CUNA Regulatory Advocacy Report

CUNA Regulatory Advocacy Report: December 7, 2012

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

  • New CUNA Examination Survey
  • NCUA Final Rule on Alternatives to the Use of Credit Ratings
  • CUNA Urges FHFA To Ensure Credit Unions Have Access to the Secondary Mortgage Market
  • CFPB Update on Fair Lending
  • CUNA Attends Financial Services Sector Coordinating Council Meeting
  • FinCEN Summaries of Public Roundtables on the Customer Due Diligence Proposal
  • Reminder that Federal Benefit Payments are Transitioning from Paper to Electronic Only
  • NCUA State-By-State Quarterly Financial Report Shows Loan Growth
  • CUNA Chart of Current Rulemakings: Current as of 12/7/2012

New CUNA Examination Survey

CUNA has developed a new survey to allow credit unions to provide CUNA and the state leagues with feedback on their most recent examination by NCUA and/or their state regulator.  The survey was emailed to all CUNA/league affiliated credit unions, except those in NCUA’s Region 2, on Thursday.  Credit unions in Region 2 have already participated in a similar survey.  It seeks input on issues such as length of on-site exam, level of the credit union’s satisfaction with the exam and results, and any problem areas identified by the examiner.

CUNA and the leagues are urging credit unions to complete the survey. The information collected through the survey will be used by CUNA and the leagues to ensure our advocacy efforts on exam-related issues are properly focused.  All information will be kept anonymous, and we will release only summary results.

You can contact CUNA’s Market Research staff with any questions regarding the survey.

NCUA Final Rule on Alternatives to the Use of Credit Ratings

As noted in our summary of yesterday’s NCUA Board meeting, the Board approved a final rule on alternatives to credit ratings to assess creditworthiness that will apply to federal natural person and corporate credit unions, effective 180 days after publication in the Federal Register; this rule change was required under the Dodd-Frank Act.  To evaluate the creditworthiness of a security, a credit union may consider, among the factors NCUA specified in the final rule, the use of internal or external credit risk assessments (such as those developed by a credit rating agency), to the extent appropriate.  However, credit unions should not rely exclusively on external credit risk assessments.  We have received a number of questions on this rule, and will continue to urge NCUA to provide greater clarity on the factors regarding creditworthiness in their upcoming supervisory guidance before the effective date of the final rule.  We will be providing a regulatory Final Rule Analysis shortly. 

CUNA Urges FHFA to Ensure Credit Unions Have Access to the Secondary Mortgage Market

On Monday, we filed a comment letter with the Federal Housing Finance Agency (FHFA) regarding an agency white paper entitled “Building a New Infrastructure for the Secondary Mortgage Market.”  As the FHFA moves forward with completing its design of a new infrastructure for the secondary mortgage market, we urged the agency to take steps to ensure that the impact of a new infrastructure on small lenders such as credit unions is positive for them and their members.  As noted in our letter, it is imperative that credit unions continue to maintain access to the secondary mortgage market.

Additionally, we urged the FHFA to allow issuers and primary servicers to access the platform directly through any new infrastructure that may be developed.  Inputting data directly, rather than having to pass such information along to primary servicers, would be beneficial for smaller financial institutions.

In our letter, we also called upon the agency to approach the definitions within any new infrastructure very carefully.  Depending on how certain terms are defined within either the infrastructure, the platform, or a standardized Pooling and Servicing Agreement (PSA) could have far-reaching implications for small lenders such as credit unions.

CFPB Update on Fair Lending

The Consumer Financial Protection Bureau (CFPB) this week posted an update on its blog regarding fair lending.  Under the Dodd-Frank Act, the agency should promote “fair, equitable, and nondiscriminatory access to credit.”  Yesterday, the agency submitted a report to Congress on the agency’s ongoing efforts and initiatives on fair lending.  CUNA is reviewing the report and will summarize this in our next Regulatory Advocacy Report. Also, the CFPB and the Department of Justice signed an agreement yesterday to increase coordination on fair lending enforcement and to avoid duplication of their respective federal law enforcement efforts.  The CFPB is currently in the process of updating the rules that implement the Equal Credit Opportunity Act and the Home Mortgage Disclosure Act.  CUNA and our Consumer Protection Subcommittee continue to work with the CFPB on consumer protection issues, including fair lending.  We continue to emphasize that the agency should minimize regulatory burdens on credit unions and also coordinate with NCUA and other regulators.

Financial Services Sector Coordinating Council Discusses Cyber-Security

This week, CUNA staff attended the Financial Services Sector Coordinating Council (FSSCC) all-day meeting to discuss coordination efforts between federal government entities and the financial services sector on critical infrastructure, cybersecurity, and crisis management.  Senior staff from the Department of Homeland Security, Treasury, and other government entities discussed current critical infrastructure initiatives and their ongoing work with the FSSCC and the financial sector.  The FSSCC also reviewed the financial sector’s responses to, and information-sharing efforts during, Hurricane Sandy.  In addition, the meeting focused on FSSCC Committee projects and initiatives to improve sector coordination.  We continue to participate on the FSSCC Policy Committee with the financial industry on critical infrastructure issues, including with cybersecurity developments and the potential, upcoming Executive Order on cybersecurity.

FinCEN Summaries of Public Roundtables on the Customer Due Diligence Proposal

The Financial Crimes Enforcement Network (FinCEN) has released summaries of its public roundtable meetings held in Los Angeles, New York City, and Chicago regarding the agency’s advance notice of proposed rulemaking (ANPR) on customer due diligence (CDD) requirements that would apply to financial institutions, including credit unions.  CUNA continues to monitor developments on this rule and express concerns that credit unions would face significant compliance challenges and costs if FinCEN proceeds with this ANPR, especially with the potential expansion of the “beneficial ownership” requirements.  We continue to work to minimize BSA regulatory and compliance burdens on credit unions.

Reminder that Federal Benefit Payments are Transitioning From Paper to Electronic Only

Federal benefit payments (e.g., payments from the Social Security Administration and Veterans Affairs) will transition entirely from paper to electronic form as of March 1, 2013.  Federal benefit payments will be delivered electronically to recipients either by direct deposit via ACH or transfer to a Direct Express Debit MasterCard card, which is administered by Comerica Bank.

With an increase in direct deposit of federal benefit payments, it is important to keep in mind the 2011 interagency rule that places restrictions on the garnishment of certain federal benefit payments.  The rule applies in instances where a bank or credit union receives a garnishment order.  Click here for CUNA’s Final Rule Analysis of the interagency garnishment rule.

Treasury’s Go Direct campaign is a good resource for information on the transition to all-electronic payments.  The Partners section of includes additional information and free materials, including a checklist of partner activities.

NCUA State-By-State Quarterly Financial Report Shows Loan Growth

NCUA has issued its “Quarterly U.S. Map Review” report that examined key financial indicators on a state-by-state basis for federally-insured credit unions.  The report indicated that outstanding loan balances have increased by 4.3 percent for the year ending in the third quarter of 2012, which reflects the continuing economic recovery and growing consumer confidence.  In particular, loan growth was strong in states such as New York, Iowa, Tennessee, North Dakota, and New Hampshire.  Only three states experienced declines in credit union lending over the last twelve months.


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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