MADISON, Wis. (7/25/11)--A provision of the Dodd-Frank financial reform law that took effect Thursday will double the amount of money financial institutions make available to customers after they deposit a check. That could create more risk for financial institutions, including credit unions, the Credit Union National Association (CUNA) said in USA TODAY Thursday. Read More...
Today, the Consumer Financial Protection Bureau (CFPB) officially receives enforcement authority for many consumer protection-related regulations from various agencies. Most notably for credit unions, the CFPB will now have enforcement authority over NCUA Regulations 707 (Truth in Savings), 716 (Privacy of Consumer Financial Information), 717 (Fair Credit Reporting) and 761 (Registration of Mortgage Loan Originators). The CFPB will also have enforcement authority over other familiar regulations including Regulation B (Equal Credit Opportunity), Regulation C (Home Mortgage Disclosure), Regulation E (Electronic Funds Transfers) and Regulation Z (Truth in Lending).
In the July 21, 2011 Federal Register, the CFPB stated that “[t]he official commentary, guidance, and policy statements issued prior to July 21, 2011 by a transferor agency [w]ill be applied by the CFPB pending further CFPB action.” This means that credit unions can continue to rely on “official” guidance, commentary and interpretation issued by the agencies formerly having enforcement authority over the particular regulation until the CFPB officially issues any conflicting information. The CFPB also stated that it intends to publish a list of the rules for which it has rulemaking authority later this year. Click here to view the Federal Register announcement.
The July 29, 2011 deadline for credit unions and their mortgage loan originators (MLOs) to register is quickly approaching. NCUA senior staff has informed CUNA’s Examination and Supervision Subcommittee that, based on NCUA’s information obtained from the Nationwide Mortgage Licensing System and Registry (NMLS), many credit unions and their MLOs that should be registered have not yet done so. If your credit union is required to register and has not yet done so, you should take immediate action to ensure compliance by the July 29th deadline. If you have already registered, you should do a final check with the NMLS to ensure that they have your credit union’s information and that it is correct.
Last Friday, the Federal Reserve published final rules amending Regulation B (Equal Credit Opportunity) and Regulation V (Fair Credit Reporting) to require disclosure of credit scores to consumers when taking adverse action. The revised rules amend the adverse action forms required to be delivered to consumers when a credit score is used as part of the decision to take adverse action against a consumer. The final rule amending Regulation B makes clear that the Fed intends for the new requirements and forms required under Regulation V to apply to both credit and non-credit related (deposit) adverse actions. See page 41597 of the Federal Register under the heading “Adverse Actions Not Limited to Credit.” Credit unions who use a credit score to take adverse action in connection with a deposit account will need to use the new forms required by amended Regulation V to notify consumers of the action taken.
The Federal Trade Commission (FTC) issued a new final rule, which bans deceptive and misleading mortgage advertising practices. The final rule includes 19 examples of practices that will be prohibited once the rule becomes effective on August 19, 2011. The final rule affects entities regulated by the FTC, which includes state-chartered credit unions. Although federal credit unions are not under the FTC’s enforcement jurisdiction, the practices can still be viewed as general guidelines to keep in mind.
The Federal Reserve Board on Thursday announced the approval of a final rule to repeal its Regulation Q, which prohibits the payment of interest on demand deposits by institutions that are member banks of the Federal Reserve System. Read More...
WASHINGTON (7/14/11)--After 75 years of regular sales, savings bonds will no longer be sold at credit unions and other financial institutions as of January 1, 2012, the U.S. Treasury has reported.
Series EE and I savings bonds will still be made available for purchase via the Treasury's online purchase platform, TreasuryDirect. Consumers can also use the Treasury's online platform to convert existing paper bonds into electronic bonds and to purchase savings bonds via a payroll savings plan. Read more…
The Federal Reserve recently issued final rules requiring credit unions to provide an amended risk based pricing notice that includes a credit score if that information is used to set material terms of credit. Similarly, the Federal Reserve issued a final rule requiring credit unions to provide an amended adverse action notice that includes a credit score, if such information is used to take an adverse action.
There has been a bit of uncertainty surrounding the effective date of these changes. Under the Dodd-Frank statute, the amendments to risk based pricing notices and adverse action notices become effective on July 21, 2011. The final rules, which were issued on July 6th, indicate that the final rules take effect 30 days after the final rules are published in the Federal Register. At this time, the final rules have not been published in the Federal Register, but we anticipate that will occur soon.
After internal discussion and a conversation with CUNA, it is the recommendation of the Regulatory Affairs Department that credit unions strive to comply as of July 21st, to the extent that it is possible. If that is not possible, complying by the final rule’s effective date appears to be permissible in the eyes of the Federal Reserve.
The Federal Reserve Board on Thursday released a report that contains 2010 payment and account information about more than 1,000 agreements between institutions of higher education or affiliated organizations and credit card issuers. The Board also updated an online database that includes the full text of each agreement that was in effect during 2010.
The Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act) requires issuers to submit to the Board annually their agreements with educational institutions or affiliated organizations, such as alumni associations. For each agreement, issuers are also required to submit information regarding payments made to the institution or organization and the number of accounts opened under the agreement.
An online database, www.FederalReserve.gov/CollegeCreditCardAgreements, provides the complete text of each agreement and the payment and accounts information submitted by issuers. Users may also search for agreements by card issuer, by educational institution or organization, or by the city or state in which the institution or organization is located.
Read the Federal Reserve Board’s press release and access Board’s report to Congress at http://www.federalreserve.gov/newsevents/press/bcreg/20110707a.htm.”
CUNA has posted its Final Rule Analysis on the interchange fee limits for large issuers and the requirements for issuers to participate on two unaffiliated networks by April 1, 2012 as well as a Regulatory Comment Call on the interim final rule on the standards large issuers must meet to receive an additional penny of interchange fee income per transaction. The Final Rule Analysis can be accessed here and the link to the Comment Call is here. CUNA is expected to provide additional analyses of the rules in the coming days.
Some payment processors and networks have already provided guidance to financial institutions regarding the impact of the Fed's interchange rule. Credit union debit card issuers that belong to only one network are advised to consider their options, as all issuers must participate in two independent networks under the new rule, effective April 1, 2012. CO-OP Financial Services is advising, “if your credit union is currently VISA-exclusive (VISA for signature and Interlink for PIN) or MasterCard-exclusive (MasterCard for signature and Maestro for PIN), you will need to add an unaffiliated PIN network (such as STAR, Pulse or NYCE)” but would not need to add a second signature network.
Following issuance of the final rule, TCF National Bank dropped the case it had brought against the Fed.
Acknowledging concerns expressed by Senators, credit unions, and community banks, the Fed has agreed to monitor the impact of the final rule on small issuers and has directed staff to come back to the board with two reports, one in six months and the other in 18 months, that will allow the agency to assess how the rule is affecting small issuers, including credit unions.
CUNA has told credit unions that it will be working closely with the Fed on these studies and will be reporting on their efforts along with the Fed’s reports in the coming weeks and months. CUNA said that it will continue working with the networks to urge them to adopt and maintain a two-tiered system that will allow small issuers such as credit unions, to receive as much of their current debit fee interchange income as possible. In addition, CUNA has committed to continuing communications with Senators that have promised to work to ensure the viability of the small issuer exemption and hold them to their word.