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Inside Washington (06/10/2010)
* WASHINGTON (6/11/10)--The Latino community “needs credit unions that understand and serve their unique needs,” said National Credit Union Administration (NCUA) board member Gigi Hyland at the National Federal of Community Development Credit Unions’ Latino Credit Union Conference in Pittsburgh. She encouraged credit unions to continue their commitment to innovative outreach. “Part of your continuing challenge is to earn and maintain the trust” of the Latino communities served by Latino-focused credit unions, she said. Hyland also discussed NCUA initiatives to recognize the unique role that Latino, other community and low-income credit unions can play. Specifically, she addressed the recent NCUA supervisory letter on low-income credit unions and community development credit unions, NCUA’s proposal on small dollar loans, its Community Development Capital Initiative and member business lending. “Many of your efforts have focused on financial education and serving community members with the products they need,” she said. From NCUA’s perspective, “I’ve been firmly committed to trying to improve the dialogue between examiners, low-income credit unions and community development credit unions” ... * WASHINGTON (6/11/10)--A provision by Sen. Susan Collins (R-Maine) in the Senate version of the reform bill could have banks flooding capital markets or pursuing preferred-to-common stock conversions, said American Banker (June 10). Collins’ amendment would no longer allow bank securities held by the Treasury through the Troubled Asset Relief Program to count toward a banking company’s Tier 1 capital. D. Barry Hester, a lawyer for Bryan Cave, said the provision would mean a number of banks would be considered undercapitalized. Michael Iannaccone, president of MDI Investments Inc., said 350 banking companies could be forced to raise more capital. Sheila Bair, chairman of the Federal Deposit Insurance Corp., supports the amendment. The amendment is critical to ensure that financial institutions hold enough capital to absorb losses during financial stress, Bair has said in a letter to Collins ... * WASHINGTON (6/11/10)--A report is expected to be released today by the Treasury Department indicating how many banks in the Troubled Asset Relief Program (TARP) have missed six dividend payments to the government (American Banker June 10). Banks in TARP must pay a 5% quarterly dividend to the government until the funds are repaid. About 74 banks have deferred at least one payment, while a dozen banks have missed four payments, according to a March Treasury report. Today’s report will show how many missed the latest payment on May 17 ... * WASHINGTON (6/11/10)--The House was expected to pass a bill Thursday to recapitalize the Federal Housing Administration (FHA) by allowing it to raise borrowers’ annual premiums. The agency has backed an increasing number of loans during the financial crisis--about 30% of all new mortgages in 2009 and 20% of refinancings. But the losses have drained its capital reserves. The Mutual Mortgage Insurance Fund has a capital ratio of 0.53%, below the minimum 2%. The bill, introduced by Rep. Maxine Waters (D-Calif.), would allow FHA to raise its premium to 1.55% from the current cap of 0.55%. FHA said it would not immediately raise the premium--rather, it would charge an annual rate of 0.90% for borrowers who make downpayments of 5% or less, and 0.85% for borrowers with bigger downpayments ... * WASHINGTON (6/11/10)--Senate Banking Committee Chairman Christopher Dodd (D-Conn.) has endorsed a plan that would force banks to divest their derivatives operations. The plan is championed by Sen. Blanche Lincoln (R-Ark.), who has been fighting an uphill battle to keep her provision in the regulatory reform bill (American Banker June 10). Dodd said Lincoln’s primary win this week increased the chances of the provision being included in the reform bill. Some financial observers said the derivatives issue could be addressed through changing language that would implement the Volcker Rule to ban proprietary trading. Dodd did not say if he favored the approach ...


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