e-Weekly

January 12, 2011

CFPB will consider credit union concerns as agency develops
The Consumer Financial Protection Bureau (CFPB) is looking at ways to streamline truth in lending and Real Estate Settlement Procedures Act (RESPA) rules, and would welcome Credit Union National Association (CUNA) input on how the regulatory burden on credit unions could be reduced, CFPB official Steve Antonakes, former Commissioner of Banks in Massachusetts, told a group of credit union officials last week.

That group, which included Credit Union Association of Rhode Island Senior Vice President/General Counsel Mary Ann Clancy, CUNA CEO/President Bill Cheney, CUNA General Counsel Eric Richard, CUNA Associate General Counsel Mary Dunn, and Chief Economist Bill Hampel, met with Antonakes to ensure that credit union concerns about regulatory burdens are considered as the new CFPB is organized. During the meeting, the credit union representatives told Antonakes that credit unions are very concerned by compliance costs and the possibility of further compliance burdens for credit unions.

Antonakes noted during the meeting that credit unions did not cause the financial crisis, and, in fact, "have served as a source of strength for their members" during the ongoing economic recovery. If the CFPB's actions result in increased costs for credit unions and lead to unnecessary consolidation and reduced consumer choice, then the agency will have failed to achieve its strategic goals, Antonakes added.

Antonakes currently serves as head of the CFPB's Depository Institution Supervision Department. The CFPB, which was created by the Dodd-Frank financial reform legislation package, will develop rules governing consumer financial products like credit cards and mortgages and will seek to improve the transparency and consumer-friendliness of many financial products. Antonakes' department will focus on supervision of financial institutions with assets over $10 billion. Credit unions with assets below that threshold will remain under the supervision of the National Credit Union Administration (NCUA) or their respective state regulators.

The CFPB is still currently in development, and the agency is expected to be running by July 21, 2011.

Social Security withholding lowered for wage earners
The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 passed on December 17, included a provision to reduce employees’ share of the Social Security portion of payroll taxes to 4.2% in 2011, from 6.2% currently. However, the amount that employers pay into the fund will remain at 6.2%.

As a result, workers who pay into Social Security will see a 2% pay hike for 2011 on income up to $106,800 — though that 2% applies solely to the wages on which you currently pay the Social Security tax known as OASDI (for Old-Age, Survivors and Disability Insurance).

The IRS has published new withholding tables for employers to use, but employers have until January 31 to make the change.

November consumer credit rises 0.7%, up 0.9% at credit unions
Consumers borrowed $2.40 trillion in November, up 0.7% or $1.3 billion from October, reported the Federal Reserve Bank (Fed) last Friday. At credit unions, members borrowed $227.6 billion--up $0.2 billion or about 0.9% from October's $227.4 billion.

Overall borrowing exceeded economists' expectations, with some expecting no change from October and others anticipating consumer credit would rise by about $500 million. (MarketWatch and Bloomberg Jan. 7).

Revolving credit or credit-card use decreased 6.3% or $4.2 billion, to $796.5 billion, as consumers continued to rein their spending until the economy recovers. That followed a $5.4 billion decrease a month earlier. November was the 27th consecutive month that revolving credit has declined, with the last increase in August 2008 (The Wall Street Journal Jan. 7).

Revolving credit at credit unions continued its trend, gradually rising to $35.8 billion, a $0.3 billion increase from October.

Overall non-revolving credit, led largely by an unadjusted rise in student loans, rose 4.2% or $5.6 billion--to $1.61 trillion, said the Fed. For credit unions, non-revolving credit totaled $191.8 billion, down $0.1 billion from October's $191.9 billion. Non-revolving credit covers loans such as auto financing and education-related lending by the government.

The report does not track mortgage debt or home-equity lines of credit.

The Fed, according to minutes of its December 14 policy meeting released last week, said consumer credit outstanding "showed signs of stabilizing," though lending "terms were still noticeably less favorable than in the past, and demand for credit appeared to remain weak."

To read the complete statistical report, click here.