will clarify the use of the unique identifier, payment of discount points and origination fees and points, and qualification requirements for loan originators.
Additionally, the CFPB plans to issue proposed regulations relating to mortgage servicing requirements mandated by the Dodd-Frank Act sometime between now and the end of this month, according to the agenda. Outside of the statutorily-mandated servicing requirements, “The CFPB is also considering whether to propose additional requirements for early intervention and continuity of contact for troubled and delinquent borrowers, and for servicers to adopt reasonable information management policies and procedures.” The CFPB states that it is participating in an interagency process to consider “broader issues regarding national servicing standards” for mortgages.
Other rulemaking initiatives include a proposed rule on Regulation B concerning copies of appraisals or other valuations to be furnished by creditors expected for this month, a final rule on requirements for escrow accounts for higher-priced mortgage loans expected in December, the ability-to-repay final rule is now expected in December, and a final rule relating to the exemption threshold on the CFPB’s final remittances regulation now expected next month. The updated agenda also indicates, “The CFPB is working on a wide range of initiatives to address issues in markets for consumer financial products and services that are not reflected in this notice….” For more information on the CFPB’s regulatory agenda, click here.
GAO Study on Servicemembers Civil Relief Act (SCRA) Compliance
On Tuesday of this week, the Government Accountability Office (GAO) published a report entitled “Mortgage Foreclosures: Regulatory Oversight of Compliance with Servicemembers Civil Relief Act Has Been Limited.” In this report, the GAO recommends that prudential regulators conduct more extensive loan file testing for SCRA compliance. Additionally, the report recommends that “regulators and other agencies that oversee mortgage activities should also explore opportunities for information sharing on SCRA compliance oversight…” To measure the extent to which each of the prudential regulators examined institutions with respect to SCRA compliance, the GAO selected a random sample of 160 depository institutions, including credit unions (40 from each of the four prudential regulators) and reviewed the workpapers for each of the examinations from 2007 through 2011 for most of these institutions. The GAO’s sample included only institutions that hold mortgages in their loan portfolios and service those loans themselves or institutions that service mortgages for other institutions. GAO analyzed the examination workpapers to estimate the percentage of institutions for which prudential regulators conducted SCRA compliance reviews and determine the frequencies with which different examination procedures were used for these reviews. Of particular note, the GAO stated that of the four prudential regulators, the FDIC, the OCC and the Federal Reserve Board all examined higher percentages of institutions for SCRA compliance than did NCUA. (See NCUA’s response to the GAO on page 81 and 82 of the report). For the GAO’s “highlights” of this study, click here. As a result of this report, we expect NCUA will be stepping up its efforts to review compliance with SCRA requirements.
CUNA Comments on CFPB Proposal re Disclosure of Consumer Complaint Data
Wednesday, we filed a comment letter with the CFPB in response to its proposed policy statement on the disclosure of consumer complaint data. Under the proposal, the CFPB would duplicate its final policy statement on the disclosure of credit card complaint data for the disclosure of complaint data related to other types of financial products and services. While the final and proposed policy statements apply only to those institutions with at least $10 billion in assets, we expressed to the CFPB our concern that other federal financial regulators may follow the Bureau’s lead with regard to disclosure of complaint data. In that connection, we suggested the Bureau continue to take proactive steps to coordinate with the other regulators and to minimize regulatory burdens, especially for smaller credit unions.
Further, our letter reiterates the comments in our January letter to the CFPB regarding the disclosure of credit card complaint data, which opposed the public release of certain complaint information that is separate from and in addition to the Bureau’s periodic reports and analyses that provide more complete complaint information to consumers.
The Bureau has implemented a tool on its website to allow public access to the complaint database, which currently includes only data related to credit card complaints. The Bureau has indicated its intention to essentially add to its public online database complaint information related to non-credit card complaints (for institutions with at least $10 billion in assets). Similar to the final policy statement, under the proposal, the Bureau will make available on the public online database only “non-narrative” data that does not contain confidential information. We ask the Bureau to consider the potential benefits of including certain “narrative” information, which includes the consumer’s description of “what happened” and assessment of a “fair resolution,” as well as the institution’s written response to the complaint.
CUNA Comment Letter to CFPB on Non-Depository Institutions that Pose Risks to Consumers
Early next week, CUNA will submit a comment letter to the CFPB regarding its proposed procedures to supervise non-depository institutions that pose risks to consumers. We strongly agree that non-depository institutions that pose risks to consumers with regard to consumer financial products or services should be subject to rigorous consumer protection supervision, regulation, and enforcement, as contemplated by the Dodd-Frank Act. We generally agree with the proposed procedures that will ensure these entities have few opportunities to take advantage of consumers. Further, we continue to urge the agency to identify any remaining gaps in coverage in the consumer finance markets. Section 1024 of the Dodd-Frank Act provides the CFPB with regulatory authority to supervise non-depository institutions that pose risks to consumers, in addition to the agency’s authority to supervise non-depository mortgage originators, mortgage brokers, payday lenders, and private education lenders regardless of size, as well as other non-depository providers that are “larger participants” in their respective markets.
FSOC “Systemically-Important” Financial Market Utilities; Fedwire and Payments System Risk
On Wednesday, the Financial Stability Oversight Council (FSOC) issued a statement and designated eight “systemically important” financial market utilities (FMUs) that would be subject to heightened risk management standards. Chairman Matz represents the National Credit Union Administration on the FSOC, which includes the U.S. Treasury, Federal Reserve Board, and other financial regulators. However, the policies of the FSOC as currently developed do not apply to credit unions. The institutions covered are very large and significant entities that provide clearing and settlement between financial institutions, such as the Clearing House, Chicago Mercantile Exchange, and the Options Clearing Corporation. Following the designation, the Federal Reserve Board (Board) issued a statement that affirmed its policy of applying relevant international risk-management standards to its Fedwire funds and securities services. Further, the Board plans to seek comments on its Payments System Risk policy in the upcoming months. CUNA is monitoring the activities of the FSOC to ensure rules developed for the very largest institutions are not imposed in some form on credit unions. We also continue to participate on the Financial Services Sector Coordinating Council (FSSCC) to represent credit union interests relating to security and safety from sector wide risks.
NACHA Resource on FFIEC Internet Banking Authentication
On Thursday, NACHA –The Electronic Payments Association released a resource for financial institutions regarding the implementation of the Federal Financial Institutions Examination Council (FFIEC) Internet Banking Authentication guidance from June 2011. NACHA’s resource is intended to identify sound business practices that financial institutions could use to create internal policies and procedures in response to FFIEC guidance, as well as describe relevant ACH requirements under the NACHA Operating Rules. CUNA’s Payments Subcommittee is reviewing the document.
I hope you find this information useful. In the meantime, if you have any questions or comments about this report, please feel free to contact Mary Dunn, Bill Hampel, or me. I hope you all have a great weekend!