Credit Union Better Choice Presented At U.S. Treasury Meeting
The Association’s Credit Union Better Choice program, a short-term loan alternative to costly payday loans, was discussed at Wednesday’s Community Financial Access Pilot Partner Meeting, sponsored by the U.S. Department of the Treasury in Washington, D.C.
During a session on Mainstream Financial Products, Mike Wishnow, Association SVP, Communications & Marketing, presented an overview of the Credit Union Better Choice program.
“The Better Choice program was extremely well received by those in attendance from throughout the country,” said Wishnow. “Several participants noted that it could be replicated.”
U.S. Treasury representatives participating in the program opening included: Neal Wolin, Deputy Secretary of the Treasury; Michael Barr, Assistant Secretary for Financial Institutions; and Michelle Greene, Deputy Assistant Secretary for Financial Education and Access.
Waugh's Bank Robbery Legislation Signed Into Law
Governor Ed Rendell signed legislation that establishes robbery of a financial institution as a second degree felony regardless of the method used to commit the robbery. Senator Mike Waugh (R-York) has sponsored the legislation each session since 2005. The Senator said bank robbers would often make threats verbally or with notes under the assumption their crime would be considered less severe without a weapon. He said the new legislation’s goal is to deter bank robberies.
Many credit unions throughout the Commonwealth have experienced an increase in robberies.
“Bank crime lists Pennsylvania as third behind California and Texas in the number of bank robbery occurrences,” said Christina Mihalik, VP, Governmental Affairs. “Increasing state penalties for this crime will work to make financial institutions a safer place for customers and employees and their communities. We applaud the General Assembly and Governor’s action on this piece of legislation as it will provide a much stronger and needed deterrent.”
Prepare For New April 1 Escrow Rules
It’s no April Fool’s joke that new escrow requirements for higher-priced mortgage loans will take affect April 1 and have some lenders and data processors perplexed with compliance issues.
The Association will hold a free conference call on Wednesday, March 24, to share compliance information and discuss operational solutions.
The one-hour call begins at 11:00 a.m. and will include Association staff Rick Wargo and Laurie Kennedy, along with Jeff Balestrini of Service 1st FCU, and Ron Celaschi of Clearview FCU.
Member credit unions may join the call by registering at registrations@pcua.coop. The call coordinates will be provided when registration is received.
Association Provides InfoSight, PolicyPro Training To Delaware Credit Unions
The Association is helping Delaware credit unions become familiar with the online InfoSight and CU PolicyPro programs. The Delaware Credit Union League has begun offering the programs to its member credit unions as a member benefit.
Elaine Royer, Association Compliance & Operations Officer, traveled to Delaware this week and presented three hands-on trainings for both programs for 17 credit unions and 24 individuals in the DEXSTA FCU office and the Del Tech, Dover campus, on these products.
As part of a partnership with Delaware, Royer will serve as the CU PolicyPro contact for its credit unions.
Wal-Mart Plans Expansion Of Low-Income Money Services
The Wall Street Journal reports that Wal-Mart announced Monday that it plans for more of its stores to offer bank-like services for the company’s lower-income customers.
It plans to have as many as 1,500 Money Centers, or financial services operations that can cash checks, pay bills, and fill out tax forms, among other things. Money centers have generally catered to customers who do not have banks. Wal-Mart cannot lend money or guarantee deposits.
InfoSight Weekly Update
The latest issue of InfoSight eNewsletter, dated 3/19/10, is now available. Log on to www.pcua.coop and click on the “Compliance” section to reach InfoSight and check out the latest compliance news. Here are some highlights for this week’s update:
Customer/Member Identification Program
Section 326 of the USA Patriot Act sets minimum standards for financial institutions, including credit unions, for the identification and verification of the identity of any customer/member who opens an account. The written customer/member identification program (CIP) must be a part of the credit union’s anti-money laundering program; must be approved by the board; and should be tailored to the credit union’s size, location, and type of business. Customers/members must be provided notice that the credit union is verifying their identity and why.
FTC Requests Comment on Mortgage Relief Rule Changes
Recently the Federal Trade Commission issued for public comment proposed rules that would change its current rules for for-profit companies that provide mortgage assistance relief services. The proposed rule, which was published in the Federal Register, would prohibit mortgage assistance providers from "making false or misleading claims" and impose new recordkeeping, disclosure, and compliance requirements. The proposed rule also would prevent the providers from collecting advance fees for their services.
April 14 is Comment Due Date for Fed CARD Act Proposal
The Federal Reserve Board’s recently issued proposal that would implement provisions of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (CARD Act), effective August 22, was published in the Federal Register on March 15.
The most recent proposal, which follows two earlier CARD Act proposals that are already effective, will prevent card issuers from charging inactivity fees, account closure fees, or multiple penalty fees based on a single violation. Card issuers will be required to inform consumers of the reasons behind an increased interest rate and must review any rate increases that have been made since the start of 2009. These rate increases will have to be reviewed every six months and, if applicable, must be reduced.
Compliance: Answers on Reg CC Notification, Check-holding Issues
CUNA has advised credit unions that they may provide a change notice in their newsletter if their current disclosures under Regulation CC are no longer accurate due to the recent elimination of nonlocal checks. However, in this month’s Compliance Challenge, CUNA warns that that very newsletter may be released after the Reg CC compliance date of March 29. In that case, credit unions must determine the cost benefit of producing a separate mailing. Another option is to simply wait until after the compliance date to inform members. No matter what action a credit union takes, its employees should ensure that their new account disclosures are updated, and post information about the changes in their funds availability policies online.
Photocopying Military ID: Clarification
Q. In last week's InfoSight eNEWSLETTER, there was a Q&A regarding photocopying military ID. We have a military FOM, and some of our members come in and tell us that we cannot copy their military ID. Could you please provide us with some clarification on this?
A. Section 701 of Title 18, of the United States Code states that a military identification card can only be copied for authorized purposes. Paragraph 6.1.7 of DoC1 1000.13, provides examples of authorized purposes. These purposes include facilitating medical care processing, check cashing, etc. Copying a military ID to otherwise prove military status or for identification purposes is not directly addressed.
More recent documentation released by the Department of Defense (DoD), since the guidance that was provided in last week’s newsletter, reiterates that copying military ID for check cashing purposes is a permitted practice, among others. One of the financial services that a credit union provides its accountholders is check cashing.
When it comes to maintaining a photocopy of the ID, a credit union must make a business decision as to whether or not photocopying a military ID for their Customer Identification Program (CIP) is a permissible practice. If unsure, a credit union could simply consider changing its policy to state that it will only collect the information on a military ID, but will not photocopy it. Photocopying identification is not a requirement of the CIP—the CIP only requires documentation of identification used. If your credit union prefers to photocopy the ID, it would be prudent to contact your credit union's legal counsel for their legal opinion.
April 1 Sees New HOEPA Escrow Rules
New escrow requirements related to recent Federal Reserve amendments to Regulation Z will become effective on April 1 for site-built homes and October 1 for manufactured homes. The amendments, which were issued in 2008, establish new protections for consumers from unfair or deceptive home mortgage lending and advertising practices and were issued under the authority provided by the Home Ownership Equity Protection Act (HOEPA).
Compliance Calendar
April 1
Regulation Z - Escrow Requirement for "Higher Priced" Mortgages - Effective Date
June 1
Regulation GG - Internet Gambling Funding Prohibition - Effective Date
June 18
ACH Risk Management and Assessment Rule - Effective Date
ACH Direct Access Registration Rule - Effective Date
10 Places Not To Use Debit Card
Creditcards.com has posted a list of 10 places to avoid using a debit card for payment. Susan Tiffany, CUNA’s Director of Consumer Periodicals, provided additional advice for the article that supports reasons to not use debit cards for these purchases:
Online
For big-ticket items
When a deposit is required
At restaurants
If you're a new customer
When you buy now, take delivery later
For recurring payments
For future travel
At gas stations and hotels
When the ATM looks "off"
“You don’t use a debit card online,” said Tiffany. Since the debit card links directly to a checking account, “you have potential vulnerability there.” She also advised that restaurants are one of the few places where you have to let cards leave your sight when you use them. Avoiding this situation isn’t workable. The “conventional advice of 'don't let the card out of your sight' -- that's just not practical,” says Tiffany.
Read article
Newsmakers
For the fifth consecutive year, Diamond Credit Union sponsored The Pottstown School District’s Reading Olympics. John Faust, President/CEO of Diamond Credit Union, and Chip, Diamond’s mascot, were on hand March 5 to share in the excitement as 16 teams competed at the Franklin Elementary School, which hosted the event. The credit union provided team T-shirts and financial support to help purchase books and transportation to events. In preparation for the competition, students collaborated with their teammates to read 40 to 50 specially-selected books. Students then competed in a rapid recall question and answer session about the books they read.
National News
CUNA to keep up drive as jobs packages develop
WASHINGTON (3/18/10)—The U.S. Senate yesterday passed a $17.6 billion jobs package, a bill that tackles tax provisions and which is expected to be one in a series of measures to create employment opportunities.
The focus on jobs creation has been pivotal in gaining more support on Capitol Hill for legislation that would increase the credit union member business lending (MBL) cap to 25% of assets, up from the current 12.25% limit. The Credit Union National Association (CUNA) estimates that the increase could create as many as 108,000 new jobs and result in $10 billion in new business loans through credit unions in the first year after enactment.
"CUNA, the leagues and credit unions have made significant progress over the last several weeks, which has led to more than 100 MBL co-sponsors in the House and 11 in the Senate," noted CUNA Senior Vice President of Legislative Affairs John Magill.
He added that there is growing recognition that MBL language would be a good fit for future jobs bills, as illustrated by a recent endorsement by Sen. Kristin Gillibrand (D-N.Y.).
Gillibrand, earlier this year, said the MBL legislation "would free up lending at not-for-profit credit unions in every corner of America to small businesses" and is necessary "if we're going to create new jobs and rebuild our economy for the long term." She was speaking at Long Island, N.Y.-based Bethpage FCU.
Gillibrand called the Senate MBL bill, the Small Business Lending Enhancement Act (S. 2919) "common-sense legislation" that would "give small businesses more of the capital they need to get off the ground, grow and get thousands of Americans back to work." The similar House bill is H.R. 3380, the Promoting Lending to America's Small Businesses Act.
CUNA's Magill said that CUNA continues its advocacy drive, aware that the Congress will continue to discuss job creation legislation as the year wears on. "CUNA will continue to work to get MBL legislation on one of those legislative vehicles."
Richard Gose, CUNA's senior vice president of political affairs, urged credit unions to continue to work with legislators to convince them of the importance of including MBLs in jobs legislation as a way to create jobs and increase credit to small businesses at no cost to the taxpayer.
NCUA proposes changes to RegFlex program today
ALEXANDRIA, Va. (3/18/10)--Today's National Credit Union Administration (NCUA) open board meeting will be headlined by discussion of proposed changes to portions of the NCUA's regulatory flexibility (RegFlex) program.
The NCUA's five-year strategic plan and the fiduciary duties of federal credit union officials when considering merging or conversion of credit unions will also be discussed. The merger/conversion changes were first proposed in a notice of proposed rulemaking issued by the NCUA in early 2008. The goal of that ANPR was to determine if any new rules were needed for credit unions that merge or convert to another type of financial institution.
The Credit Union National Association has recently set up a working group to address how the NCUA selects and pursues credit union mergers.
The board will also be updated on the status of the National Credit Union Share Insurance Fund during the open portion of the meeting, with a closed NCUA board meeting set to follow.
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