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Interchange rule even with two tiers harms CUs CUNA

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WASHINGTON (1/11/11)—Pending interchange fee rule changes will create issues for both credit unions and their members, as well as consumers in general, whether a two-tier fee system is followed or not, the Credit Union National Association (CUNA) has again warned. It has been widely reported in recent days that Visa plans to follow a two-tiered interchange fee structure when and if the interchange fee regulations take effect later this year. Visa representatives, when contacted by News Now, said they did not wish to comment on the reports. Under the two-tiered fee system, credit unions and other financial institutions with over $10 billion in assets would be required to limit the interchange fee charged on individual purchases. This fee could be as low as seven cents per transaction under one plan released by the Federal Reserve. Credit unions and other institutions with under $10 billion in assets would not be subject to this fee limit. However, nothing in the Fed’s proposal, which was released late last year, provides an enforcement mechanism to ensure that the two-tier fee schedule is followed. CUNA Chief Economist Bill Hampel has said that market forces would likely erode the gap between the two tiers over time. Overall, smaller institutions such as credit unions could lose revenue due to the interchange changes, a circumstance that may force credit unions to increase member fees or reduce the amount of services they offer to those members, CUNA has said. CUNA and several congressional representatives have called on the Fed to hold hearings to review the interchange fee proposal.

Rep. Barney Frank added to 2011 GAC lineup

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WASHINGTON (1/11/11)—Democratic firebrand, House Financial Services Committee stalwart and co-sponsor of the most sweeping financial reform package in decades Barney Frank (Mass.) will again join credit union boosters as a speaker at the Credit Union National Association’s Governmental Affairs Conference (GAC).
Click to view larger image Rep. Barney Frank (D-Mass.), who becomes the ranking minority member of the House Financial Services Committee as the U.S. Congress reconvenes, is shown here at Credit Union House with Dan Egan, president of the Massachusetts, Rhode Island and New Hampshire Credit Union Leagues. Throughout 2010, Frank and his staff met with the Credit Union National Association, state leagues, and credit unions regarding their concerns with evolving financial regulatory reform measures. (CUNA Photo)
Frank is a frequent GAC speaker. While Frank was one of the architects of the Dodd-Frank Financial Regulatory Reform bill which was recently enacted, he has said that interchange regulations that were added to the financial reform package at the last minute could, if not properly crafted, "have unintended consequences" for credit unions and consumers. In a December letter to the Federal Reserve, Frank added that limitations on network restrictions should not unduly increase costs for credit unions, community banks or government card programs. Other well-known policymakers House Financial Services Committee chairman Rep. Spencer Bachus (R-Ala.) and Rep. Debbie Wasserman Schultz (D-Fla.) will also speak during the GAC, as will Consumer Financial Protection Bureau architect Elizabeth Warren. Actor and Children's Miracle Network Hospitals co-founder John Schneider, political pundits and co-authors of The New York Times No. 1 best-seller "Game Change" Mark Halperin and John Heilemann, and "Miracle on the Hudson" pilot Captain Chesley B. "Sully" Sullenberger III will also speak during the GAC, which will open on Sunday evening, Feb. 27 with a performance by classic rockers Three Dog Night. Additional speakers from Capitol Hill and the regulatory agencies will be announced in coming weeks. To register for this year's GAC, use the resource link.

UW CUs Mike Long to serve on Fed CAC

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WASHINGTON (1/11/11)—Credit Union National Association (CUNA) nominee and UW CU Chief Credit Officer Mike Long will, starting in 2011, serve on the Federal Reserve’s Consumer Advisory Council (CAC). Long is one of 10 new CAC appointees. Long told News Now that he is honored to be a part of the CAC, adding that he looks forward to representing the interests of credit unions and their members during his time with the committee. CUNA nominated Long and Idaho Credit Union League President/CEO Alan Cameron to serve on the CAC last September. Cameron served on the CAC through the end of 2010. The CAC, which is composed of 30 members that serve three-year terms, advises the Fed on its responsibilities under the Consumer Credit Protection Act and on other matters in the area of consumer financial services. The group meets three times a year in Washington, D.C. and meetings are open to the public. The group discussed loss-mitigation efforts, the Obama Administration's Making Home Affordable program, neighborhood stabilization initiatives and challenges, and other issues related to foreclosures during its last meeting, which took place on June 17, 2010. The CAC has not scheduled its first meeting of 2011. The Fed said that the CAC will continue to hold meetings until a number of consumer protection functions, in accordance with the Dodd-Frank financial regulatory reform act, are moved from the Fed to the new Consumer Financial Protection Bureau (CFPB). The CAC will be dissolved at that time, but the CFPB is authorized to establish its own consumer advisory body.

Rep. Emerson to lead appropriations finance subcommittee

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WASHINGTON (1/11/11)—Rep. Jo Ann Emerson (R-Mo.) has been appointed Chairman of the House Appropriations Committee’s financial services subcommittee. The National Credit Union Administration’s Central Liquidity Facility (CLF) and Community Development Revolving Loan Fund (CDRLF) fall under the jurisdiction of Emerson’s subcommittee. The U.S. Treasury's Community Development Financial Institutions (CDFI) Fund and the Small Business Administration are also overseen by this subcommittee. Congress in 2010 appropriated $1.25 million in funds to the NCUA's CDRLF, which provides loans and technical assistance to federal and state credit unions that are designated as low-income credit unions. The CDFI Fund has made $135 million in funds available to eligible community development financial institutions, including credit unions. Emerson has met frequently with representatives of the Missouri Credit Union Association, discussing small business lending and interchange fees, among other items, during those meetings.

CUNA urges reforms to GSEs rules

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WASHINGTON (1/11/11)--The challenge of reforming the government-sponsored housing enterprises is huge, but the costs to the economy and housing market of failing to make necessary changes is far greater, the Credit Union National Association (CUNA) told the U.S. Treasury Department in a letter urging a series of reforms. CUNA President/CEO Bill Cheney wrote in a Jan. 10 letter that CUNA and credit unions agree with a range of policy makers that “meaningful, comprehensive efforts” to address the numerous problems leading to the federal government’s conservatorships of Fannie Mae and Freddie Mac in September 2008 deserve to be addressed in the 112th Congress. In its letter, CUNA sent to Treasury Secretary Timothy Geithner specific recommendations the group has developed that reflect the needs and concerns of credit unions and their members regarding reform of the government-sponsored enterprises (GSEs). The recommendations include:
* Continuing the role of the GSEs to ensure that the housing finance system remains efficient, even if the current entities themselves must be replaced; * Equal access to the secondary market must be preserved going forward; it must be open to lenders of all sizes on an equitable basis; * A strong system of supervision must be developed and maintained, and entities providing secondary market services must be subject to appropriate regulatory and examination oversight to ensure safety and soundness, as well as strong capital requirements; * A reformed secondary mortgage market should distinguish between the goals of public policy, such as affordable housing, and a secondary market for mortgages; and * Legislation and regulations implementing the new housing finance system should emphasize consumer education and counseling as a means to ensure that borrowers receive appropriate mortgage loans.
Cheney told Geithner that mortgage lending is “a significant activity for many credit unions and is a vital financial service for their members.” He emphasized that throughout the housing crisis and recession, as other lenders pulled back credit, credit union first mortgage originations increased from $53 billion in 2006 to $59 billion in 2007, $70 billion in 2008 and a record $94 billion in 2009. Through September of 2010, credit unions originated first mortgages at an annual rate of $74 billion, with a delinquency rate in 2010 that has been about half that of commercial banks. Cheney further noted that from 2006 to 2008, credit unions sold about one-quarter of first mortgage originations. In 2009 and 2010, sales accounted for a little more than half of originations. “Obviously, a healthy, efficient and accessible secondary market is vital to credit unions and the millions of consumers they serve,” Cheney wrote. CUNA also circulated the letter to Senate Banking Committee Chairman-Designate Tim Johnson (R-S.D.), Senate Banking Committee ranking member Richard Shelby (R-Ala.), House Financial Services Chairman-Designate Spencer Bachus (R-Ala.), House Financial Services ranking member-designate Barney Frank (D-Mass.), and Special Advisor to the President Elizabeth Warren. To read CUNA’s extensive comments on GSE reform, use the resource link below.

Inside Washington (01/10/2011)

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* WASHINGTON (1/11/11)--Having projected that bank failures resulting from the 2008 crisis peaked in 2010, the Federal Deposit Insurance Corp. last month said it was cutting its budget slightly in 2011--but the agency will continue to add staff (American BankerJan 10). The agency’s budget remains at about $4 billion, and it adds 2.5% in staffing. The new positions are temporary, as are 40% of the total 9,252 authorized positions for 2011. With bank failures expected to remain high through at least 2011, the agency is not expected to downsize significantly for at least two years, experts say. The 2010 total of 157 bank failures surpassed the 2009 total of 140, but the cost of the 2010 failures was about $22 billion, compared with $37 billion in 2009. As the failures slow, the agency will increasingly turn its attention to litigation, observers said. Also, FDIC’s list of “problem” institutions still numbers 860 … * WASHINGTON (1/11/11)--The National Credit Union Administration (NCUA) Board has revised the closed Board meeting agenda scheduled for Thursday. The Board unanimously approved deleting item No.1, Insurance Appeals, from the previously announced closed meeting agenda. The revised agenda for the Thursday's open and closed Board meeting sessions is available online here