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Inside Washington (01/11/2010)

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* WASHINGTON (1/12/10)--Treasury Secretary Timothy Geithner could testify next week in Congress about the Federal Reserve Bank of New York’s effort to limit American International Group Inc.’s disclosures during its bailout. Congress obtained e-mails sent from the New York Fed when Geithner was president of the bank, about withholding the documents. The hearing will put pressure on Geithner to explain his handling of the company’s bailout, observers said (Bloomberg News Jan. 11). Rep. Darrell Issa (R-Calif.) has called the bailout a backdoor deal. President Barack Obama, who expressed confidence in Geithner, said Geithner was not involved in any of the e-mails in question ... * WASHINGTON (1/12/10)--President Obama is considering a fee on financial institutions to offset the federal deficit, according to administration officials. The fee would generate back some of the money that taxpayers paid to bail out the financial system in 2008. Politico reported Monday that the administration was deliberating a fee (The New York Times Jan. 11). The Obama administration has been pressured to tax institutions and their executive compensation. Anger has prevailed as big banks are generating profits and paying big bonuses despite rising unemployment, the Times said. Treasury Secretary Timothy Geithner has argued that a transactions tax would be passed onto consumers and that institutions would work to avoid a bonus tax. The Federal Deposit Insurance Corp. also is considering charging riskier banks higher premiums ...

Congress this week Slow before Senate return

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WASHINGTON (1/12/10)--While the House of Representatives will return for the second session of the 111th Congress on Tuesday, there is little in the way of official business scheduled, and many of the House members will depart Washington on Thursday to attend the Democratic Issues Conference. A number of bank executives later this week will testify before Congressional members in the first of many hearings held by the Financial Crisis Inquiry Commission, a body that was formed to determine the causes of the nation's financial crisis. Additional hearings are planned throughout the year. The Senate will not return to session until Tuesday, Jan. 19.

Jobs effort bankers neglect could help boost MBLs

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WASHINGTON (1/12/10)--Sen. Kristin Gillibrand (D-N.Y.) is pushing to include member business lending (MBL) legislation as part of pending job-creation legislation that will soon come up in Congress. Gillibrande said the MBL legislation “would free up lending at not-for-profit credit unions in every corner of America to small businesses” and is necessary “if we’re going to create new jobs and rebuild our economy for the long term.” House Financial Services Committee Chairman Rep. Barney Frank (D-Mass.) in an interview with The Boston Herald, also discussed the small business lending issue, threatening to “give credit unions more power” if banks neglect to improve their current lending practices. State legislators have also come out in support of lifting the MBL cap, with Michigan State Sen. Randy Richardville (R) asking Rep. John Dingell (D-Mich.) to support MBL legislation in a recent letter. Commenting on these reports, Credit Union National Association (CUNA) Senior Vice President of Legislative Affairs John Magill said that CUNA is “delighted that the legislators are giving serious attention to this very important lending tool for credit unions.” Speaking at Long Island, N.Y.-based Bethpage FCU, Gillibrand called S. 2919, the Small Business Lending Enhancement Act of 2009, “common-sense legislation” that would “give small businesses more of the capital they need to get off the ground, grow and get thousands of Americans back to work.” Similar to H.R. 3380, the Promoting Lending to America's Small Businesses Act, which was recently introduced by Reps. Paul Kanjorski (D-Pa.) and Ed Royce (R-Calif.), S. 2919 would increase the cap on credit union member business lending to 25% of a credit union's total assets and raise the de minimis loan threshold from $50,000 to $250,000. CUNA has estimated that expanding the capacity of credit unions to make business loans could result in $10 billion in new business loans through credit unions and at least 108,000 new jobs in the first year after enactment, with no additional costs to taxpayers. Expressing frustration with the current “intolerable” lending situation, Frank said that he would consider increasing credit union lending authority if conventional or community banks do not step up to support small businesses. In his interview, Frank said that while the economic recovery is “under way,” it is “not expanding enough.” Frank has also promised to organize a hearing on loan practices in the coming weeks.

Reg alert on CTR exemptions

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ALEXANDRIA, Va. (1/12/10)—The National Credit Union Administration (NCUA) has issued a regulatory alert to red-flag recent guidance by the Financial Crimes Enforcement Network (FinCEN) on determining a accountholders’ eligibility for an exemption from Currency Transaction Report (CTR) requirements. The NCUA issued the alert last month reminding credit unions that under the Bank Secrecy Act (BSA) financial institutions must file a CTR on any transaction in currency of more than $10,000. BSA rules do allow exemptions for certain members, or customers, and FinCEN issued the following guidance late last year on a rule that was actually effective Jan. 5, 2009. In that rule, the NCUA alert noted, FinCEN made the following changes to the previous CTR exemption system:
* Eliminated the designation and annual review requirement for most credit unions; * Decreased the definition of “frequent reportable transactions” from eight to five transactions; * Decreased the waiting time for CTR exemption eligibility from twelve months to two months; and * Eliminated the CTR exemption biennial renewal requirement.
The FinCEN guidance (FIN-2009-G003) also addresses the most frequently asked questions regarding the CTR exemption. Use the resource link below to access the NCUA regulatory alert on the CTR rules.