Friday, September 19, 2014

No Follow Up Report on September 2013 Community Charter Approval

A year ago, the NCUA Board approved an expansion of the community charter for Peoples Advantage Federal Credit Union to serve the Richmond (VA) Metropolitan Statistical Area.

But the transcript from the September 2013 NCUA Board meeting shows that Board member Michael Fryzel expressed deep reservations about the ability of the credit union to serve this expanded community charter. He requested a follow up report from staff to the NCUA Board one year after the community charter approval on how the "credit union is doing and what part of their new market they're penetrating and if they are achieving the goals they said they would in their marketing plan."

Well, it is one year later. Fryzel is no longer on the NCUA Board and there was no report to the NCUA Board at its September 2014 meeting on how the credit union is doing in serving this expanded community.

Out of sight, out of mind.

Thursday, September 18, 2014

Disability as a Common Bond

Is a disability a common bond?

For at least one credit union, the answer is yes.

Veridian Credit Union (Waterloo, Iowa) states that part of its field of membership includes "individuals with disabilities as defined by the Americans with Disabilities Act of 1990 who are living in the State of Iowa."

To read how the Americans with Disabilities Act defines the term disabilities, click here.

But the big question is how do individuals with disabilities meet the requirements for a common bond?

Section 533.202 of the Iowa Code states that "[s]tate credit union organization shall be available to groups of individuals who have a common bond of association such as, but not limited to, occupation, common employer, or residence within specified geographic boundaries."

If you dig into the state's administrative code, it defines the various types of common bond.

But I have a hard time comprehending how individuals with disabilities as defined by the Americans with Disabilities Act meets the state's common bond requirements.

This is just another example of credit unions pushing the boundary with regard to common bond and a credit union regulator abetting the effort.

Wednesday, September 17, 2014

CFPB Needs to Provide Written Guidance on TILA-RESPA Merger

Sixteen trade groups on September 16 asked the Consumer Financial Protection Bureau (CFPB) for additional written guidance to help the industry implement the merger of the Truth in Lending Act and Real Estate Settlement Procedures Act disclosures, which takes effect Aug. 1, 2015.

Specifically, the groups sought clear written guidance addressing the industry’s implementation questions. “We appreciate the bureau offering oral guidance through webinars, and other channels,” they said. But “uniform written guidance developed with stakeholders’ input that can be relied upon will further fair competition and minimize the possibility of undue liability increasing costs. Most importantly, it will ensure that consumers will not be harmed by unnecessary confusion.”

The groups also encouraged the CFPB to continue working with industry vendors, provide additional example forms and resolve inconsistencies with state laws on mortgage disclosures.

Read the letter.

Tuesday, September 16, 2014

Undercapitalized Credit Unions, June 30, 2014

As of June 30, 2014, there were 60 undercapitalized credit unions in the United States.

These undercapitalized credit unions held slightly more than $3.4 billion in assets.

Six credit unions were classified as critically undercapitalized, while 14 credit unions were significantly undercapitalized.

Four credit unions that were classified as undercapitalized had net worth ratios in excess of 6 percent. However, their net worth ratios did not meet the minimum risk-based net worth requirement.

Monday, September 15, 2014

Rep. Luetkemeyer Rips NCUA

Speaking at the National Association of Federal Credit Unions Congressional Caucus, Rep. Blaine Luetkemeyer (R - MO) ripped the National Credit Union Administration (NCUA) for requesting that the House Financial Services Committee reject any amendment related to the agency's risk-based capital proposal.

Luetkemeyer said: "Here’s a regulator petitioning us, Congress, not to do our job. I mean, it’s just beyond explanation. They don’t want any oversight. They don’t want anybody to interrupt their little games that they’re playing."

It seems that the relationship between some members of the House Financial Services Committee and NCUA's leadership may be a bit frosty.

See the story in Credit Union Times.

Friday, September 12, 2014

Bethpage FCU Buys Branch, Assets, and Liabilities from City National Bank of New Jersey

Newark, N.J.-based City National Bank of New Jersey is selling assets and liabilities of its Roosevelt, N.Y., branch to $5.7 billion Bethpage Federal Credit Union.

According to the FDIC, the branch in question had $15.3 million in deposits as of June 30, 2013. City National Bank on September 4 filed an application seeking approval for the proposed sale, which is expected to close by December.

Read the story in the American Banker.

Rep. Maloney: Overdraft Fees Should Be Reasonable and Proportional

Representative Carolyn B. Maloney (D-NY) wrote Consumer Financial Protection Bureau Director Richard Cordray requesting he act immediately to curb abusive overdraft fees.

She specifically urged Cordray to expand the opt-in rules to checks and ACH transactions and to require overdraft fees to be “reasonable and proportional.”

By advocating for overdraft fees be "reasonable and proportional," the Congresswoman is proposing price controls.

However, price controls interfere with the proper functioning of markets.

Capping overdraft fees would create perverse incentives. Individuals would be more likely to overdraw their accounts, while at the same time banks and credit unions would be less likely to offer the product.

In addition, a possible outcome from capping overdraft fees is that people who regularly overdraw their accounts may lose access to checking accounts and possibly to depository institutions.

While policymakers are looking for ways to increase financial inclusion, proposals to limit what banks and credit unions can charge on their products and services, such as requiring overdraft fees to be reasonable and proportional, will achieve the opposite outcome.

Read Representative Maloney's press release and letter.
 

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