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Inside Washington (03/27/2012)
  • WASHINGTON (3/28/12)--During the 2012 Credit Union National Association (CUNA) Governmental Affairs Conference (GAC), Minnesota credit union representatives spent an afternoon on Capitol Hill, visiting all the offices of the state's congressional delegation. Of top concern were bills in the House and Senate regarding member business lending (MBL), which propose raising the credit union cap on lending to 27.5% of assets from 12.25%. Increasing the MBL cap would inject $13 billion in new funds into the economy, creating as many as 140,000 new jobs in the first year after enactment, estimates CUNA. Both House and Senate versions of the bill are expected to be voted on during the current session. Sen. Al Franken (D-Minn.) has signed on as a co-sponsor of the Senate bill, and Minnesota's GAC attendees worked to encourage more delegates to sponsor the legislation. They also discussed a bill allowing credit unions access to supplemental capital and financial institution exam reform. In the photo, Lynn Kothe of North Memorial FCU, Robbinsdale, Minn., (left) and Pat Brekken of Richfield-Bloomington CU, Richfield, Minn., (right) were among a group of Minnesota GAC attendees who met with Rep. Keith Ellison (D-5th District). (Photo provided by Minnesota Credit Union Network) …
  • WASHINGTON (3/28/12)--The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corp., and Office of the Comptroller of the Currency are seeking comment on proposed revisions to the interagency leveraged finance guidance issued in 2001. The guidance covers transactions characterized by a borrower with a degree of financial or cash flow leverage that significantly exceeds industry norms as measured by various debt, cash flow, or other ratios. The three agencies said they observed tremendous growth in the volume of leveraged credit leading up to the financial crisis and in the participation of non-regulated investors. While there was a pull-back in leveraged lending during the crisis, volumes have since increased while prudent underwriting practices have deteriorated, the agencies said. As the market has grown, debt agreements frequently have included features that provide relatively limited lender protection, including a lack of maintenance covenants and other features that can affect lenders' recourse if borrowers fail to pay back loans. Capital structures and repayment prospects for some transactions, whether originated to hold or to distribute, have been aggressive, the agencies said. Management information systems at some institutions have not been accurate or timely in aggregating exposures, and many institutions have found themselves holding large pipelines of higher-risk commitments at a time when buyer demand for risky assets diminished significantly …
  • WASHINGTON (3/28/12)--The Federal Deposit Insurance Corp. (FDIC) extended until April 30, the comment period on a proposed rule to require banks with more than $10 billion in consolidated assets to conduct annual stress tests. The FDIC said the scope and complexity of the proposal required the comment period to be extended to allow interested parties more time to analyze the issues and prepare their comments. Originally, comments were due by March 23. The proposed rule, part of the Dodd Frank Act, was approved at the Jan. 17 FDIC Board meeting …


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