NAFCU Compliance Blog

Equifax Breach Update - What NAFCU Is Doing

Written by Elizabeth M. Young LaBerge, Senior Regulatory Compliance Counsel

In the past few weeks, NAFCU has been focused on defending credit unions from the fallout of the Equifax breach specifically, and the cybersecurity risks posed by third parties generally. At this moment, the door is open to cybersecurity legislation that could have real positive impact for the credit union industry, and NAFCU is moving to seize on that opportunity. As legislation may be the best hope to protect credit unions from another breach like the one at Equifax, I'd encourage your credit union to engage with your Members of Congress to ensure they understand that credit unions must be protected in the future. Please visit our Grassroots Action Center for more information.

Equifax Botched It

Equifax was warned of the vulnerability which lead to the breach in December, 2016. This March, Equifax ignored a notification from the Department of Homeland Security, CERT to fix that vulnerability. In August, following the breach, Equifax established an insecure domain for its breach response site which was spoofed. In early October, Equifax's credit protection website was discovered to be hosting malware. The hits keep coming for Equifax, and whatever credibility Equifax might have still had after the breach, it is now completely gone. Equifax is trying to leave consumers, credit unions and other financial institutions to foot the bill for its mess. NAFCU is engaging on all fronts to make sure that doesn't happen.

The Regulators Are Quiet

NAFCU has been in touch with NCUA, but the agency lacks any real authority to take action on the Equifax breach or other third party cybersecurity issues. NAFCU has also reached out to the CFPB, and the Bureau continues to take the position that it would have needed additional authority over the credit reporting bureaus to have prevented the breach from occurring. The Bureau is currently investigating Equifax's use of a mandatory arbitration clause in connection with its breach response website.

The FTC is conducting its investigation into the Equifax breach and the response. NAFCU has encouraged the FTC to keep credit unions apprised of their findings, but we expect that investigation to continue for several years. No matter what that investigation finds, the FTC will not be able to prevent another breach like this from happening again unless Congress steps in.

The Hill Has Questions

The Equifax breach has Congress angry and looking for answers. On October 3, Equifax's former CEO, Rick Smith, testified before the House Energy and Commerce Committee, providing details for the first time about the internal failures at Equifax that lead to the breach, and accounting for the behavior of Equifax leadership in the days that followed. A few days later, the Senate Banking Committee and then the House Financial Services Committee both heard further testimony from Mr. Smith regarding the variety of failures in Equifax's response to and communication about the breach.

While both parties are actively engaged on this issue, it is worth noting the differing approaches of Republican and Democratic Members of Congress. Republican Members of Congress appear to be actively seeking the ways in which regulatory oversight failed with Equifax, and how these gaps can be fixed. Democratic Members of Congress have zeroed-in on how the Equifax breach will affect consumers, and what Equifax and Congress can do to try and make them whole.

While Equifax's current leadership has failed to show up for hearings so far, the credit union industry has come when called. On Wednesday, Debra Schwartz, NAFCU Board treasurer and President and CEO of Mission Federal Credit Union testified on behalf of NAFCU before the House Financial Services Committee about data security and what credit unions need from Congress. Ms. Schwartz explained the sufficiency of the Gramm-Leach-Bliley's existing Safeguard Rule pertaining to financial institutions, and pointed out that the Equifax breach was the failure of examination and oversight of the credit reporting bureaus, rather than a failure of the law itself. She emphasized that if there are not standards throughout the entire payments infrastructure, criminals will go to the weakest link, which is the merchants. She championed the industry and provided important, factual testimony that will aid Congress in drafting a bill that works and can pass. NAFCU will continue to work to ensure that credit unions' voices are heard in these Congressional hearings.

Legislation Is In the Works

There is a strong appetite on both sides of the aisle to pass legislation in response to the Equifax breach. So far, legislative proposals generally fall into one of three buckets: consumer protection proposals in response to the breach, proposals to correct or increase regulatory oversight over the credit reporting bureaus, and broader proposals regarding national standards for cybersecurity.

The PROTECT Act, recently introduced by Representative Patrick McHenry (R-N.C.), has garnered significant attention. This Act would have the FFIEC appoint a supervisory agency and examine the credit reporting bureaus for compliance with the GLBA's Safeguards Rule, correcting the "examination gap" that currently exists with the bureaus. This proposal also contains national requirements regarding the operation of credit freezes, something that is currently handled at the state law level. Of concern is a provision in the Act that seeks to phase social security numbers out of use by the bureaus as a personal identifier. Obviously this raises red flags as social security numbers are critical to properly identifying members, and NAFCU is currently raising these concerns to lawmakers.

While Congress's attention is focused on cybersecurity, NAFCU is pushing to ensure that credit unions can get the protection they need against third party breaches. There is real energy behind getting general data security legislation passed, and NAFCU is seeking to take advantage of that. As always, we are keeping a careful eye to ensuring that organizations subject to the Gramm-Leach-Bliley Act, like credit unions, do not end up being subject to stricter standards. But this may be our moment to get credit unions the protections they need from third party cybersecurity risk, and NAFCU is working to make sure we take as much advantage of the moment as we can.

Litigation Is on the Table

To date, multiple class action lawsuits have been filed against Equifax by financial institutions across the country. It is highly likely that all financial institution class actions suits will eventually be joined together. Filing or joining a lawsuit continues to be an available option which NAFCU closely considering. Only if NAFCU determines that litigation is viable and a worthwhile avenue for recovery for credit unions will we pursue that option.

NAFCU is continuing to engage everywhere we can to protect credit unions from the breach's continuing fall-out, and to demand Congress act so that this cannot happen again.

Regulatory Relief: Your chance to weigh in

Written by Brad Thaler, Vice President of Legislative Affairs

I know that the compliance community is well aware of the ever-increasing regulatory burden credit unions face in a post Dodd-Frank world.  Last week, NAFCU told the Senate Banking Committee about this burden and our ideas for regulatory relief when NAFCU’s Board Chairman and SRP FCU President/CEO Ed Templeton testified Thursday before the committee at one of two hearings examining “Regulatory Relief for Community Banks and Credit Unions.”  Last Tuesday, the Committee also heard from financial regulators, including NCUA.

Now the Senate Banking Committee wants to hear from you.  They have asked NAFCU to gather stories and letters from individual credit unions about the regulatory burdens you face and ideas for where and how your credit union needs relief.  It is with this in mind that I am asking for your input.

Are there particular statutes or regulations that are especially burdensome on your institution and your ability to serve your members?  Are there some that just seem out of date? How should they be changed?  What has the impact been on your institution?  Are there examples of regulatory cost/time estimates that your institution finds are off-kilter?  (You can view NAFCU’s Top Ten Regulations to Eliminate or Amend and our new Five-Point Plan for Credit Union Regulatory Relief if you need some ideas.)

If your credit union is interested in sharing your regulatory burden stories or regulatory relief ideas with Senate Banking Committee Chairman Richard Shelby, please reach out to me at [email protected], and I will walk you through the submission steps.

The Committee’s ultimate goal is to take your suggestions and craft a common-sense regulatory relief package, which they hope to bring to the Senate floor this spring.  The Committee hopes to get comments as soon as possible, so I ask that you try to get us any letters by Thursday, February 26^th.  Please reach out to me, directly with any questions ([email protected] or 703-842-2204).   

Staying on the topic of providing feedback on regulatory review, the hearings last week also had a lot of discussion about the EGRPRA process.  The Committee noted that EGRPRA provides a lot of important insight on areas that regulators need to act and can also give Congress reform ideas.  It is with this in mind that I also want to encourage everyone to submit your comments on NAFCU’s Regulatory Alert 15-EA-03 on NCUA’s second EGRPRA review. Comments are also due to NAFCU on February 26^th.  You can complete our Regulatory Survey, or reach out to Alicia Nealon, NAFCU’s Director of Regulatory Affairs, directly ([email protected], 703-842-2266) with your thoughts. 

Thanks in advance for your participation in this process.

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NAFCU Webcast. Regulation Z: Five Challenges and Their Solutions - Regulation Z of the Truth in Lending Act (TILA) may be the oldest federal consumer credit law, but it can still be challenging to heed. Make sure you’re not overlooking its fundamental principles with a NAFCU webcast that dives into TILA’s five core issues, and examines how best to address them.  This important knowledge is just as important as staying up-to-date on the Act’s latest changes.

 

The 12%: The Ballad of the 113th Congress

Written by Katie Marisic, VP of Political Affairs

With all the new regulations about to go in effect in the coming months we thought we’d give you a little break from the normal updates and let you sit back, relax and enjoy what Congress has to offer. But first here is a corgi doing an impression of Congress  trying to pass legislation.

It’s been week after the government shutdown ended and Washington, D.C. is quickly returning to its “normal state.”  Federal employees have returned to work, acrimonious congressional hearings   are being held and the panda cam is back in action.

Next week the budget conference committee tasked with finding a compromise on the Continuing Resolution and Extension of the Debt Ceiling will meet. There was a lot of talk going around that a compromise would involve major tax reform, but yesterday both Senate Majority Leader Harry Reid (D-NV) and House Budget Committee Chairman Paul Ryan (R-WI) appeared to rule out the idea of a grand bargain.

With an approval rating of 12%, and a record of passing legislation that has them on track to be the least effective Congress in American history, the idea to scale back the grandiose rhetoric and focus on something that is achievable seems like a pretty good plan. Here's that corgi again.

But just because tax reform might not be in this compromise doesn’t mean that the issue is going away. Both Sen. Max Baucus (D-MT) and Rep. Dave Camp (R-MI), chairmen of the committees that deal with tax reform have repeatedly expressed their desire to pass legislation this Congress. Sen. Baucus is retiring and Camp’s tenure as Chairman is term limited so both of them have significant interest in making something happen before 2015.

If Congress does a 180, and starts working together anything could happen. It’s important that we keep encouraging them to focus on legislation that is beneficial to credit unions. S. 635, the Privacy Notice Modernization Act of 2013, is one bill that we want to make sure stays on their radar. Similar legislation has already passed in the House and a presidential signature on this bill would be a boon to credit unions.

All of this is assuming they come to a compromise, if the conference committee can’t come to a bargain by December 15 be prepared for round two of shutdowns. But just because Congress might not be able to meet their deadlines doesn’t mean you can miss yours. Make sure your credit union is prepared for all the compliance deadlines by visiting the NAFCU Compliance Calendar.

Before you return to your regularly scheduled program here is one more video to get you through your day.

Have a great weekend!

The Mortgage Choice Act (H.R. 3211); Congress Must Address the Points & Fees Issue

Written by Jillian Pevo, NAFCU’s Director of Legislative Affairs

For over two weeks it felt like Groundhog Day here in Washington –each day it seemed like additional federal employees were furloughed, Congress did a whole bunch of arguing, and not a lot got done. Congressional staffers deemed “non-essential” were instructed to stay home, and the agendas of various committee chairmen temporarily fell by the wayside as negotiating relative to the government shutdown and national debt ceiling took center stage. 

It’s worth noting that credit unions really showed their true colors during this difficult time – numerous lawmakers took note of the special incentives and programs many of your credit unions offered to your members affected by the shutdown. We aren’t surprised, but our staff here at NAFCU can’t thank you enough for all you do. 

When the logjam in Congress finally broke last week, with an agreement on government funding until January 15 and on the debt ceiling through February 7, elected officials scrambled to fill the Congressional agenda with previously postponed hearings and a host of other activity related to the issues they care about most.  

One issue that seems to be percolating in both the House Financial Services and Senate Banking Committee’s is the CFPB’s qualified mortgage (QM) definition in satisfying “ability to repay” requirements under the Dodd-Frank Act. As currently defined, QMs cannot have points and fees in excess of 3 percent of the loan amount (for loans $100,000 or greater). This will make meeting the QM test problematic for lenders and non-QM loans would be less likely to be made or would only be available at higher rates due to heightened liability risks.

Representative Bill Huizenga (R-MI) has been out front on this issue and recently, in the spirit of compromise, introduced a scaled down version of a more board piece of legislation to modify the definition of “points and fees.”  The Mortgage Choice Act (H.R. 3211) would exclude title charges from the “points and fees” definition, and clarify that escrow charges should also be excluded. Representative Huizenga’s bill is bipartisan, and there is also a bipartisan Senate bill (S.949) that would also address this issue. 

With the ability-to-repay provisions set to take effect in January of 2014, time is of the essence for stakeholders to make their case to Congress. NAFCU’s government affairs team is committed to pursuing this issue in hopes of seeing changes before the effective date. As Congress came back into session yesterday, NAFCU brought H.R. 3211 to the attention of House Speaker Boehner and Minority Leader Nancy Pelosi. We are also working with other industry groups to help educate members of Congress about how burdensome the points and fees definition will be for lenders, and ultimately consumers. We recognize the importance of this issue to credit unions.  However, it should be noted, as the recent government funding fight so keenly demonstrated, getting almost anything passed in the current environment is an uphill battle.  Nonetheless, NAFCU will be here fighting for you.

As always, if you have questions about what’s happening in Congress, or additional insight that may be helpful to NAFCU’s lobbying team, please reach out to us. 

Congressional Caucus - NAFCU Issue Briefs; Annual Privacy Disclosures

Written by Steve Van Beek

Today is the start of NAFCU's Congressional Caucus in Washington D.C. Credit union leaders from throughout the country will be hearing from (and talking to) their representatives and key players from the Obama Administration and the regulatory agencies.

What will they be talking about?

• Credit Union Tax Exemption

• Regulatory Relief - NAFCU's Five-Point Plan

• Interchange Fees

• Housing Finance Reform

• Annual Privacy Disclosure Notices*

The links above are to NAFCU's Issue Briefs on these legislative issues. One suggestion is to pass these along to your credit union's senior managers as they are great summaries of the current issues being discussed on Capitol Hill. For additional legislative issues - be sure to check out NAFCU's Legislative page and monitor the NAFCU Today.

Bonus Idea: Include the Issue Briefs in your next "Board pack" and give a brief update at your credit union's next Board meeting. 

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*Privacy Notices. Just a quick note on the Annual Privacy Disclosure Notices. While H.R. 749 was passed by the House in March 2013, it still needs to pass the Senate and be signed by the President before it would take effect. 

In short, until the Senate and President act - credit unions need to continue sending their annual privacy disclosures to members.

Regulatory Relief; NAFCU's Congressional Caucus; August Compliance Monitor

Written by Michael Coleman, Regulatory Compliance Counsel

Programming Note: As Steve mentioned yesterday, for the month of August, we'll be blogging on Monday, Wednesday and Friday rather than our usual every business day.

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Regulatory Relief. We blog a lot about the regulatory burden faced by credit unions today (it even has its own category on our blog), and I have been known to describe the current regulatory environment as “The Reg-pocalypse.” Credit union professionals know that this is a serious issue facing the credit union industry. Just ask any compliance officer, they’ll probably just point to the phone book(s) sized set of recent final rules they are trying to wade through. That being said, it’s one thing for me to sit at my computer and shout into the vast expanse of the internet blogosphere about the issue, but the real question is: “What can we do about it?”

Which brings me to the issue of regulatory relief. My colleagues here at NAFCU tirelessly advocate on behalf of credit unions to provide much needed regulatory relief to the industry. On Wednesday July 31st NAFCU’s Vice President of Legislative Affairs Brad Thaler sent a letter to Speaker Boehner and Minority Leader Pelosi in support of the regulatory relief efforts found in the Regulations from the Executive in Need of Scrutiny (REINS) Act (H.R. 367), here is an excerpt:  

“The REINS Act would make an important step toward regulatory relief by requiring any executive branch regulation with an economic impact in excess of $100 million as scored by the Office of Management and Budget to come before Congress for an up-or-down vote before it could be enacted. NAFCU believes putting this legislative process into place could help ensure additional accountability from the Administration and Congress regardless of which political party is in the majority.

As Congress looks for ways to cut down on duplicative and over-burdensome federal regulation, we urge you to also support efforts to provide regulatory relief for credit unions such as legislation introduced by Representative Gary Miller—H.R. 2572, the Regulatory Relief for Credit Unions Act of 2013. This legislation reflects key provisions we shared with Congress on February 12th of this year as part of NAFCU’s five-point plan for credit union regulatory relief.”

As Brad points out, the REINS Act is definitely a step in the right direction. He also referenced NAFCU's Five-Point Plan for Regulatory Relief which calls on Congress to provide comprehensive broad-based regulatory relief for credit unions, and H.R. 2572 introduced by Representative Gary Miller (R-CA). For additional information on the Miller bill and NAFCU's Five-Point plan, make sure to check out NAFCU's Regulatory Relief webpage, and this blog post.

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NAFCU's Congressional Caucus. You might still be asking yourself: “OK, regulatory relief is a big deal, but what can my credit union do about it?” NAFCU’s 2013 Congressional Caucus is just around the corner - September 8-11 in Washington, D.C.  Caucus is the perfect time for your credit union to meet with your Senators and Representatives and let them know about the increasing regulatory burden on your credit union. Don’t miss this opportunity to make your credit union’s voice heard! Sign up today.

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August Compliance Monitor. The latest NAFCU Compliance Monitor is available for download (NAFCU login required). This month’s issue contains the following in depth articles:

• Small Creditor Portfolio Exemption for QMs Explained
• Lessons Learned from the CFPB’s Recent MILES Enforcement Action

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Have a great weekend everyone!  

Representative Miller Introduces H.R. 2572: Regulatory Relief for Credit Unions Act of 2013

Written by Steve Van Beek

On Friday, Representative Gary Miller (R-CA) introduced H.R. 2572 - the Regulatory Relief for Credit Unions Act of 2013. NAFCU's legislative and regulatory teams have worked extremely hard with Representative Miller's staff to introduce this bill and will continue to push for additional support in the House. 

The provisions in the Miller bill, as reflected in NAFCU’s five-point plan, would:

• allow NCUA to grant federal credit unions a waiver to follow a state rule instead of a federal one in certain situations;

• authorize NCUA to step in where appropriate to modify a CFPB rule affecting credit unions;

• establish a risk-based capital system for credit unions;

• require that NCUA and CFPB revisit cost/benefit analyses of rules after three years so they have a true sense of the compliance costs for credit unions;

• require NCUA to conduct a study of the Central Liquidity Facility and make legislative recommendations for its modernization;

• give credit unions better control over their investment decisions and portfolio risk; and

• provide credit unions parity with FDIC-insured institutions when it comes to deposit insurance coverage on Interest on Lawyers Trust Accounts (IOLTAs).

For additional information on the Miller bill and NAFCU's Five-Point plan, head to NAFCU's Regulatory Relief webpage.

And, be sure to view a special video from NAFCU's President and CEO Fred Becker:

If the video above does not work - click here to view.

Do You Support the Regulatory Accountability Act of 2013? NAFCU Does.

Written by Steve Van Beek

On Thursday, NAFCU joined 87 other trade associations in sending letters of support to Congress for the Regulatory Accountability Act of 2013 (H.R. 2122 and S. 1029). Here is a snippet from the House letter (identical language in the Senate letter):

"Our regulatory process has not been updated in more than six decades, and as a result we are seeing a rising number of massive, costly rules that breed uncertainty, drive up costs, and stifle hiring and investment. This legislation, which would modernize the 66-year old Administrative Procedure Act, would improve the process by which federal agencies promulgate regulations to improve accountability and the integrity of the rulemaking process.

Small and large businesses alike consistently cite growing regulatory burdens and the uncertainty that occurs when badly-written regulations must be corrected through years of litigation as the most significant obstacles to new hiring."

This isn't just a financial institutions issue - check out some of the other signatories of the letters:

• Aeronautical Repair Station Association
• Associated Wire Rope Fabricators
• Flexible Packaging Association
• Shipbuilders Council of America
• Window & Door Manufacturers Association

A pretty diverse crowd. 

What would the Regulatory Accountability Act of 2013 do? It would make substantial changes to the rulemaking process used by federal regulators - including these three improvements that I personally endorse (from H.R. 2122):

"(b) RULE MAKING CONSIDERATIONS - In a rule making, an agency shall make all preliminary and final factual determinations based on evidence and consider, in addition to other applicable considerations, the following:

....

(4) Whether existing rules have created or contributed to the problem the agency may address with a rule and whether those rules could be amended or rescinded to address the problem in whole or part."

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"(c) ADVANCE NOTICE OF PROPOSED RULE MAKING FOR MAJOR RULES, HIGH-IMPACT RULES, AND RULES INVOLVING NOVEL LEGAL OR POLICY ISSUES - In the case of a rule making for a major rule or high-impact rule or a rule that involves a novel legal or policy issue arising out of statutory mandates, not later than 90 days before a notice of proposed rule making is published in the Federal Register, an agency shall publish advance notice of proposed rule making in the Federal Register."

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"(k) RULE MAKING GUIDELINES - 

...

(2) The Administrator of the Office of Information and Regulatory Affairs shall also issue guidelines to promote coordination, simplification and harmonization of agency rules during the rule making process and otherwise. Such guidelines shall assure that each agency avoids regulations that are inconsistent or incompatible with, or duplicative of, its other regulations and those of other Federal agencies and drafts its regulations to be simple and easy to understand, with the goal of minimizing the potential for uncertainty and litigation arising from such uncertainty."

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To sum up - those three provisions would:

1. Require regulators to consider their existing rules when writing new regulations;
2. Issue an advanced notice of proposed rulemaking (ANPR) prior to proposing a major rule; and
3. Require regulators to avoid regulations that are inconsistent or incompatible with other regulations and draft regulations in simple and easy to understand language.

Again - NAFCU was happy to sign on to the letters. 

NAFCU Urges Regulatory Coordination; FSOC Annual Report

Written by Michael Coleman, Regulatory Compliance Counsel

There is no denying the fact that regulatory burden is a major issue faced by the credit union industry. Even so, I still sometimes feel like the boy who cried wolf when I am constantly talking about regulatory burden and compliance issues faced by credit unions. But then I remind myself that there actually are wolves out there, and they have really big teeth. As I mentioned in this blog post a while back, I tend to speak in quaint colloquialisms from time to time, and I have been known to make up a word or two as well. If you have ever spoken with me in person or on the phone, you might have heard me refer to the current regulatory environment as "The Reg-pocalypse."  

With this in mind, NAFCU is constantly advocating on behalf of our members to try and reduce regulatory burden and provide regulatory relief for credit unions. For example, NAFCU's Five-Point Plan for Regulatory Relief calls on Congress to provide comprehensive broad-based regulatory relief for credit unions. However, in addition to legislative measures,  there are other steps which can be taken to help provide regulatory relief to the credit union industry. 

As we mentioned in this blog post, the Financial Stability Oversight Council (FSOC) recently issued their 2013 Annual Report detailing the activities of the Council, significant market and regulatory developments, and potential emerging threats to the financial stability of the United States. However, notably absent is any discussion of regulatory burden on financial institutions. This is incredibly unfortunate as the FSOC has a statutory mandate from Dodd-Frank to facilitate coordination between federal regulators.

On May 20th, Fred Becker, NAFCU's President and CEO, sent a letter on the FSOC and regulatory coodination to Sen. Tim Johnson, Chairman of the Senate Committee on Banking, Housing and Urban Affairs, and Sen. Michael Crapo, ranking member of the Senate Committee on Banking, expounding the need for the FSOC to take seriously its duty to facilitate regulatory coordination, here is an excerpt: 

"As the tide of regulation rises, there has never been a more critical time for the FSOC, led by Secretary Lew, to facilitate regulatory coordination among its member regulators. This duty includes facilitating information sharing and coordination among the member agencies of domestic financial services policy development, rulemaking, examinations, reporting requirements and enforcement actions. As outlined in the attached letter to then Treasury Secretary Timothy Geithner in June of 2012, under the Dodd-Frank Act the FSOC is effectively charged with ameliorating weaknesses within the regulatory structure therein providing a safe and more stable system as a whole. NAFCU appreciates the committee’s focus on the activities of the FSOC and looks forwarding to learning more about the steps that have been taken to avoid duplicative and over burdensome regulation of our nation’s credit unions."

A similar letter was also sent on May 21st to Rep. Jeb Hensarling, the Chairman of the House Financial Services Committee, and Rep. Maxine Waters, the ranking member of the House Financial Services Committee. Here's hoping we see some relief! 

H.R. 1077, the Consumer Mortgage Choice Act; QM Points and Fees Caps - Part 3

Written by Michael Coleman, Regulatory Compliance Counsel

Last week we blogged about the CFPB’s Small entity compliance Guide for the Ability to Repay/Qualified Mortgage final rule, as well as some NAFCU resources on the CFPB’s final mortgage rules, specifically about the points and fees caps contained in the qualified mortgage final rule.

Today we’d like take a look at H.R. 1077, the Consumer Mortgage Choice Act, introduced by Representative Bill Huizenga on March 12, 2013. If you have ever talked with me on the phone (particularly about some kind of a violation/non-compliance with a regulation), you might have heard me utter one of my favorite sayings: “you can’t unscramble those eggs.” Well, we mere-mortal compliance officers might not be able to unscramble those eggs, but Congress sure can.

The final rule on ability to repay and qualified mortgages section 1026.43(e)(3) contains restrictions on points and fees for qualified mortgages. H.R. 1077 would amend the Truth in Lending Act (TILA) definition of “points and fees.”

On May 3rd, Dan Berger, NAFCU’s Executive Vice President of Government Affairs, sent a letter on H.R. 1077 to Rep. Jeb Hensarling, the Chairman of the House Financial Services Committee, and Rep. Maxine Waters, the ranking member of the House Financial Services Committee, here’s an excerpt:

“As currently defined, “points and fees” include, among other charges, fees paid to affiliated title companies, salaries paid to loan originators, amounts of insurance and taxes held in escrow, loan level price adjustments, and payments by lenders to correspondent banks, credit unions and mortgage brokers in wholesale transactions.  As a result of this troublesome definition, many affiliated loans, particularly those made to low- and moderate-income borrowers, would not qualify as Qualified Mortgages (QMs) and would be unlikely to be made or would only be available at higher rates due to heightened liability risks.  Consumers would lose the ability to choose to take advantage of the convenience and market efficiencies offered by one-stop shopping.

The Consumer Mortgage Choice Act would make important changes that would:

- Exclude title charges from “points and fees” definition. 

- Prevent double-counting of loan officer compensation.  

- Clarify that escrow charges should be excluded from any calculation of “points and fees.”

- Exclude loan level pricing adjustments (LLPAs).     

- Exclude lender-paid compensation to mortgage brokers. 

 Taken together, these changes would make important improvements to the definition of “points and fees” used to determine whether a loan meets the QM test.” 

 Contact your members of Congress. My colleague Katie Marisic – NAFCU’s Director of Political Affairs- wrote a great guest blog a while back about the importance of reaching out to your members of Congress on important issues that affect credit unions.  As Katie pointed out, legislative advocacy is an important means by which credit unions (and their members) can help stem the tide of regulatory burden. And every now and then, a bill is introduced that will do just that – help credit unions by directly reducing regulatory burden. Or as I like to say: “unscrambling those eggs.” Check out NAFCU's Legislative Resource Center, it has links to help you find your Representative, as well as other great resources such as NAFCU’s Grassroots Action Network. 

I don’t know about you, but I would much rather be spending my free time watching the Capitals playoffs than worrying about the points and fees calculations for qualified mortgages. 

Regulatory Relief: NAFCU Testimony on the Hill; Rep. Miller Announces Legislation. CFPB Issues ATR/QM Small Entity Compliance Guide.

Written by Michael Coleman, Regulatory Compliance Counsel

Yesterday, Bob Burrow, president and CEO of Bayer Heritage FCU in Proctor, W.Va., testified on behalf of NAFCU before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit at a hearing on regulatory relief for credit unions. Mr. Burrow’s testimony stressed the need to provide credit unions the regulatory relief outlined in NAFCU’s five-point plan for credit union regulatory relief. You can find Mr. Burrow’s testimony here. For more details, see this NAFCU Today story.   

Also, House Financial Services Committee Vice Chairman Gary Miller, R-Calif., announced during a the hearing that he will introduce a credit union relief bill that draws on several concepts presented in NAFCU’s five-point plan. The legislation is likely to include efforts to implement a risk-based capital system for credit unions and give the NCUA flexibility in critical areas such as the ability to grant parity to a federal credit union on a broader state rule. Take a look at this NAFCU Today story for some more details.

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ATR/QM Small Entity Compliance Guide. Yesterday, the CFPB issued a Small Entity Compliance Guide for the Ability to Repay/Qualified Mortgage final rule. As we mentioned in a blog post last week, the CFPB plans to issue more compliance guides (we hope) in the coming weeks. You can sign up to receive their announcements of the release of these materials on the CFPB’s regulations website (enter your email in the top right-hand corner). For now, you can also find the ATR/QM guide on the CFPB’s site for the ATR/QM rule. We will blog about the ATR/QM small entity compliance guide in more detail in future blog posts. 

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In January, I took a vacation with my family to Iceland. The main goal was to catch a glimpse of the Northern Lights, which can be difficult to see at times depending on the conditions (cloud cover, solar activity, etc.) Thankfully, there was one night on the trip with perfect conditions, and we were treated to a phenomenal display. Now I can check it off my bucket list! Below are a couple photos (which don't do it justice), enjoy! 

I'm the really blurry one on the left. 

By the Time It's a Regulation, It’s Too Late

Written by Katie Marisic, NAFCU’s Director of Political Affairs

Dodd-Frank, which created the CFPB, was passed without much deliberation (and without NAFCU’s support) and is responsible for many of the issues credit unions are dealing with today.  The CFPB has been up and running since July 2011, in that short time they have issued thousands of pages of regulation and credit union compliance officers across the country have been dealing with the aftermath.  Despite our best efforts, what we are seeing is that by the time it becomes regulation it is too late.  

Velociraptors became famous in the 1993 movie Jurassic Park because of their hunting stratagem.  By the time you saw the one standing right in front of you it was already too late, its unseen counterparts were swooping in to finish you off.  Which, when you think about it, is exactly like regulation issued by the CFPB, by the time you see it, no matter how terrible it is, it’s already too late to do anything about it, carnage ensues.  It’s velociregulation!

Velociregulation is something we want to avoid, but that doesn’t mean credit unions should fear Washington, D.C. With close to 95 million credit union members across the country we have the opportunity to make a real impact on legislation before it is passed.

Legislation, like the T-Rex, can be formidable and frightening but it isn’t unstoppable. A large, well-organized and active group of people can incapacitate, restrain and even defeat it before it gets going.  The best part is, if your group is big enough, each member of the group doesn’t have to do much work. What if all you had to do was pick up the phone or send an email, would you be more likely to get involved in the fight?

Legislation can be won, lost, delayed or altered by a robust grassroots and advocacy program. Legislative advocacy efforts are made stronger by the skills and expertise of its members.  As the director of political affairs, I want NAFCU’s grassroots efforts to be broad and diverse.  I need compliance experts to share their invaluable firsthand knowledge about the unnecessary burdens over-regulation is placing on credit unions.

A few short years ago the CFPB was a T-Rex, unbalanced with little arms, a small brain and poor eyesight.  Now it’s a herd of raptors, and they are breeding and learning.  You can help NAFCU make sure that similar legislation doesn’t pass in the future. Click here to go to NAFCU’s Grassroots Action Network today and write a letter to  your members of Congress.  Encourage them to support legislation such as H.R. 719, H.R. 749 and H.R.688, all bills that are portions of NAFCU’s Five Point Plan for Regulatory Relief.  Share your stories about regulatory burdens and how they are impacting your credit union. It will help NAFCU’s lobbyists in their legislative efforts, strengthen our advocacy and show Congress that we are serious about enacting real relief.

Remember, next time you are dealing with velociregulation ask yourself, wouldn’t you rather be fighting a T-Rex?

Hope you enjoyed the post, if you have any interest in learning more about NAFCU’s grassroots political advocacy efforts you can email me at [email protected].  Please come join the fight for regulatory relief at NAFCU’s 2013 Congressional Caucus from September 8-11, 2013 in Washington, D.C.  Click here to find out more!

You Know You're a Lobbyist When...

Written by Jillian Pevo, Senior Associate Director - Legislative Affairs

Some people gulp down a double-mocha-latte on their way out of the door each morning. Others need that time on the treadmill to feel good about the day ahead. I knew I had lived in Washington, D.C. for too long when the first thing I did each morning was check to see if the Congressional Record was posted.   

Aptly named, the Congressional Record is one stop shopping for all legislative business that occurred the day before. From new legislation and cosponsors to debate transcripts and floor speeches - it's all at your fingertips. 

When I worked on Capitol Hill for a Member of Congress, I read the Record to keep up with what other members of our state delegation were doing and looked to identify potential allies on our office's legislative priorities. In my role at NAFCU I'm doing much of the same - looking for activity on legislation impacting credit unions, checking to see what other issues our champions in Congress are working on, and reporting back to my colleagues on anything of note that will benefit our team's efforts in making the credit union voice heard.

While it's super-nerdy and mundane to most, the Congressional Record is a great tool to use if you want to drill down and get into the details of House or Senate happenings. Here's how it works:  

• Go to the Library of Congress “Thomas” landing page for the Congressional Record – Thomas was started in the mid-1990s to make legislative information freely available to the public.

• You will see some different search options – I use the “Latest Daily Digest” option which is an easy to read snapshot of the last legislative day’s activity.

• From there, everything is pretty self-explanatory. Sponsors, descriptions, and bill numbers for new pieces of legislation are included. The full text of new legislation is not usually immediately available but is generally posted within a few business days. The Hill can be very fast-paced and we pride ourselves on getting you important and up-to-date information as it is happening, so, if a bill isn’t up yet chances are we are already have it. Feel free to give us a call!

• Note, the Daily Digest links to the Government Printing Office’s PDF file of the actual Congressional Record. So if you see a topic of interest, you can click on the links provided to look at it in more detail.  

You also can do a generic search for every mention of credit unions on the floor of either chamber. Go back to the Congressional Record landing page, and type “credit union” under “Enter Search.” Keep all of the boxes checked, and select “yes” under “search results by date.” Voila!   

For additional information on tracking federal legislation, check out my related post on this subject from last Congress. 

These are the basics on what the system has to offer. I’m always happy to help you navigate these online tools or track down whatever information you are looking for. 

Thanks and happy Congressional Record searching! 

House Passes H.R. 749 - The Eliminate Privacy Notice Confusion Act

Note: If you are reading this post via the email delivery subscription option - you may have noticed a delay the past couple of days. We're aware of the issue but a solution isn't readily apparent. You can always find the daily blog post directly on the blog's website (just scroll down past the "Welcome Blog Post").

So, if you need your daily fix and haven't seen the email - be sure to check the blog's main website as the post is usually up there by 6 a.m.  Have a great day!

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Written by Steve Van Beek

One of the pieces of NAFCU's five point plan for regulatory relief is Operational Improvements for Credit Unions - including a specific push for elimination of unnecessary privacy notices. Yesterday, the House took an important step toward this goal by passing H.R. 749.

Now, you might be having déjà vu. Didn't the House pass a similar bill back in December?  They sure did - but since this is a new Congress, they needed to introduce and pass the bill again. And, now attention turns back to the Senate - which failed to pass similar legislation in 2012.

Below is a summary from our December 14th blog post that I've updated slightly with the information from yesterday's action.

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The Elimination Privacy Notice Confusion Act & What it Means to Your Credit Union

Summary.  The bill - H.R. 749 - was passed by the House on Tuesday and now awaits action in the Senate.

What will the bill do?  The bill would remove the annual privacy notice requirement for certain financial institutions.  

How do we find out if we would be one of these "certain" financial institutions?  Ah, please join me (again!!) as we wander down the rabbit hole called Regulatory & Legislative Complexity (the middle name is "&" for those keeping score at home).     

The Start.  The annual privacy notice requirement comes from Section 503 of Gramm-Leach-Bliley (15 USC 6803):"

"(a) Disclosure required

At the time of establishing a customer relationship with a consumer and not less than annually during the continuation of such relationship, a financial institution shall provide a clear and conspicuous disclosure to such consumer, in writing or in electronic form or other form permitted by the regulations prescribed under section 6804 of this title, of such financial institution’s policies and practices with respect to..."  (emphasis added)."

The Bill.  The bill would add subsection (f) to Section 503 of Gramm-Leach-Bliley:

‘‘(f) EXCEPTION TO ANNUAL NOTICE REQUIREMENT.—A financial institution that—

‘‘(1) provides nonpublic personal information only in accordance with the provisions of subsection (b)(2) or (e) of section 502 or regulations prescribed under section 504(b), and

‘(2) has not changed its policies and practices with regard to disclosing nonpublic personal information from the policies and practices that were disclosed in the most recent disclosure sent to consumers in accordance with this subsection, shall not be required to provide an annual disclosure under this subsection until such time as the financial institution fails to comply with any criteria described in paragraph (1) or (2)."

Ok - so there are two main prongs to obtaining this potential exception.  We'll take them in reverse order. 

Prong 2 - No Changes Since Your Last Privacy Policy.  This is the easier prong.  If you've changed your privacy policy, you'd need to send the annual notice so that members are aware of your new sharing practices.    

Prong 1 - Shares Information Only in Accordance with Exceptions.  This one is where things get a bit dicey.  I'll spoil the ending by letting you know that if this bill becomes law - the CFPB should be amending Regulation P and will have a great opportunity to provide clarity to everyone (credit unions, banks, consumers, etc).    

In order to satisfy Prong 1, credit unions need to share nonpublic personal information about their members "only in accordance with the provisions of subsection (b)(2) or (e) of section 502 or regulations prescribed under section 504(b)."  But, what does that mean?   

These two provisions discuss the situations where credit unions can share nonpublic personal information with nonaffiliates without having to provide the member an opt-out.  

Section 502(b)(2) - 15 USC 6802(b)(2).  This provision outlines the exception for service providers and joint marketing agreements.  It is implemented in 12 CFR 1016.13 of Regulation P.  

Section 502(e) - 15 USC 6802(e).  This provision contains the general exceptions to the opt-out requirements.  Credit unions can share information with nonaffiliated third parties in these situations - such as to service or process a transaction or at the member's request - without needing to provide the member an opportunity to opt-out.  These exceptions are outlined in 12 CFR 1016.14 & 12 CFR 1016.15 of Regulation P.   

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Confused?  The crux is that in order to satisfy Prong 1 your credit union would need to only share information with nonaffiliates in ways that do not trigger the requirement to provide members the right to opt-out.  Prong 2 is easier in that it will be met if you have had no changes to your privacy policy since your last mailing.  

Your Homework?  Check out whether your credit union's existing privacy policy requires you to provide members the right to opt-out because your credit union shares nonpublic personal information with nonaffiliated third parties.  

Outcome 1:  If you aren't currently required to provide the opt-out to members, this bill could provide some real regulatory relief as it could remove the requirement to send your privacy policy on an annual basis.

Outcome 2:  If you currently share with nonaffiliated third parties (outside of the exceptions discussed above) and are required to provide members the opt-out, check how many nonaffiliated third parties you share with.  How valuable are those relationships?  How does that compare with the regulatory cost (and printing costs and mailing costs) of sending the annual privacy notice?  

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Reminder:  Keep in mind that this bill still needs to work its way through the Senate.  Additionally, the CFPB would need to amend Regulation P to implement these changes and provide clarity. And, as we discussed in yesterday's blog post - it isn't always a fast process. 

NAFCU's Five-Point Plan for Credit Union Regulatory Relief

Written by Steve Van Beek

We mentioned last week, NAFCU's letter to Congressional leaders calling for regulatory relief for credit unions.

Below, I'll outline the five-point plan and why regulatory relief is needed (nevermind - no need to preach to the choir!).

I did want to share this paragraph which does a great job of explaining the issue to Congress:

"Our nation's credit unions are struggling under an ever-increasing regulatory burden that must be immediately addressed.  A survey of NAFCU members late last year found that 94% have seen their regulatory burden increase since the passage of the Dodd-Frank Act in July 2010.  The regulatory onslaught continues to compound as credit unions now have over 5,000 pages of rules from the Consumer Financial Protection Bureau (CFPB) that they must understand, interpret, and ultimately comply with - despite the fact that Congress has widely acknowledged that credit unions were not the cause of the financial crisis.  Credit unions, many of which have very small compliance departments, must comply with the same rules and regulations as our nation's largest financial institutions that employ armies of lawyers.  The impact of the ever-increasing regulatory burden is even more sobering, as the number of credit unions continues to decline.  There are nearly 700 fewer credit unions today than there were before the passage of the Dodd-Frank Act."

Read that last line again:  There are nearly 700 fewer credit unions today than there were before the passage of the Dodd-Frank Act.  

That is why NAFCU is pushing so hard for regulatory relief.

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Five-Point Plan. NAFCU's five-point plan for credit union regulatory relief covers these five major issues (we'll discuss each in more detail in later blog posts):

• Administrative Improvements for the Powers of the NCUA

• Capital Reforms for Credit Unions

• Structural Improvements for Credit Unions

• Operational Improvements for Credit Unions

• 21st Century Data Security Standards

You can find the full letter and details here.  As indicated, we'll expand on each point in future blog posts.  

ATM Fee Disclosure Bill Signed; HMDA Reporting Threshold

Written by Michael Coleman, Regulatory Compliance Counsel

ATM Fee Disclosure Bill. On Thursday, December 20^th, 2012, President Obama signed the ATM Fee Disclosure bill (H.R. 4367) into law. We previously blogged about the impact this law has for credit unions, including the reduction of litigation risk, state law impacts, removal of the physical signs, and updates to Regulation E.

Now that the bill has been signed into law, the federal requirement for posting a physical notice on the ATM itself has been removed. Therefore, the credit union’s litigation and compliance risk going forward was reduced effective December 20, 2012.  This will allow credit unions to reduce the time and effort and costs spent tracking, photographing, documenting and auditing the notices on your ATMs.

State Law. As noted before, although the federal requirement for the physical notices has been eliminated, there still may be state laws which require a physical notice on ATMs. Two states that we are aware of that have such laws are New York (NY Gen Bus § 399-y) and Nevada (Nev. Rev. Stat. Ann. § 660.052). You might want to check your own state’s laws and perhaps consult your local counsel with regards to any state law requirements that might affect your credit union. If you find applicable state law citations, please feel free to let us know.  

Removal of Notices. While the notices are no longer required on the actual ATMs, there is really no harm in leaving them there, and no reason to immediately remove the existing notices from the machines. The extra notice provided by the sign is still a service to member and non-member ATM users, and as mentioned above, there may be state law requirements for on machine disclosures.

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2013 HMDA Asset Threshold. On December 28, 2012 the CFPB announced  the 2013 HMDA asset threshold, the final rule was published in the Federal Register on December 31, 2012. Institutions with assets of $42 million or less as of December 31, 2012, are exempt from HMDA reporting in 2013. The CFPB was a bit more timely with the publication of the threshold this year (they announced the 2012 threshold on February 15, 2012), let’s hope the trend continues.

HMDA Data Entry Software.  The free FFIEC HMDA Data Entry Software, version 2013 for calendar year 2013 data due March 3, 2014 is now available for download.

NCUA HMDA Webinar. NCUA will host a free webinar on January 24, 2013 at 2pm EST entitled “HMDA: Accuracy and Timeliness.” During the webinar experts from NCUA and the Federal Reserve Board will:

• address common errors identified in HMDA LAR data and submissions;
• provide tips for preparing and submitting accurate and timely HMDA LARs; and
• discuss financial institution management responsibilities in the HMDA process.

You can register for the webinar here. See NCUA’s press release for more details.

2012 HDMA Data. Reminder: For those credit unions over the 2012 threshold, your HDMA data for calendar year 2012 must be submitted by March 1, 2013.

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Redskins, Again. Last week was the end of the NFL’s regular season, and the Redskins came up big time defeating Dallas to win the NFC East for the first time since 1999 and secure their first playoff berth since 2007. Needless to say, this weekend’s playoff game against Seattle has this Skins fan excited!

  

ATM Fee Disclosure & CFPB Privilege Bills Pass Senate; NCUA Webinar; Member Call-In

Written by Steve Van Beek

Yesterday, we gave a roundup of various issues On the Hill.  Last night, the Senate passed both the ATM Fee Disclosure bill as well as the CFPB Privilege bill.  These will both move along to President Obama's desk for his signature.  You can find additional details in the NAFCU Today.  The NAFCU Today also has the latest on the TAB/NIBTA bill which would extend the unlimited share insurance on noninterest-bearing transaction accounts.  

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NCUA Webinar.  NCUA recently announced a free webinar on Mergers this Friday.  The webinar will address the following questions:

• Why do mergers happen?
• Should merger scenarios be a part of strategic planning?
• Who is responsible for protecting the interests of members during a merger?
• How to maintain viability and avoid administrative mergers?
• How to find the ideal merger partner?
• What is the merger process?

Registration is now available.  The webinar is slated for 2:00 p.m. EST on Friday, December 14th.    

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NCUA Small Credit Union Website.  NCUA also announced new features and a new design for their Office of Small Credit Union Initiatives (OSCUI) website.  The new website is here.    

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NAFCU Member Call-In.  If you missed the live call-in last Thursday, you can still listen to the audio version here (NAFCU member log-in required).  The total call is just under 43 minutes.  If you don't have 43 minutes, you can listen to the compliance discussion from the 26:00 mark until the 35:30 mark.  

On the Hill; NAFCU Credit Union Trends Report; GPS Fixes

Written by Steve Van Beek

There has been a flurry of activity related to the Senate's action or inaction on a number of bills that would impact credit unions.  I'll give a brief update of a couple of those that impact compliance.

• ATM Fix Bill.  This bill would remove the requirement for posting the ATM fee disclosure on the ATM itself.  It looks like this one is getting closer to being passed by the Senate.  For more on the underlying requirements, check out this April blog post (the House version was passed in July).

• CFPB Privilege Bill.  This bill would ensure that information passed by financial institutions to the CFPB during an examination (or other event - such as a CID) remain confidential and were not available to third-parties.  Other regulators - including NCUA - are already covered by this type of law.  However, the CFPB was not added to the list of regulators during Dodd-Frank.  Perhaps more evidence that Dodd-Frank wasn't fully considered?  Someone get a crane so that we can reach the top of that mountain of evidence.  

• TAG/NIBTA - Unlimited Share Insurance.  This issue is still being discussed.  We blogged on this on Friday and it is still a wait and see type situation.  Your credit union will need to take action no matter how this turns out - so be sure you follow this one.  

• Annual Privacy Notices.  There is also a bill that would remove the requirement to send annual privacy policies to members if:  (1) you do not share nonpublic personal information with nonaffiliates; and (2) your privacy policy has not change since your last mailing.  We'll have a more detailed blog post on this issue in the future, so stay tuned.

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Credit Union Trends Report.  NAFCU has a new members-only report from our Research division that you might want to pass along to some of your colleagues.  NAFCU's Credit Union Trends Report is a quarterly summary of the latest trends among federal credit unions. The report is designed as a benchmarking tool to help credit unions compare themselves to their peers and remain competitive in the marketplace.

The report breaks the numbers down by Region as well as Asset Size.  You can take a look here.  

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GPS Fixes.  Yesterday, we sent an email to users of the 2012 GPS so that they could download a new PDF with the fixed links.  If you didn't receive your email (which went to those bought the 2012 GPS or attended NAFCU's 2012 Regulatory Compliance School) or have other concerns, please send me an email.  

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Heads-Up:  We'll be offering a "Buy the 2012, Get the 2013 Free" promotion for the NAFCU GPS at the beginning of 2013.  If you've been looking into buying the GPS - that would be the perfect time as you'd get immediate access to the 2012 GPS and you'd also receive the Updated 2013 when it is available (mid-March).  

Additionally, the 2013 GPS will be given to all attendees at NAFCU's 2013 Regulatory Compliance School.  

Reminder: All of NAFCU's events (including webcasts) are open to everyone!  You do not have to be a NAFCU member credit union to attend.  In fact, you don't even need to work at a credit union.  Everyone is welcome.  

Overdraft Programs Under Attack; Recap of Reg Burden Hearing

Written by Steve Van Beek

As if the CFPB's Inquiry into Overdrafts wasn't enough, there are continued pushes by both consumer groups and lawmakers to drastically change overdraft protection programs.  Oh, and the New York Times stepped in as well to write an op-ed.   

Congress.  This seems like the Credit CARD Act all over again.  Remember how the Federal Reserve was working on amending and changing the credit card disclosures and rules but Congress forced the Credit CARD Act through anyway?  You know, the Credit CARD Act that is still being clarified, tweaked and amended because it was so poorly written.     

Well, even as the CFPB conducts its "inquiry" into Overdraft Protection (comment period extended to June 29th) - Congress is at it again.  

Overdraft Protection Act.  Representative Carolyn Maloney (and 46 co-sponsors) announced she would introduce legislation that would:

• Extend the opt-in requirement to paper checks, ACHs and recurring debit transactions;
• Define overdraft fees as finance charges for Truth in Lending Act disclosures (Ed: Huh??);
• Prohibit the ordering of transactions to maximize overdrafts;
• Require that fees be "reasonable and proportional" to the amount of the overdraft;
• Cap the number of fees at one per month and six per year;
• Add new disclosures prior to opt-in and whenever an overdraft fee is charged; and
• Require the CFPB to study overdraft fees on prepaid debit cards.

I guess when they say they want to "Stop Overdraft Protection" they are serious.  This bill (we haven't seen the full text yet) would pretty much do just that.  I can't imagine too many institutions continuing to provide this service if a bill along these lines would actually pass.  

But, I wonder if Congress is worried that if they prohibited overdraft protection it would force consumers to actually keep track of their spending and take some responsibility.  Now, that would be draconian.  

Consumer Groups.  If you haven't seen the recent Pew Study on Overdrafts, it is worth a read.  Also be sure to pass around your credit union.  This is what is being handed out to the CFPB and Congress in pushes to change the current overdraft rules.

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On the Hill.  The NAFCU Today has a great recap of yesterday's hearing on Rising Regulatory Compliance Costs.  

Guidance on Interest Rate Risk Requirements; Hearing on Regulatory Burden

Written by Steve Van Beek

Apologies for the later than usual posting today.  We had some unexpected technical issues.  

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Yesterday, NCUA issued Letter to Credit Unions 12-CU-05 which provides an overview of their Interest Rate Risk regulation (12 CFR 741.3(b)(5)).  The requirements are effective September 30, 2012.

The Letter to Credit Unions addresses frequently asked questions since the rule was finalized in January.  The Letter also includes the Examination Questionnaire that has been provided to NCUA examiners.    

Below is the first FAQ:

"Is your credit union subject to the new requirements?

You are subject to the requirements of the final rule if:

• Your credit union’s assets exceed $50 million, as shown by your most recent Call Report filing; or
• Your credit union’s assets are equal to or greater than $10 million but do not exceed $50 million and the sum of your first mortgage loans held and investments with maturities exceeding five years is equal to or greater than 100% of your net worth at quarter end.

Otherwise, you are not subject to the rule requirements. We are mindful of the need to avoid unjustified regulatory burden. We recognize past efforts to develop sound IRR policy and believe many FICUs already meet the rule requirements.

To promote transparency and facilitate implementation for FICUs with higher IRR exposure, we included comprehensive guidance on developing an IRR policy and an effective IRR management program in an appendix to the rule. This guidance describes widely accepted sound practices in IRR management and prior supervisory guidance such as the FFIEC Advisory on Interest Rate Risk Management discussed in NCUA Letter to Credit Unions 10-CU-06 (May 2010)."

NAFCU Webcast.  We have a May 24th webcast which will feature NCUA speakers taking A Detailed Look at NCUA's Interest Rate Risk Rule.  You'll have an opportunity to ask your own questions during the webcast and hear directly from NCUA.  Save $100 by signing up by May 17th.  

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Testimony on the Hill.  This morning Ed Templeton, CEO of SRP FCU and NAFCU Board Treasurer, testified during the House Financial Services Committee hearing "Rising Regulatory Compliance Costs and Their Impact on Small Financial Institutions."

You can read more about today's hearing in the NAFCU Today.  Mr. Templeton's full written testimony can be found here.  I have a feeling quite a few blog readers will find themselves nodding their heads in agreement while reading the testimony.