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For those who were wondering how NAFCU President Ken Robinson, given his 16-year-plus association with the credit union movement and H.R. 1151's "insider" restriction on NCUA Board membership, could qualify for a position on the agency board-as he is rumored to seek-a document that circulated on Capitol Hill is illuminating.
Marked as an October 7 memorandum to a top NAFCU executive, the document argues that Robinson is patently eligible for an NCUA Board position because H.R. 1151's one-member restriction applies only to people "who, at the time of the appointment, are, or have recently been, involved with any insured credit union as a committee member, director, officer, employee, or other institution-affiliated party."
Robinson's status, the memo states, falls under none of these categories.
"Although it is inherent in his role as President of NAFCU that Mr. Robinson be `involved' in credit union issues," the memo states, "this indirect representation could not possibly (rise) to the level of involvement that was contemplated by Congress."
The memo also states that Robinson's "indirect" association with CU operations actually seems to track well with an H.R. 1151 provision establishing experience in a "broad range of financial services" as a Board requirement, and that this, as well as Robinson's long service to the CU movement, should especially qualify him for a Board position.
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Both NAFCU and CUNA, in comment letters sent to the Fed on January 6 and January 10 respectively, weighed in with the central bank in its attempt to regulate so-called payday lenders-check-cashers who cash post-dated checks for needy consumers, usually at exorbitant service rates.
In a proposed revision to staff commentary on its Truth in Lending Act-implementing (TILA) Regulation Z, the Fed is attempting to treat such payday lending-which it currently does not regulate-as an extension of credit that is covered by TILA and the central bank's oversight.
"NAFCU supports the Board's efforts to clarify that, by offering payday loans, creditors are, in fact, establishing a line of credit...," wrote NAFCU President Ken Robinson. "When a consumer pays a fee of $12 for a $100 loan for 14 days, he or she is essentially being charged an annual percentage rate (APR) equal to 314%...."
Robinson added that the Fed's effort to list payday loans as a credit extension under Regulation Z disclosure requirements would help the consumer by increasing public awareness of the actual cost of such credit.
"CUNA supports the revisions to clarify that payday loans constitute credit and would be covered under TILA...," wrote CUNA President Dan Mica. "The required disclosures will increase consumer awareness and hopefully will encourage consumers to compare the costs of funds among various types of lenders."
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In a face-to-face meeting with NCUA Board members January 12, CUNA staff and members of its examination and subcommittee presented yet another plea for capital concessions for rapidly growing CUs under the H.R. 1151-mandated, net worth tripwire supervisory regime called prompt corrective action (PCA), scheduled for a Board vote on February 3.
"We're going to suggest again that there is a role for secondary capital (uninsured deposits from non-CU members that could be treated as "paid-in" capital) in prompt corrective action, either directly as part of net worth, or, if not directly countable as net worth, there may be a role for secondary capital in net worth restoration plans," said CUNA Chief Economist Bill Hampel of the prospective proposals.
Hampel said that the subcommittee would also recommend that credit unions falling under net worth restoration plan requirements only because of growth spurts be allowed to submit a "standardized" restoration plan that simply outlined their growth and recapitalization projections.
Finally, CUNA Vice President for Regulatory Advocacy Mary Dunn added that the subcommittee would also recommend that NCUA ease the criteria-along lines of the agency's member business lending rule-for a CU to qualify for low-income status. This, Dunn said, would automatically make secondary capital benefits available to newly designated low-income CUs. -
gmcorrigan@mindspring.com
