Equifax Settles CU Suit Over Data Breach Posted by AVCU on 11:53 AM

Equifax has settled a lawsuit with financial institutions, most of which are credit unions, following its 2017 data breach that affected more than 147 million U.S. consumers.

CUNA initially filed the lawsuit and was later joined by both the Pennsylvania and New Jersey credit union leagues, now called CrossState, and dozens of other plaintiffs, including state leagues and individual credit unions seeking to recover costs related to reissuing cards, reimbursing members and more.

In its settlement, Equifax has agreed to:

• Pay up to $5.5 million to settlement class members who submit valid claims documenting unreimbursed out-of-pocket expenses associated with the breach and fraud reimbursement amounts paid to customers between July 6 and Dec. 20, 2017
• Spend a minimum of $25 million over the next two years on relevant data security measures
• Pay settlement costs and court-approved attorneys’ fees, expenses, and service awards 

CUNA, CUs say most of Crapo’s concerns can be addressed in SAFE Banking Act Posted by AVCU on 8:26 AM

The Secure and Fair Enforcement (SAFE) Banking Act can be modified to address most of is generally consistent with Senate Banking Chair Sen. Mike Crapo’s (R-Idaho) concerns in a manner consistent with the narrow objectives the bill was designed to achieve, CUNA wrote to Crapo Friday.

In response to the Chair’s request for feedback on the cannabis legislation, CUNA noted that-with the exception of the Chairman’s proposal to add public health and safety requirements to the enforcement responsibilities of financial institutions-the SAFE Banking Act is already consistent with the Chair’s positions and would benefit from his proposed clarification language reinforcing the bill’s intent.

CUNA urged the Chairman to advance the bill through the consideration process in order to allow his proposed changes to be offered as amendments that all of the members of the Senate Banking Committee can vote upon and responded to a series of proposals Crapo issued on the SAFE Banking Act and urged him to continue to advance the bill through the Senate Banking Committee’s consideration process.

Specifically, the legislation would provide protections for financial institutions that serve cannabis businesses and ancillary businesses in places where cannabis is legal. CUNA testified in support of the bill in front of House and Senate members last year, and the House passed the bill in September.

 “Enactment of this bill would offer much-needed, narrowly targeted federal protections for credit unions and other financial institutions who accept deposits from, extend credit to, or provide payment services for an individual or business engaged in cannabis-related commerce in states where the activity is legal--as long as the activity is compliant with all other applicable laws and regulations," the letter reads. "CUNA strongly believes that federal legislation providing these protections is essential to bringing revenue from state-sanctioned cannabis entities and hemp businesses into the financial services mainstream and, as a result, keeping communities safe by removing vast amounts of cash off the streets.”

CUNA notes that neither it nor its members take a position on the legalization or decriminalization of cannabis. Rather, CUNA believes that the conflict between federal law and the laws in 33 states and District of Columbia that allow sales of cannabis, creates compliance challenges that require Congress’s immediate attention. recognizes the compliance issues that arise with the 33 states and District of Columbia that allow sales of cannabis, but it being illegal at the federal level.

The letter also notes:
• CUNA welcomes Crapo’s recommendation that the Treasury’s Financial Crimes Enforcement Network (FinCEN) be required to issue a rulemaking covering the same scope ast FinCEN’s 2014 guidance, which would be rendered outdated with the passage of the SAFE Banking Act;
• CUNA believes the SAFE Banking Act would not facilitate the interstate cannabis commerce of cannabis, as illustrated in Section 4(a) of the bill, but would be willing to support the additional inclusion of additional language reinforcing that interpretationsaying the bill does not authorize interstate commerce;
• CUNA believes that the existing language of the Financial Institution Consumer Protection Act, which was cosponsored by Crapo ands included in the SAFE Banking Act, is preferable to a provision from Crapo’s recent proposal tohat would exclude reputational risk as an Iunsafe or unsound practice in order to protect institutions’ ability to rely upon their own internal risk assessments; and
• CUNA and its member credit unions support Crapo’s recommendation to continue to include the House hemp provisions in the SAFE Banking Act in any legislation that moves forward in the Senate.

House Members Ask Regulators About Concerns with Bank Purchases, CRA, and More Posted by AVCU on 9:43 AM

On Wednesday, several members of Congress had questions for the chairs of the NCUA and the FDIC during testimony before the U.S. House of Representatives. Much of the discussion during the regular appearance by financial institution regulators revolved around credit union purchases of banks. The hearing took place just one day after the largest such deal to date was announced.

NCUA Chairman Rodney Hood (Photo credit: CUtoday.info) and FDIC Chair Jelena McWilliams appeared before the House Financial Services Committee during a regularly scheduled hearing for financial institution regulatory agencies. Following their prepared remarks, during questions by members of the committee, Rep. Blaine Leutkemeyer (R-MO) asked both Hood and McWilliams about their “concerns” over credit unions buying banks.

“These are voluntary, market-based transactions,” responded Hood.

“There have been 28 acquisitions to date and others are pending,” answered McWilliams. “Yes, we have concerns and are looking at this…”

Rep. Trey Hollingsworth (R-IN) said he has had discussions with both Hood and his constituents related to CU acquisitions of banks and has heard both positive and negative views on the issue. Hollingsworth pressed Hood for his view on the issue.

“There have been 32 credit unions that have acquired bank assets since 2013. There have been 250 bank on bank acquisitions over the last year alone,” said Hood. “These are voluntary, market-based transactions. In approving these transactions we at NCUA look to ensure that the bank’s customers qualify for the FOM, and that other statutes of FCU Act are met. And I would note that if not for credit unions acquiring some of these banks, some communities would be left without a financial institution. At the end of the day, the bank does get to choose who that acquiring institution is. It’s not arbitrary or capricious.”

In response to legislator questions regarding the credit union income tax exemption, Hood said, “...in today’s dynamic marketplace, at the end of the day {consumers} are getting access to affordable financial services. I would much rather have both banks and CUs growing…I don’t want to pit banks against credit unions. Credit unions now serve a third of the American public and I think that is due to their commitment to providing access.”

When asked about whether credit unions should be subjected to the Community Reinvestment Act, Hood replied, "Credit unions are based on a mission of people helping people. They are serving low-income people through their products and services they already offer.  I don’t think credit unions need government fiat to encourage them to do the right thing.”

Supreme Court Will Hear Challenge to CFPB's Constitutionality Posted by AVCU on 1:24 PM

The U.S. Supreme Court has scheduled to hold oral arguments March 3, 2020 in the lawsuit filed by Seila Law in Orange, CA challenging the Consumer Financial Protection Bureau's (CFPB) single-director structure.

The CFPB had previously announced it would no longer defend its director structure, following years of lawsuits and calls from various stakeholders to reform its structure.

Following the Supreme Court's decision to take up the case, NAFCU President and CEO Dan Berger reiterated the association's stance "that a commission structure at the CFPB is absolutely essential to ensuring greater transparency and accountability."

CFPB Director Kathy Kraninger notified congressional leaders of the Bureau's intent to no longer defend its structure and also reinforced that position during a House Financial Services Committee hearing. The Bureau also notified the Supreme Court of its intent in a court filing.

Suncoast CU to Buy $746M Miami-based Bank Posted by AVCU on 1:12 PM

Tampa Florida-based $10.4B Suncoast Credit Union, the 10th largest in the country, has announced plans to purchase Apollo Bank, a $746M financial institution headquartered in Miami. If plans go through, this would be the largest credit union purchase of a bank to date and will continue to shine the spotlight on such transactions. Multiple industry analysts have forecast that more deals of this magnitude and larger are expected to continue well into 2020.

Apollo Bank, which opened its doors in 2010, has approximately 100 employees and five branches in Miami’s Brickell Financial District, Doral, Coral Gables, Kendall and Hialeah markets. The bank has been profitable, making $8.9 million in 2018 and $5.4 million through September of this year.

“We are pleased and enthusiastic to bring the value of Suncoast Credit Union to this important community,” said Suncoast CEO Kevin Johnson. “Our excellent rates, low fees and community service will have a positive impact in South Florida. We look forward to the Apollo team joining our organization and continuing to serve their commercial customer base. Bringing the benefits of membership offered by Florida’s largest credit union to the diverse cultural population in Miami is a privilege that we take great pride in sharing.”

Apollo Bank CEO and Chairman Eddy Arriola, who will serve as Suncoast’s new South Florida market president added, “Apollo Bank has thrived by meeting the needs of South Florida businesses, delivering exceptional service, investing in our communities, and nurturing talent. Nearly a decade after launching, we realized that partnering with a larger institution would put our team in position to offer even more products and services to clients while allowing our bank to scale. After considering a range of options, it became clear that Suncoast Credit Union was the right partner. Suncoast is a Florida market leader that shares Apollo Bank’s deep-rooted commitment to client service and community involvement.”

The transaction is expected to close in 2020, subject to shareholder and regulatory approvals.

CUNA Hosting Webinar to Discuss RDC compliance Posted by AVCU on 9:48 AM

CUNA will host a webinar on Wednesday, Nov. 20 to discuss patent enforcement of certain remote deposit capture (RDC) technology, particularly in the wake of the $200 million verdict awarded to USAA from Wells Fargo earlier this month. The webinar is free for CUNA members, and begins at 1 p.m. (ET).

CUNA Senior Director for Advocacy for Payments and Cybersecurity Lance Noggle and CUNA’s patent litigation attorneys Mike Rounds and Adam Yowell, of Brownstein Hyatt Farber Schreck will discuss the background of the issue, the court decision against Wells Fargo and what ramifications that decision could have for credit unions.

USAA filed suit in June 2018 against Wells Fargo alleging that the bank infringed on certain USAA patents for remote check capture (RDC), specifically patents related to mobile check capture.

Credit unions around the country have received letters from USAA asking them to negotiate licensing deals for using RDC technology that USAA claims it developed.

A recorded version of the event will be available the following day to those who registered, and interested parties can also register for the recorded version separately.