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CUNA continues to address a number of key regulatory issues, including proposals from the Federal Reserve Board and Financial Accounting Standards Board (FASB), plus financial literacy requirements for directors and guidance on corporate credit unions and internet banking authentication.
Debit interchange proposal
CUNA President/CEO Bill Cheney says there’s no higher policy priority for CUNA at this time than to improve the “potentially horrendous” outcome under the Federal Reserve Board’s debit interchange proposal that will be inflicted on credit unions offering debit card programs if significant changes aren’t made.
CUNA’s Operation Comment has generated 3,600 letters from credit unions on this issue. “We’re grateful to the leagues and to credit unions for generating so many letters and for continuing to weigh-in with policy makers,” Cheney says. “In addition, I commend leagues that have organized their own interchange working groups.”
CUNA is preparing for the Feb. 17 hearing of the House Financial Services Committee’s Financial Institutions Subcommittee that addresses the Fed’s proposal and the debit card interchange amendment.
CUNA strongly urged this hearing and, along with leagues, is meeting with key legislators and staff to ensure they understand why the proposal and statute combine to disadvantage, not protect, credit unions and other small issuers.
On a positive note, FASB reversed its position that the vast majority of financial assets and liabilities should be recorded at fair value. FASB issued an exposure draft in May 2010 that would greatly expand the use of fair value accounting for financial instruments.
The agency has reviewed the exposure draft’s proposed changes since the comment period ended last October, and the board members agreed to allow as an exception to the fair value requirement that loan products can be recorded at their amortized cost.
CUNA strongly supports FASB’s tentative decision, which expresses acknowledgement by the Board that fair value as a measurement approach is inappropriate for certain items, such as “simple plain vanilla instruments” that an entity does not actively trade but holds to maturity.
While this development is positive, other aspects of the financial instruments proposal, such as the requirement to fair value debt securities, are worrisome. CUNA will continue to work with FASB and its parent entity, the Financial Accounting Foundation, to ensure credit unions’ concerns are heard and hopefully to minimize the negative effects that the proposal would likely have on credit unions and other reporting entities.
Next: Financial literacy for directors