HOUSE PASSES CU-BACKED
FIX FOR ATM DISCLOSURES
WASHINGTON-The House easily approved a credit union-backed bill last week that would eliminate the requirement for the on-machine second fee disclosure at ATMs, the source of a growing number of legal claims against credit unions and banks.
The bill amending the Electronic Funds Transfer Act, known as Reg E, would make the single on-screen disclosure adequate to notify consumers of potential fees they may incur by using a cash machine.
The measure comes amid a growing number of consumer suits against ATM owners for violation of the EFTA's requirement for the on-machine disclosure. A missing placard can open an ATM owner to fines of up to $500,000 plus lawyers' fees and expenses.
The bill was supported by a coalition of credit union groups, banking associations and ATM owners. NAFCU President Fred Becker said after the vote his group has been lobbying Congress to pass the bill, which he called a "common-sense measure that eliminates the incentive for frivolous lawsuits while preserving a disclosure mechanism to ensure consumers' interests."
"This bill eliminates a frustrating regulatory burden for credit unions, namely the mandate that ATMs carry a physical disclosure notifying consumers of the potential imposition of fees for use of the ATM," said CUNA President Bill Cheney, who added consumers won't be adversely affected by the elimination of the second disclosure the bill maintains the obligation that consumers opt-in to any ATM fees before a transaction is processed.
The bill now heads to the Senate, where consumer groups who oppose the measure hope to derail it. The Senate is not expected to take it before the end of the summer.
NCUA ISSUES GUIDANCE ON
CLOUD COMPUTING SERVICES
WASHINGTON-NCUA and banking regulators said last week that institutions that use cloud-based computing services may need to impose stronger risk-management controls, given the new challenges the technology carries in terms of protecting data and complying with regulations.
The regulators said migrating data to an Internet "cloud" managed by a third-party service holds potential advantages for financial institutions, such as cost reduction, speed and flexibility. But it also may require more robust controls and should be treated as a form of outsourcing, said the agencies that make up the Federal Financial Institution Examination Council.
"When evaluating the feasibility of outsourcing to a cloud-computing service provider, it is important to look beyond potential benefits and to perform a thorough due diligence and risk assessment of elements specific to that service," said the agencies.
In fact, cloud computing might not be appropriate for all financial institutions, the agencies said.
The agencies provided a range of recommendations for ensuring sound risk management, including ensuring regulatory compliance, maintaining proper control over vendors, protecting data against security incidents and adjusting audit policies.
REGULATORS EXEMPT CUS
FROM NEW RATE SWAP RULES
WASHINGTON-The Commodity Futures Exchange Commission last week exempted all but a handful of credit unions from new rules on financial derivatives, clearing the way for NCUA to open the door later this year to greater use of interest rate swaps and options for a broader credit union market.
The CFTC's rules, required under the Dodd-Frank Act, frees up end-users of derivatives under $10 billion in assets from the requirement that they route all of their trades through independent clearinghouses. The derivatives regulator estimates roughly 30,000 firms will qualify for the exemption.
The four credit unions over $10 billion in assets will probably also be exempted under certain carve-outs for institutions who use swaps purely for hedging interest rate risk.
The exemption comes as NCUA is preparing its own rules to expand the use of financial derivatives from a handful of carefully selected credit unions to a broad range of healthy credit unions. The agency has made it clear its rule, expected later this year, will be limited to interest rate hedges, like swaps, options and collars.
The new CFTC rules will require most derivatives to be traded on open platforms and routed through a clearinghouse that secures the deal and collects margin from both sides.
Commercial companies, banks and credit unions have lobbied to be excluded from these new requirements because posting margin to a clearinghouse will tie up money that could be used for other purposes.
Major Wall Street firms and banks dominate the derivatives market and have been widely expected to be captured in the swap dealer category. JPMorgan Chase, Bank of America, Citigroup, HSBC and Goldman Sachs control 96% of cash and derivatives trading for commercial banks and trust companies as of December 31, according to the Office of the Comptroller of the Currency.
NCUA Board Meeting, July 24, Alexandria, Va.NCUA Listening Session, July 31, DenverNCUA CU Workshop, Aug. 1, OmahaNCUA CU Workshop, Aug. 9, St. LouisNCUA CU Workshop, Aug. 11, HonoluluNCUA CU Workshop, Aug. 16, NashvilleAPPLICATIONSCDFI Fund Bank Enterprise Award applications due July 27.comment