CUNA Regulatory Advocacy Report

CUNA Regulatory Advocacy Report: October 26, 2012   

Good afternoon.  Here is an update on the issues that CUNA’s Regulatory Advocacy group has been pursuing in recent days.  

  • Credit Union Representatives Named to Fed’s Community Depository Institutions Advisory Council
  • CFPB Finalizes Rule on Defining Larger Participants of the Consumer Debt Collection Market
  • CFPB’s Cordray Talks Shop with Northwest Credit Unions
  • CUNA and Financial Trade Groups Meet with Federal Reserve Board on Debit Interchange
  • WOCCU Participates on Financial Stability Board Legal Identifier Project
  • NCUA Issues Letter to Credit Unions on New Reporting Requirements for TDRs on the Call Report 

Credit Union Representatives Named to Fed’s Community Depository Institutions Advisory Council 

Earlier this week, the Federal Reserve Bank of New York announced Michael Castellana, president and CEO of SEFCU, Albany, NY, as the new chair of the Reserve Bank’s Community Depository Institutions Advisory Council (CDIAC). In addition, Michael will represent the New York Reserve Bank on the Federal Reserve Board’s CDIAC, which is comprised of representatives from each of the twelve regional Federal Reserve Banks. This announcement follows the Board’s release last week of the members named to its CDIAC for 2013. Glenn Barks, president and CEO, First Community Credit Union, Chesterfield, MO, will be the other credit union representative on the Board’s CDIAC. I would like to congratulate both Michael and Glenn on this prestigious and important assignment.

The CDIAC was established in 2010 by the Board to provide input on the economy, lending conditions, and other issues of interest to community depository institutions. The regional CDIACs are made up of representatives of commercial banks, thrift institutions, and credit unions of varying sizes.

CFPB Finalizes Rule on Defining Larger Participants of the Consumer Debt Collection Market 

On Wednesday, the CFPB issued a final rule that will allow it to supervise the larger consumer debt collectors for the first time. The final rule was accompanied by the examiners field guide, which examiners will use to assess potential risks to consumers and whether debt collectors are complying with requirements of federal consumer financial law.

While the final rule does not apply to depository institutions or credit unions of any size, we will monitor it after it becomes effective in January of next year for any indirect impact on credit unions.

The consumer debt collection market covered by the rule includes the following types of debt collection: (1) firms that buy defaulted debt and collect the proceeds for themselves; (2) firms that collect defaulted debt owned by another company in return for a fee; and (3) debt collection attorneys that collect through litigation. Under the rule, any firm that has more than $10 million in annual receipts from consumer debt collection activities will be subject to the CFPB’s supervisory authority. “By expanding the supervision program to oversee the nonbanks that are larger participants in the consumer debt collection market, the Bureau will now have a window into every stage of the process—from the origination of credit to debt collection,” as stated in the press release.

CFPB’s Cordray Talks Shop with Northwest Credit Unions

Earlier this week, representatives from the Northwest Credit Union Association and area credit unions met with Director Cordray.  Here is the Association’s summary of that meeting.

Northwest credit union leaders met with Consumer Financial Protection Bureau (CFPB) Director Richard Cordray in Seattle on Wednesday to share concerns and learn more about the bureau. Joining Cordray at the hour-long roundtable was Assistant Director of Community Affairs Zixta Martinez and West Regional Director Edwin Chow.

Cordray demonstrated a thorough understanding of the credit union difference, stating specifically that credit unions were in no way to blame for the financial crisis. Cordray clarified the exam process as well, explaining that because the CFPB is only responsible for regulating financial institutions with more than $10 billion in assets, the majority of financial institutions will continue to be regulated by their current regulator, who will be given exam guidance for rules issued by the CFPB.

Cordray informed credit unions that they will not have to send out a 45-day advance notice for changing the website reference on credit card applications from the Federal Reserve Board to the CFPB, but they still may have to notify consumers of the change. The CFPB will likely offer an initial opinion in the near future.

“Yesterday’s meeting helped give credit unions a clearer picture of what to expect from the CFPB,” said John Trull, director of regulatory advocacy for the Northwest Credit Union Association (NWCUA). “It also gave credit union leaders the opportunity to let Director Cordray know that credit unions are model financial institutions—organized with direct accountability to the individual members we serve.”

“Credit unions are not going to be happy about everything that comes out from the CFPB,” said Jack Fallis, president and CEO of  Global Credit Union and chair of the Association’s Regulatory Affairs Committee, “but it is clear from the meeting that the director is willing to work with us in areas where they have discretionary authority.”

The CFPB was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and effectively consolidates most federal consumer financial protection authority under one umbrella. President Obama appointed Cordray to be the agency’s first director in January 2012. 

Prior to assuming his current position, Cordray led the CFPB’s enforcement division. Before that, Cordray served on the front lines of consumer protection as Ohio’s attorney general. 

Chow will join the region’s credit union leaders again next week at the Association’s Leadership Symposium, presenting another opportunity to continue the dialogue with the new agency. The free event is scheduled for Thursday, Nov. 1, in Federal Way, Wash., with registration available online. Chow, who will oversee the CFPB operations in 17 western states, was the deputy regional director with the federal Office of Thrift Supervision operating out of Daly City, Calif., prior to joining the CFPB.  Submitted by John Trull, Director of Regulatory Affairs, Northwest Credit Union Association

CUNA and Financial Trade Groups Meet with Federal Reserve Board on Debit Interchange

On Wednesday, representatives from CUNA and other financial trade associations met with Louise Roseman, Director of the Reserve Bank Operations and Payments Systems Division at the Federal Reserve Board (Board), to advocate that the debit interchange fee caps should include certain additional costs incurred by issuers, as detailed in a joint letter submitted to the Board this August.  In the joint letter, we asked the Board to consider including, under the debit interchange fee caps, international fraud losses in the calculation of the fraud loss ad valorem, as well as previously-excluded costs related to cardholder inquiries.  CUNA continues to have significant concerns that, under the Board’s debit interchange rules, market forces will ultimately drive down the debit interchange fees that the exemption for smaller institutions is intended to protect.  We support the inclusion of additional costs that debit card issuers currently incur to provide debit card programs, under the debit interchange fee caps. 

WOCCU Participates on Financial Stability Board Legal Identifier Project 

Since August, the World Council of Credit Unions (WOCCU) has been deeply involved in consultations regarding the Financial Stability Board’s (FSB) Legal Entity Identifier (LEI) project as a member of the FSB’s Private Sector Participation Group.  The LEI system will come into existence likely in March 2013 and will assign a unique number to every financial institution, including credit unions, and all other parties to “financial transactions” in the world.  The LEI number will ultimately be used to identify credit unions and other institutions in connection with payments, transfers of securities (e.g., bonds), derivatives contracts, and transfers of negotiable instruments such as loans and, possibly, cheques and other drafts.  For more information, please visit the LEI project website and its October 24 update.  CUNA continues to coordinate with WOCCU regarding developments on the LEI project. 

NCUA Issues Letter to Credit Unions on New Reporting Requirements for TDRs on the Call Report 

NCUA issued a letter to credit unions in advance of changes to the 5300 Call Report to replace existing reporting requirements on loan modifications with information on troubled debt restructurings (TDRs) specifically.  Revisions to the Call Report are necessary to implement requirements included in the Board’s May 2012 Final Rule on TDRs and loan-workout guidance.  The changes will be reflected in the December 31, 2012 5300 Call Report.

CUNA Chart of Current Rulemakings: Updated 10/26/12

Here is our updated chart on rulemakings. (Click Here)


As always, we appreciate the positive comments we continue to receive about this report and suggestions for items you would like us to cover are always welcome.  For any questions about this week’s report please feel free to contact Mary Dunn, Bill Hampel, or me.

Best regards,
Bill Cheney


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