Michigan Credit Union League: Comment Letters

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Michigan Credit Union League Home » Governmental Affairs » Regulatory Affairs » Compliance Hot Topics » Comment Letters

Comment Letters

2013 COMMENT CALL / LETTER
SUMMARY CHART

Comment Letters Archive

2012 2011 2010 2009 2008 2007 2006

Comment Letters - 2013

CFPB: Truth in Lending – Escrows Final Rule Amendments (5/3/13)
In response to the CFPB’s request for comment on their proposed technical amendments to the Escrows Rule under Truth in Lending, the MCUL believes that the CFPB’s attempt to provide comprehensive and conclusive determinations for exemptions falls short. The MCUL noted that for this particular regulation, as with many others being issued by the CFPB, credit unions are spending a significant amount of time and resources associated with reading, interpreting and determining compliant processes for the voluminous and highly complex publications which include Final Rules, amendments to those rules and relevant commentary, and the related Small Entity Compliance Guides. The MCUL also believes the CFPB fails to consider the very substantive and highly detrimental effect that these changes pose for small to mid-sized credit unions that have limited staffing, systems, and resources. Finally, the MCUL urges the CFPB to consider expanding and simplifying exemptions to their rules and provide adequate time to assess pending regulations, especially where accurate interpretation is dependent on information or clarification that is not available or issued too close to the effective date of a rule, as is the case for these Escrow Rules amendments.
CFPB: Student Loan Affordability (4/8/13)
The CFPB is focusing on student lending and requested information on student loan affordability in an attempt to better understand landing practices. The MCUL provided information on the Credit Union Student Choice program and the benefits students obtain by financing their educational needs that are not addressed through Federal student loan programs, through their relationships as members of credit unions. The MCUL response focused on how credit unions set themselves apart from other private student lenders through efforts to educate student members, lower loan rates, and graduated repayment and loan deferment options.
FFIEC - Social Media Risk Management Guidance (3/25/13)
On March 25th the MCUL provided its comment to the Federal Financial Institutions Examination Council (FFIEC) on their proposed guidance on Social Media: Risk Management. The MCUL comments stressed the current burdens new regulations have placed on credit unions and emphasized that additional strict requirements on social media will make it unlikely for credit unions to consider developing and utilizing social media strategies to enhance member communications. The MCUL strongly opposed the proposed requirement to manage the risk of internet gaming and virtual currency transactions that are not conducted within the current federally regulated financial services industry. Additionally the MCUL opposes additional third party due diligence requirements that duplicate current NCUA requirements. The FFIEC included in its proposal requirements for risk management planning, procedures and responses for negative comments posted to social media sites that could have a negative impact on a credit union and the MCUL stated that credit union should not be responsible or liable for the actions of the general public.
CFPB - Financial Products Marketed to Students (3/18/13)
MCUL submitted a comment letter to the CFPB in response to its request for information on Financial Products Marketed to Students Enrolled in Institutions of Higher Education. The CFPB requested the information to get a clearer picture of the financial products and services that are offered to college students, as well as information about how financial institutions can structure and promote positive financial decision-making among young consumers. In their comment the MCUL stressed the unique relationship students have as member/owners of their credit unions and the significance of the financial literacy and education provided by credit unions to all members, but particularly focused on students. In 2012, Michigan credit unions operated 395 student-run credit union branches and presented 2,001 classroom presentations on financial literacy. The MCUL highlighted the regulatory restrictions already present in the Truth in Lending Act to protect student borrowers and advocated for decreased regulatory burdens for credit unions.
CFPB - Ability to Repay under TILA (2/25/13)
The MCUL provided support for the amendments proposed by the CFPB for the Ability to Repay Standards in the Truth in Lending Act. Several additional exemptions were proposed and supported by the MCUL including: housing finance agency programs, Emergency Economic Stabilization Act programs, and non-profit creditors. The MCUL urged the CFPB to consider expanding the definition of non-profit organizations under the Ability to Repay rules to include both federal and state chartered credit unions so they would qualify for an exemption afforded to other non-profit organizations.
CFPB: Effectiveness of the CARD Act (2/19/13)
The CFPB requested information from the financial services industry on the impact the CARD Act has had. The MCUL provided input on the positive and negative impacts of the Act and stated generally that the credit union industry has not experienced a negative impact on the safety and soundness of credit union card issuers as a result of implementation of the CARD Act. The MCUL response provided information on the negative impact of the CARD Act on risk based pricing and the corresponding effect on at-risk borrowers.
CFPB - Remittance Transfers (1/29/13)
The MCUL urges the Bureau to reconsider raising the exemption threshold for International Remittance Transfers (IRT) to at least 1,000 per year to provide further regulatory relief and maintain the level of service consumers expect by allowing “small” providers to continue to deliver this service to their members. MCUL supports the proposed error resolution provision that would remove the liability from financial institutions for errors that result from the sender providing incorrect or insufficient information in regards to account numbers. MCUL is concerned with the Bureau’s revisions allowing an IRT provider to rely on a sender’s representations regarding foreign taxes and recipient institutions fees because the compliance burdens associated with documenting the sender’s representations would likely be very burdensome.
CFPB - Independent Ability to Repay Credit Cards (1/7/13)
MCUL provided support for the CFPB proposal, which would implement the ability to repay provisions as required under the Credit Card Act of 2010, as opposed to the broad and incorrect interpretation of the Federal Reserve Board put into place in 2011. MCUL supports eliminating reference to the independent ability to repay, in favor of a return to a broader focus on access to household income and believes that underwriting decisions should be left up to individual credit card lenders.

2012 COMMENT CALL / LETTER
SUMMARY CHART

Comment Letters - 2012

NCUA - Definition of "Small Entity" (11/26/12)
MCUL strongly supports a change in definition and increased thresholds for “small entities.” However, MCUL encourages the NCUA Board to adopt the small entity thresholds in the SBA definition, used by other federal financial institution regulators for purposes of RFA analysis, and an increase to $50 million in the small entity definition for access to agency assistance. Such would provide measureable and meaningful, yet reasonable relief to credit unions in Michigan and across the country.
NCUA - Definition of "Rural District" (11/26/12)
MCUL supports the NCUA Board’s intent to improve the definition of ‘‘rural district’’ that, in its current form, has only generated modest and limited use since its inception. MCUL agrees that the current threshold is too low. MCUL appreciates the Board’s willingness to expand this definition so that FCUs would have the opportunity to serve consumers in areas that do not have adequate access to financial services, but who likely utilize population hubs for greater access to a wide variety of services. MCUL is hopeful, however, that this threshold along with the other components of the rural district definition will be revisited in the near future to determine whether further amendments are necessary to ensure consumers in rural areas are being served. Finally, MCUL supports the NCUA Board allowing those “grandfathered” institutions employing the rural district charter the opportunity to apply for an expansion of their charter based on the new criteria, to serve a broader membership and improve the overall health and viability of their institution.
NCUA - Extending Low-Income Credit Union Acceptance Timeframe (11/26/12)
MCUL strongly supports this proposed change allowing 90 days for a credit union to accept a LICU designation, as opposed to the current 30 day allowance. MCUL believes the increased latitude will result in a thorough assessment by institutions regarding the positives and negatives of such a designation, and will allow more federal credit unions to take advantage of the benefits that a low-income designation provides when such is appropriate for that institution. MCUL also urges the Board to work with state regulators to clarify the process for state-chartered LICU designations, and to help ensure that the process works as well for state-chartered credit unions as it does for FCUs.
NCUA - Payday Loan Alternatives (11/26/12)
MCUL supports the ability of federal credit unions (FCUs) to provide PALs to members as a means of diverting members from accessing such credit from unscrupulous payday lenders. MCUL appreciates NCUA’s willingness to review the PAL regulatory provisions, and the potential social and fiscal benefits that may result in greater access to the PAL product. MCUL believes (1) credit unions should be allowed to charge an APR of up to 36% that incorporates fees, which also happens to be the APR permitted under the Department of the Defense’s rule regarding payday alternative loans to service members; (2) the permissible loan range of $200-1,000 should be expanded so that FCUs could provide a broader range of alternatives; (3) loan maturities shorter than one month and longer than six months should be authorized; (4) FCUs should have the option to provide more than three PALs to a given borrower in any rolling six-month period, or more than one at a time; (5) the one-month minimum membership requirement should be eliminated; and (6) the 20% of net worth cap should be lifted.
NCUA - Investments in TIPS (11/26/12)
MCUL supports the NCUA Board’s proposal to allow for an additional investment option for FCUs, and appreciates the NCUA’s actions in researching and monitoring this product for the purpose of determining whether FCUs may include TIPS in their respective investment portfolios. MCUL also urges NCUA to work with state credit union regulators to facilitate the ability of well-managed state credit unions to invest in these securities as well, as permitted under applicable state law.
CFPB - High-Cost Mortgage Proposal (11/6/12)
MCUL urged the CFPB to delay the effective date of the high-cost mortgage rule in order to enable credit unions to adequately adjust to the new mortgage lending framework and ensure their respective members have uninterrupted access to mortgage credit. MCUL also urged the CFPB to reduce the number of homeownership counselors required to be provided to potential borrowers from five to at least three, refrain from expanding on the provisions of the Dodd-Frank Act by amending the definition of a “finance charge,” and refrain from introducing a new “transaction coverage rate.” MCUL disagreed with the proposal to expand the home ownership counselor list to be provided to applicants for refinancings, home-equity lines of credit, and purchase money transactions. MCUL believes this process would only serve to delay the process to obtain access to credit. MCUL is very concerned that these proposed provisions will result in a reduced access to mortgage credit, as many creditors will decide to cease offering high-cost mortgages in an effort to avoid wading into the compliance minefield associated with these products.
CFBP - TILA/RESPA Document Integration Proposal (11/6/12)
MCUL supports the goal of streamlining mortgage disclosures, but fears the length of the rule and the level of detail provided will require an extensive amount of time and legal fees to ensure compliance – all in an effort to reduce the amount of paper provided to borrowers from an average of ten pages to an average of six – a savings of just four pages. MCUL is strongly opposed to the proposed provisions to amend the definition of “finance charge,” as well as the proposal to require creditors to adopt a machine-readable electronic format to retain mortgage loan records. MCUL does not support the justifications provided in the proposed rule, and believes further regulatory action would become necessary to rectify the unforeseen consequences of such requirements. Given the overwhelming amount of regulations mandated by the Dodd-Frank Act that credit unions will be required to adhere to over the course of the next 12-18 months, credit unions, especially those small credit unions that make up a majority of the institutions in the industry, can ill afford any additional and unnecessary regulatory burden. The CFPB requested comment on “whether the level of detail in the proposed regulations and guidance…will make compliance more, rather than less, burdensome and whether the Bureau should adopt a less prescriptive approach in the final rule.” MCUL is hopeful that the CFPB will in fact adopt a less prescriptive approach and publish a final rule that does not compare in volume with the 1100-plus pages contained in this proposal.
CFPB - Loan Originator Compensation (10/16/12)
MCUL took exception and vehemently objected to the proposed rule’s premise that credit unions have preyed on unsuspecting consumers by steering them into high-cost loans in order to generate profits. MCUL believes the proposed rule makes various assumptions that this is the case, and urged the CFPB to refrain from expanding on the provisions of the Dodd-Frank Act. MCUL opposed most of the provisions of the proposed rule, including the following: the expanded record retention requirements; the definition of “loan originator” that is inconsistent with that of the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act); prohibited loan originator compensation payments based on transaction terms, as well as multiple loan originators’ transactions; the restrictions on discount points and origination points or fees; and the loan originator qualification requirements. The Dodd-Frank Act does not prescribe a specific time frame for enactment of a final rule related to loan originator compensation. Therefore, MCUL urged the CFPB to delay the effective date of this proposal until all of the related proposals referenced herein and in the proposed rule have been finalized due to the overwhelming number of sweeping changes such a rule may require.
CFPB - Appraisal and Valuation Reports Under Regulation B (10/15/12)
MCUL understands that the provisions of this proposal are mandated by the Dodd-Frank Act. However, MCUL respectfully urged CFPB to exercise its authority under Section 1405(b) of the Dodd-Frank Act to “exempt from or modify disclosure requirements, in whole or in part, for any class of residential mortgage loans if the [Bureau] determines that such exemption or modification is in the interest of consumers and in the public interest’’ in order to limit the effects of the overwhelming regulatory burden credit unions will face as a result of the multitude of mortgage regulations to be issued over the course of the next three months. MCUL is concerned with the proposed commentary’s expansion of what is required to be provided to consumers. Specifically, the proposed commentary would include, in addition to the appraisal or valuation report: “written comments and other documents submitted to the creditor in support of the estimate of the property’s value.” MCUL believes this information should be considered “internal documents” that are excluded from the term “appraisal report.” These supporting documents would likely create greater confusion on the part of consumers, with very little value.
CFPB - Appraisals for Higher-Risk Mortgages (10/15/12)
MCUL strongly opposed most of the Agencies’ proposed changes, including the use of a “Transaction Coverage Rate” (TCR) in place of the finance charge; the proposed exclusion of a “qualified mortgage” as a “higher-risk mortgage until a “qualified mortgage” is sufficiently defined to provide adequate legal protection for mortgage lenders; and the requirement to use a “different” certified or licensed appraiser to conduct the additional appraisal required under the proposed rule. MCUL urged the CFPB to exercise its authority under Section 1405(b) of the Dodd-Frank Act to “exempt from or modify disclosure requirements, in whole or in part, for any class of residential mortgage loans…” in order to make necessary improvements. MCUL fears that failure to do so will raise the cost and compliance burden on creditors, and limit access to higher-risk mortgage credit for consumers. MCUL believes the resulting unforeseen consequences could be worse than the problems the Dodd-Frank Act and its implementing regulations were designed to address in the first place.
CFPB - Mortgage Servicing Under Regulation Z (10/9/12)
MCUL believes 60 days is too long of a time period to provide an ARM adjustment notice (increased from 25 days). MCUL also believes the CFPB is correct in stating that there have been technological advances since the inception of this notice requirement in 1987. However, this does not negate the fact that there would be costs associated with altering this technology to accommodate a new notice deadline. MCUL does not believe these costs would be justified, as an estimate may not provide enough certainty to induce consumer actions to refinance or take other actions on their mortgage loan. It might be that consumer efforts to take such actions could end up backfiring in the event the refinanced amount is higher than the actual rate adjustment when the actual rate is unknown at the time of the disclosure. MCUL strongly disagrees with the value of a 210 to 240 day notice regarding an initial interest rate adjustment. MCUL agrees with the Small Business Regulatory Enforcement Fairness Act (SBREFA) panel that a disclosure delivered this far in advance would require an estimate that would not provide an adequate benefit to consumers. Because an accurate rate will likely be unknown that far in advance, consumer efforts to refinance could end up backfiring in the event the refinanced amount is higher than the actual rate adjustment. MCUL believes 10-day periodic statement mailing requirement before the first payment is due present a serious issue for credit unions that provide periodic statements according to an already-established schedule, or those that offer a biweekly billing cycle. We strongly urge the CFPB to reconsider the timeframes within this proposal, and in particular to provide flexibility with respect to the timing of the periodic statement mailing. MCUL also believes the past payment breakdown is unnecessary if the rule would require a breakdown of how the previous payment was applied. Multiple breakdowns would only serve to confuse consumers and would provide an additional burden on mortgage lenders and servicers that would substantially outweigh any potential benefit.
CFPB - Mortgage Servicing Under Regulation X (10/9/12)
MCUL believes servicers should have the option to require borrowers to provide their oral error resolution assertions in writing to confirm the allegations and to provide adequate detail in order to initiate effective investigations. MCUL also believes that it would be very difficult to prove that an error assertion was “substantially similar” to a previously asserted error, “overbroad,” or untimely if borrowers are permitted to assert errors orally without being required to confirm their assertions in writing. MCUL also opposed the loss mitigation provisions of the proposal. As evidenced by current Michigan law, MCUL does not believe it is necessary to include additional federal mandates on this topic. Given the extraordinary length of the foreclosure process in the State of Michigan as well as in many other states, it is overly burdensome to create additional delay in the foreclosure process, and further increases the risk of damage to the properties in question, loss to the institution, and contribution to blight within the surrounding community. MCUL believes the CFPB should afford deference to the states on this topic, and urges that this this added regulatory requirement in the final rule be withdrawn. In light of the multitude of mortgage-related regulations scheduled to take effect on January 21, 2013, as well as the difficulty in determining the cost of compliance with such regulations, MCUL strongly urges the CFPB to delay the effective date of the mortgage servicing rules for a 12-month period permitted under the Dodd-Frank Act, to provide appropriate exemptions for smaller institutions as appropriate, and to withdraw the provisions not specifically mandated by the Act. MCUL believes the “small servicer” exemption should apply to the requirement to send written force-placed insurance and early intervention notices, as well as the loss mitigation requirements, and urged the CFPB to increase this exemption from 1,000 loans to 5,000.
NCUA - Definition of Credit Unions in “Troubled Condition” (10/1/12)
MCUL strongly disagrees with this proposed rule, and believes the resolution regarding any CAMEL ratings between NCUA and a State Supervisory Authority (SSA) lies with the process for determining appropriate CAMEL rating between the agencies, and not with the ultimate authority in determining “troubled condition” status. Under the current examination structure, NCUA examiners have the authority to engage in joint examinations with SSAs for credit unions $250 million in assets or over. MCUL is very concerned that the proposed rule appears to expand the reach of NCUA by granting it the authority to make a “troubled condition” pronouncement for all FISCUs, based solely on the work papers of an SSA. MCUL agrees with NCUA that SSAs possess an “in-depth familiarity with local trends” that complements NCUA’s examination efforts. It is for this reason that NCUA should rely on an SSA’s well-reasoned assessment of a credit union, rather than seek to ignore this reality and displace traditional and appropriate state regulatory authority. A “complement” to one’s efforts denotes collaboration. MCUL urges NCUA to recognize and uphold the proper and complementary nature of state and federal regulation and examination under the dual-chartering system by withdrawing this proposal, and seeking to reach better compromise positions with SSAs in the examination of FISCUs.
NCUA - Maintaining Access to Emergency Liquidity (9/28/12)
MCUL does not support this proposal and urges the NCUA Board to withdraw it. MCUL also believes the proposal does not sufficiently justify any additional regulation. First, MCUL believes this proposed regulation directly contradicts assurances provided to credit unions in the Interagency liquidity policy statement issued in 2010, and urges the NCUA to continue operating under this policy framework. Second, NCUA stated in the proposed rule that it does not believe it is sound practice for larger credit unions to meet their emergency liquidity needs solely by holding highly liquid assets. MCUL agrees that a single avenue for emergency liquidity funding is not advisable. It follows then, that FICUs should be permitted to have a number of emergency funding sources, including access to the Federal Home Loan Banks (FHLBs) as a permissible federal source of emergency liquidity. Third, MCUL believes issues associated with the CLF should be addressed before a regulation is passed that would mandate becoming a member of it. it has come to MCUL’s attention that, depending on the amount of funding required, it could take up to ten (10) business days for a loan request to be funded. For a FICU confronted with a liquidity emergency, this amount of time would be insufficient to meet the need. Additionally, MCUL believes a legislative amendment to allow corporate credit unions to capitalize and borrow from the CLF directly would provide an additional layer of emergency liquidity. Until such changes are made, MCUL urges the NCUA Board to withdraw this proposed rule.
CFPB - Request for Information Regarding Overdraft Programs (6/29/12)
MCUL is very concerned that credit unions and their respective members will be harmed by rules and restrictions added to overdraft protection programs (e.g., increased costs and reduced options). MCUL appreciates the CFPB’s desire to study this issue further before crafting a proposed rule, and is hopeful that any future proposal presented would not add to the already overwhelming regulatory burdens placed on credit unions.
CFPB - Regulation Z 25 Percent Fee Limitation (6/11/12)
MCUL supports the proposal to narrow the approach to the 25 percent fee limitation to the first year after account opening, rather than maintaining the current rule that expanded this limitation to apply before the account was opened. MCUL believes the Federal Reserve Board exceeded its authority to carry out the terms of the Credit Card Act of 2009’s amendments to the Truth in Lending Act and its implementing regulation, Regulation Z. MCUL also believes that, should this proposal be finalized as written, credit union members will not be negatively impacted, as credit unions do not engage in assessing exorbitant fees either before or during the first year that an account is opened.
FinCEN - Beneficial Owners of Accounts (5/4/12)
Although MCUL supports FinCEN’s intended purpose to improve the investigations of financial crimes and to provide for a more uniform and consistent process across business lines, MCUL does not agree with FinCEN’s approach to address the issues regarding beneficial ownership of accounts. Rather than increasing the regulatory burden on financial institutions, MCUL urges FinCEN to instead provide additional guidance in order to achieve consistency with respect to existing regulatory requirements. Additionally, MCUL believes the focus should be on the entities that are “not currently mandated to obtain the minimum mandatory information required to identify customers (i.e., money services businesses” [including providers of prepaid access], insurance companies, casinos, dealers in precious metals, stones and jewels, non-bank mortgage lenders or originators, and other entities under FinCEN’s regulations,” and not on the financial institutions that are already subject to the various Bank Secrecy Act mandates.
CFPB - Remittance Transfers (4/9/12)
MCUL appreciates the CFPB’s efforts to potentially offer additional safe harbors and flexibility with respect to the remittance transfer final rules as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). However, as MCUL stated in its letter to the Federal Reserve Board on July 20, 2011 in response to the original remittance transfer proposal, MCUL believes consumers will be severely harmed by the final rule, as financial institutions, especially smaller ones, will undoubtedly give serious consideration to dropping the valuable remittance transfer service in order to avoid the consequences of non-compliance. MCUL does not believe the proposed rule goes far enough to ensure that this does not occur.
CFPB - Streamlining of Regulations (3/5/12)
MCUL supports eliminating the requirement to provide an annual notice when nothing has changed with regard to a given institution's privacy practices, as well as the requirement to post a fee notice on an automated teller machine (ATM). MCUL believes the requirement to follow the recording and reporting requirements under Regulations B and C should be raised to at least 25, as these would be consistent with the thresholds outlined in both Regulation Z and Regulation M, and is also the number proposed with regard to whether a person is a remittance transfer provider under Regulation E. MCUL commends the CFPB’s efforts to examine the regulations that may be “outdated, unduly burdensome, or unnecessary.” MCUL would like to add to this list regulations that are “costly” as well, as the increasing costs of compliance will be ultimately borne by the consumer in order for financial institutions to survive. MCUL is hopeful that the ultimate outcome of this endeavor is one in which the regulatory burden and costs of compliance will not be compounded, and the CFPB will maintain an ongoing review process of the regulations that are under its purview to achieve the stated goals outlined in this request for comment. MCUL strongly urges the CFPB to amend the ability to repay provisions under Regulation Z to mirror that required under the Credit Card Act and intended by Congress, and not as broadly and incorrectly interpreted by the Federal Reserve Board.
NCUA - Troubled Debt Restructurings (3/2/12)
MCUL appreciates the NCUA Board’s response to the concerns raised by credit unions regarding the issues surrounding the treatment and reporting of TDRs, and is largely supportive of the proposed changes. MCUL thanks the Board for addressing in this proposed rule the specific issues addressed in MCUL’s letter to Chairperson Matz dated July 13, 2011 in which MCUL cited the practical issues associated with requiring a credit union to report TDRs as delinquent for a six month period. However, MCUL expressed its concerns related to the TDR policy limits, and urged the Board to treat member business loan TDRs in the same manner as other TDRs.
NCUA - Elimination of Regulatory Flexibility Program (RegFlex) (2/27/12)
MCUL supports the NCUA Board’s effort to ease the compliance burden on federal credit unions (FCUs) while retaining certain safety and soundness standards. MCUL largely supports the Board’s proposal to provide greater regulatory flexibility in exchange for the elimination of the RegFlex regulation. MCUL urges the Board, however, to consider offering a waiver opportunity for the areas in which the elimination of RegFlex provisions present greater restrictions.
NCUA - Loan Participations (2/20/12)
MCUL strongly disagrees with the proposed rule, and urges the Board to withdraw this proposed rule, as it only serves to contradict the opening statements to the proposal; conflict with the recent concerns and issuance of the Advanced Notice of Proposed Rulemaking (ANPR) regarding NCUA’s increased concerns related to credit union access to adequate liquidity sources (RIN 3133–AD96); substantially increase the regulatory burden on credit unions at a time when the industry is already overwhelmed with regulatory changes; severely decrease a sound avenue for credit union earnings and liquidity; usurp the authority of state-chartered credit union regulators and state laws; and devalue the dual-chartering system.

2011 COMMENT CALL / LETTER
SUMMARY CHART

Comment Letters - 2011

FRB - Regulation D (12/19/11)
MCUL supports these revisions, but urges the Board to afford depository institutions ample time to adjust to and implement the changes (at least nine months). Though MCUL understands that this is beyond the scope of the proposed rule, we would like to take this opportunity to urge the Board to reconsider its Reg D six transfer/withdrawal limit on savings deposit accounts. Regulation D currently limits the number of “convenient” transfers and withdrawals to no more than six per calendar month or statement period. In the event such a change requires Congressional action to amend the Monetary Control Act regarding the numerical limits on transfers between savings and transaction accounts, we urge the Board, in the meantime, to increase the number of such transfers allowable per month.
FTC - COPPA Rule (12/22/11)
MCUL supports the FTC’s proposal to better protect children, but urges the agency to modify several aspects in order to make it easier for credit unions to obtain parental consent under the COPPA rules and limit unnecessary disclosure requirements, including the proposal to render “user names” part of the definition of “personal information” when no personal information is ever collected. MCUL opposes the proposed requirement for operators to send a direct notice to parents even when an operator never collects child personal information, due to the fact that this is outside of the Congressional intent under the COPPA law and thus requires Congressional action to effectuate this change. MCUL also urges the FTC to provide model COPPA disclosures that would operate as a compliance safe harbor if used by operators.
FinCEN - Electronic Filing of BSA Reports (11/15/11)
MCUL generally supported FinCEN’s reasoning behind the migration to the electronic filing of BSA-related reports, but urged FinCEN to provide a permanent exemption for the 200 small credit unions that are continuing to file their respective 5300 Call Reports to NCUA manually. Additionally, MCUL requested the continued access to a manual process for all depository institutions during times in which the e-filing system is inaccessible for an extended period of time.
NCUA - CUSOs (9/22/11)
MCUL largely opposed NCUA’s proposed rule to require CUSO to provide quarterly reports directly to NCUA, as MCUL does not believe the Federal Credit Union Act provides the statutory authority to do so. MCUL also believes that NCUA’s concern that CUSOs pose a “systemic risk” to the credit union system is overstated, as the total cumulative credit union investments in CUSOs (22 basis points) is less that the Temporary Corporate Credit Union Stabilization Fund Assessment that was announced at the August NCUA Board meeting (25 basis points). MCUL does not oppose limiting CUSO investment amounts for undercapitalized credit unions so long as there is an appeals process established to appeal a decision of the NCUA regional director. MCUL vehemently opposes NCUA’s approach to tie share insurance protection to CUSO compliance with this proposal, and in growing increasingly concerned with NCUA’s continued approach to connect share insurance protection to proposed rules under the guise of “safety and soundness.” MCUL urges the Board to withdraw the remaining provisions of the proposed rule until the Federal Credit Union Act (FCUA) is amended and more reasoned approach can be undertaken to address the issues regarding CUSO investments.
FRB-OCC-FDIC-SEC-FHFA – Qualified Residential Mortgages (8/1/11)
This Letter comments on a proposal that was mandated by Dodd-Frank Act for “securitizers” to retain at least 5% of the credit risk of loan obligations that are bundled to create an asset backed security (ABS) including residential mortgages. However, the 5% risk retention requirement would not apply to any Qualified Residential Mortgages (QRM) that comply with certain very conservative underwriting standards which are intended to mitigate credit risk. For example, a QRM would require a minimum down payment of 20%, reflect the use of maximum DTI ratios, and the borrower be clean of any past default or late payment history. While CUNA believes this 5% risk retention proposal does not directly impact credit unions as there are very few credit unions that are deemed “securitizers,” they are concerned that the safer underwriting standards could become residential mortgage industry standards, which would remove flexibility for lenders and borrowers, and ultimately reduce the number of qualified borrowers. This in turn could diminish the effectiveness of a secondary market. We asked the Agencies to pull the proposal and give new consideration to the possible consequences.
FRB – Reg Z - Ability to Repay (7/22/11)
MCUL commented on various aspects of this very involved Reg Z proposal which places an extraordinary burden on lenders in an effort to make sure all possible repayment costs (points, fees, interest and what they all mean) are clearly calculated and disclosed to a borrower, even including calculating and disclosing worst case payment scenarios under an adjustable interest rate or stepped increase interest rate programs. The Congress in Dodd-Frank has overreacted in the extreme in micromanaging the loan underwriting process for lenders in the interest of protecting the consumer. It is especially unreasonable and will be very costly to financial institutions including credit unions that have been conservative in their lending practices both before, during and now after the height of the residential mortgage lending crisis.
FRB – Remittance Transfers (7/20/11)
MCUL took issue with several parts of the proposal. The intent of the proposed rule is based on the Dodd-Frank Act, which would require remittance providers to be able to disclose accurate pricing information to a member/sender of a remittance whose recipient is in a foreign country. Foreign fees, possible taxes and a timetable for when funds would be available would difficult to obtain and therefore to accurately disclose, especially for smaller credit unions that are not part of a large network or do not otherwise have access to reliable resources from which to obtain the information. Even the Fed expressed this concern in the proposal. We believe the difficulties intrinsic to the proposal, potential increases in costs to obtain needed information, and penalties for errors and non-compliance would ultimately have a stifling impact on current providers, many of which are small and serve populations that actively use remittance transfers.
NCUA – Call Report Instructions for TDRs (7/13/11)
MCUL sent this comment letter requesting NCUA adjust its Call Report Instructions for loans restructured under Troubled Debt Restructuring guidelines that currently require credit unions to report TDR loans as “delinquent” until such time as a borrower demonstrates timely payment of the restructured loan for a minimum period of six consecutive months. The stated concern is that during this six-month period, if the borrower is current under the terms of the restructured loan, this TDR loan can be deemed both current and Call Report “delinquent.” During a period when many credit unions are making every effort to work with troubled borrowers this reporting status is both frustrating to the institution and presents some related issues especially since Call Reports are public information.
NCUA - Interest Rate Risk Proposal-Additional Comments (7/11/11)
Dave Adams sent additional comments to NCUA Board expressing strong concerns with the NCUA’s proposal that would require credit unions, depending on size and investment makeup, to establish a formal written Interest Rate Risk policy and an effective IRR management system. The new concern is that the proposal adds new criteria to that section of the NCUA’s share insurance regulations that lists criteria for obtaining and maintaining NCUSIF insurance. In other words compliance with the proposal is tied to a credit union’s insurability. MCUL objected to this given the wide variance of education and background of NCUA examiners across the country, the subjective nature of this topic in examiner evaluations, and the real possibility of inconsistency and the existence of current guidance. MCUL acknowledged the importance of strong ALM management, but urged insurability not be tied to this proposal.
NCUA - Corporate Stabilization Voluntary Prepayment Program (6/20/11)
MCUL appreciates the effort NCUA has undertaken to address the needs of credit unions and the suggestions of the credit union trade associations by establishing a means of reducing future corporate stabilization assessments. In general, MCUL supports NCUA’s efforts, but offers the recommendations in an effort to improve the effectiveness of, as well as the participation in, this proposed program, including the payment of interest on prepaid funds and a refund of any funds in excess of the desired total.
FRB - Regulation CC (6/3/11)
MCUL understands that the Dodd-Frank Act amended the Expedited Funds Availability Act (EFA Act) to increase from $100 to $200 the minimum amount of funds deposited by check or checks on a given business day that a bank must make available by opening of business on the next business day, so there is little opportunity for change regarding this issue. MCUL also supports the removal of the term “non-local check” from the regulation, as there is currently only one check processing center. MCUL is very concerned that the Board will view the fact that it has not received an overwhelming number of comments to mean that the proposed provisions are supported. On the contrary, the reason why many have not bothered to provide comment is due to the extraordinary length of this proposed rule. MCUL strongly urges the Board to keep this fact in mind when deliberating the passage of a final rule.
NCUA - Incentive-Based Compensation (5/27/11)
MCUL opposes the creation of a new regulation, as the Dodd-Frank Act requires NCUA and the other federal financial institution regulators (the Agencies) to jointly prescribe regulations or guidelines with respect to incentive-based compensation practices at covered financial institutions (CFI). MCUL believes that this proposed rule, if finalized, would merely serve to penalize credit unions retroactively in the event a given loan product tied to an incentive program resulted in financial loss years after consummation, and excuse previously lax examiner oversight of a credit union’s loan portfolio. Additionally, MCUL does not believe CUSOs should be treated as a CFI for the simple fact that CUSOs are not considered financial institutions, they are not regulated by NCUA, and are not insured by the National Credit Union Share Insurance Fund. Further, MCUL does not support requiring credit unions to submit an annual report to NCUA. MCUL strongly urges the NCUA Board to require examiners to review incentive-based compensation arrangements as part of the credit union examination process. MCUL agrees that there is no substitute for strong supervision that enhances safe and sound operations – not strong regulation.
NCUA - Net Worth and Equity Ratio (5/20/11)
MCUL supports the regulatory changes regarding the calculation of the National Credit Union Share Insurance Fund’s equity ratio, as well as the NCUA’s ability to include Section 208 Assistance as regulatory net worth for troubled credit unions. These changes were designed to mirror that of Public Law 111-382 which amended the Federal Credit Union Act (FCU Act) definitions of “net worth” and “equity ratio.” However, MCUL does not support the requirement to subtract any “bargain purchase gain” from a merging credit union’s retained earnings before it is added to the net worth of the surviving credit union. MCUL believes this technical change is outside the scope of Public Law 111-382 and should be withdrawn so that alternative solutions can be deliberated in to ensure minimal differences exist between regulatory capital and GAAP.
NCUA - Interest Rate Risk (5/19/11)
While MCUL supports the goal of promoting sound interest rate risk (IRR) management, MCUL believes the mechanisms to monitor and assess federally insured credit unions’ (FICUs) interest rate risk policies and management already exist, without there being a need to create yet another regulation.
FRB – Escrow Accounts (5/2/11)
The comment letter acknowledges that the mandate comes from Dodd-Frank Act concerning new disclosures for escrow accounts for higher-priced loans, and states concerns re additional costs to lenders to establish and monitor escrow accounts and provide new disclosures about escrow accounts; the timing of new disclosures prior to closings that could delay it; and definitions of “underserved” and “rural” areas that are not consistent with definitions used by other agencies like NCUA, which will result in confusion.
NCUA – References to Credit Ratings in NCUA Regulations (5/2/11)
This letter recognizes the mandate comes from the Dodd-Frank Act without much room for change. However it does point out the usefulness of the current rating system without which many institutions will need additional guidance from NCUA for an alternative system that is viable. It also points out the timing incongruity between the longer window for the SEC to set standards for CMOs that FCUs would be prohibited from purchasing until the SEC sets the standards. The proposal will place a heavier burden on boards.
FRB – Credit Scores in Adverse Action Notices (4/14/11)
MCUL takes the position in this letter that while there is little opportunity for changes in the rule since the provisions are prescribed by the Dodd-Frank Act, the small change is representative of yet one more compliance requirement that diverts valuable resources in an ever growing regulatory burden. Additional information in the notices was not supported.
FRB and FTC – Credit Scores in Risk-Based Pricing Disclosures (4/13/11)
MCUL takes the position in this letter that while there is little opportunity for changes in the rule since the provisions are prescribed by the Dodd-Frank Act, the small change is representative of yet one more compliance requirement that diverts valuable resources in an ever growing regulatory burden.
IRS – Reporting Interest Paid to Nonresident Aliens (4/7/11)
MCUL strongly opposes this proposal as yet one more regulatory mandate that imposes an additional compliance burden with a significant economic impact for a substantial number of credit unions. Credit unions are already experiencing a deluge of new regulations from the Dodd-Frank Act, and this proposal represents yet one more mandate that does not help the institution nor its members.
NCUA - Share Insurance Advertising (2/28/11)
MCUL does not oppose the expansion of the NCUA insurance statement into TV and radio ads as it raises public awareness of deposit protection. However, concerns were expressed over taking up time in short radio ads. MCUL also believes credit union “annual reports” and “statements of condition” should be distinguished in the regulation from other types of TV and radio advertising.
NCUA - Share Insurance and Appendix (2/22/11)
MCUL files this letter in support of temporary full insurance coverage for any member or depositor funds held in non-interest/dividend bearing accounts as defined in the proposal. The Dodd-Frank Act mandates this temporary coverage through December 31, 2012.
NCUA-NCUSIF Net Worth Ratio Flexibility (2/18/11)
MCUL CEO Dave Adams makes strong suggestions to the NCUA Board to be more flexible in setting the NW ratio of the NCUSIF. The goal is to take a longer view approach and thereby lessen the more immediate financial impact on credit unions.
Federal Reserve - Interchange Fees (2/21/11)
MCUL CEO David Adams strongly opposes the Federal Reserve Board’s proposal because it is inconsistent with the Dodd-Frank Act in several areas and it will likely result in merchants/retailers discriminating against cards that carry the higher interchange rate and therefore a two-tiered system would not give smaller issuers relief unless there is clear and strong enforcement.
NCUA - Low Income Designation - Member Income Sampling (2/18/11)
MCUL supports the additional sampling option provided in the proposal. Concerns raised re additional paperwork, urged use of other reliable commercial software, and implementing use of NCUA’s software tool by state charters. Also recommended broadening the current standard for qualification to apply for low-income status.
NCUA - Corporate Credit Unions (1/28/11)
MCUL does not support the provisions outlined in this comment letter, as the various elements of the proposed rules achieve the stated objective of strengthening the corporate credit union system. On the contrary, MCUL believes that the result will be the exact opposite of what NCUA intends to rectify. MCUL contends that NCUA has expressed a “no confidence” vote in corporate credit union investments, despite its recently enacted corporate rule to limit the risks taken that were the stated cause of the corporate credit union crisis in its Office of Inspector General’s Material Loss Reviews. MCUL strongly urges NCUA to reconsider the provisions outlined in its proposed rule.
DOJ - ADA Website Accessibility (1/24/11)
While MCUL believes that credit unions are not opposed to providing reasonable means for disabled individuals to access the various products and services credit unions offer their respective members through the Internet, MCUL believes that a more measured approach is called for to better balance the objectives of the ADA with the costs credit unions will bear to implement a very complex set of technology standards.

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Comment Letters - 2010

Regulation Z (Real Estate Appraisals Interim Final Rule)
While MCUL supports rules designed to ensure the independent judgment of real estate appraisals, MCUL believes that establishing the fees for appraisals does nothing to advance the independent judgment of appraisers, nor the quality of the appraisals. Creditors and their agents should not be forced to employ the services of unprofessional appraisals under the threat of administrative action. Creditors and their agents should continue to work with appraisers to mutually agree on the appropriate appraisal fees without government intervention that will most assuredly lead to higher costs and price fixing. So long as an appraisal used to support a creditor’s underwriting decisions is based on the appraiser’s independent professional judgment, MCUL believes the amount of the fee should not matter.
FRB Reg Z Credit Life Proposal
MCUL strongly objects to the Federal Reserve Board’s proposal requiring new disclosures in connection with the sale of credit protection products that in effect discourages borrowers from buying them.
NCUA Board's Nov. 2010 Budget Approvals
This letter is addressed to NCUA Board chair, Debbie Matz, and questions certain budget approvals at a time when credit unions are tightening their belts and watching every expense.
Regulation Z (Mortgage Loan Disclosure Tables)
MCUL strongly opposes the interim final rule's requirements to re-structure the way disclosures for consumer credit secured by real property or a dwelling are provided, as the Dodd-Frank Wall Street Reform Act of 2010 requires disclosure intergration with the Real Estate Settlement Procedures Act (RESPA) disclosures. In the event the interim rule is finalized as written, MCUL strongly urges the Federal Reserve Board to delay the effective date to enable lenders to better manage the ever-changing regulatory requirements.
FTC Mortgage Acts and Practices
MCUL strongly opposes the proposed rule to provide the FTC with increased enforcement powers in order to combat misleading mortgage loan advertisements. The proposed list of prohibitions were the subject of enforcement actions in state and federal court. As there already is a mechanism to challenge these practices, there is no need for the rule.
NMLR Fees
MCUL strongly opposes the fees proposed by the State Regulatory Registry for SAFE Act mortgage loan originator (MLOs) registrations. MCUL does not believe that the fees for registration should be the same as those charged by states for the licensing of MLOs.
Golden Parachute and Indemnification Payments
MCUL does not support NCUA's proposal regarding indemnification payments. MCUL believes the laws and regulations regarding indemnification should remain in place. MCUL does not support extending this rule to FICUs, as the Michigan statute is more comprehensive than the one presented in this proposed rule.
RegFlex
MCUL opposes NCUA’s proposal to curtail RegFlex allowances regarding fixed assets, member business lending and investments.
Mergers-Conversions
Federal Credit Union Board Fiduciary Duties; Conversions of Federally-Insured Credit Unions into Mutual Savings Banks; Mergers of Federally-Insured Credit Unions with Banks and Other Credit Unions – MCUL offers qualified support regarding fiduciary duties of federal credit union board members and the conversion/merger process, but strongly opposes other aspects of the specific proposals regarding each issue.
Field of Membership Proposal
Regulation E
Corporate Credit Union Proposal