CONGRESS IS PRESSED TO

EXEMPT CUS FROM NEW REGS

WASHINGTON-The credit union lobby urged Congress last week to get the new Consumer Financial Protection Bureau to ease off credit unions and focus its attention on unregulated entities and big banks.

In testimony on Capitol Hill, the president of Ohio's Wright-Patt CU urged lawmakers to use provisions included in the Dodd-Frank Act to exempt credit unions and banks from a growing number of regulatory initiatives the new consumer agency is planning, particularly an unfurling array of mortgage rules. "We believe the Bureau has more authority than it has been exercising to extend relief to credit unions and others from certain compliance responsibilities," Doug Fecher, head the $2.5-billion credit union, told the House Oversight Committee during last week's hearing on the new consumer bureau.

"It is important that Congress aggressively urge the Bureau to utilize the exemption clause so that the weight of compounding regulations that are intended for abusers and the largest of financial institutions do not overburden credit unions and other smaller financial institutions," said Fecher, who was representing CUNA at last week's hearing.

The CU lobby, which opposed creation of the new consumer agency to begin with, has stepped up its efforts for an exclusion from a variety of new regulations on mortgages, credit cards and on remittances.

NAFCU urged the lawmakers to see that the regulators do a strong cost-benefit analysis of potential regulations and to review and streamline regulations where possible.

Last week's session follows a May hearing where two credit union executives also urged exemptions for credit unions from new CFPB regulations.

"Credit unions face a crisis of creeping complexity with respect to regulatory burden," said Wright-Patt's Fecher. "It is not just one new law or revised regulation that challenges credit unions, but the cumulative effect of all regulatory changes."

"The frequency with which new and revised regulations have been promulgated in recent years and the complexity of these requirements is staggering. Since 2008, we estimate that credit unions have been subjected to in excess of 120 regulatory changes from at least 15 different federal agencies," he testified.

He noted that part of the Dodd-Frank bill gives the new consumer agency the authority to "exempt any class of provider from its rulemaking." "We believe the Bureau has more authority than it has been exercising to extend relief to credit unions and others from certain compliance responsibilities," he said. "We encourage Congress to urge that the Bureau exercise its authority as broadly as possible to protect credit unions from burdensome overregulation, which ultimately impacts consumers."

NCUA EXTENDS 18% LOAN

INTEREST RATE CEILING

ALEXANDRIA, Va.-The NCUA Board last week extended the 18% loan interest rate ceiling for loans provided by federal credit unions.

NCUA is the only financial institution regulatory agency that sets an interest rate cap. The board also proposed a rule that would allow ether NCUA or a state supervisory authority to declare a federally insured, state-chartered credit union to be in a "troubled condition." This is aimed at enhancing NCUA's ability to identify a troubled credit union and better protect the National CU Share Insurance Fund from losses.

It also proposed a rule that would require federally insured credit unions to have in place certain contingency plans if emergency liquidity is needed.

Federally insured credit unions with less than $10 million in assets would be required to maintain a basic written policy that provides a board-approved framework for managing liquidity and a list of contingent liquidity sources it can utilize. Those with assets of $10 million or more would be required to have a contingency funding plan that clearly sets out strategies for addressing liquidity short falls; and federally insured credit unions with assets of $100 million or more would be required to have access to a backup federal liquidity source.

TEXANS CU SWINGS TO THE BLACK FOR FIRST HALF

RICHARDSON, Texas-Texans CU, the one-time $2-billion credit union run under NCUA conservatorship for the past year, reported an $11.7 million net for the first six months of 2012, as NCUA was able to slash its provision for loan losses by 93%, to just $1.3 million.

The first half net compares to a loss of $11.7 million for the first half of 2011, NCUA reported recently.

The Texas giant, which ran aground on a troubled portfolio of bad member business loans around the country, reported a staggering $225 million in losses from 2008 through 2011 and is only operating because of a $60 million emergency NCUA loan through the National CU Share Insurance Fund.

At mid-year its assets had declined to $1.4 billion.

FIVE MORE BANKS FAIL

WASHINGTON-Regulators closed two small banks in Georgia and one each in Florida, Kansas and Illinois, making 38 bank failures so far in 2012.

The FDIC seized $120 million Georgia Trust Bank in Buford, Ga.; $230 million First Cherokee State Bank in Woodstock, Ga.; $87 million Royal Palm Bank of Florida in Naples, Fla.; $110 million Heartland Bank in Leawood, Kan.; and $175 million Second Federal Savings and Loan Association of Chicago.

This year's bank failures are down from 58 at the same time last year.

There have been 14 credit union failures so far this year.

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