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Washington Archive

Washington

NCUA offers changes to House TARP bill

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ALEXANDRIA, Va. (1/14/09)—The National Credit Union Administration (NCUA) yesterday urged House Financial Services Committee Chairman Barney Frank (D-Mass.) and Ranking Member Spencer Bachus (R-Ala.) to make changes to the TARP Reform and Accountability Act of 2009 (H.R. 384). In a letter to the lawmakers, NCUA Chairman Michael Fryzel expressed his agency’s support for the measure. However the federal credit union regulator said he “believes it to be extremely important to equip NCUA with the same essential powers and authorities being considered for FDIC in dealing with the varied and complex set of risks confronting financial institutions in this volatile market.” Use the resource link below to access Fryzel’s 11-page letter.

Inside Washington (01/13/2009)

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* WASHINGTON (1/14/09)--A new Federal Emergency Management Agency (FEMA) flood hazard form has a June 16 compliance date. FEMA has replaced Form 81-93, the Standard Flood Hazard Determination Form (SFHDF), which expired Oct. 3, with a new Form 81-93 that expires Dec. 31, 2011. SFHDFs completed June 16 or later must use the new form for compliance purposes. Credit unions must perform a flood hazard determination when they make, increase, extend, or renew a loan secured by a “building”--a home on a permanent foundation or a mobile home--located in a special flood hazard area. The credit union or its service provider must document the flood determination on the SFHDF. The form must be retained, in hard copy or electronically, while the credit union owns the loan ... * WASHINGTON (1/14/09)--President-elect Barack Obama is pushing for the second half of the $700 billion bailout fund to be released (The Associated Press Jan. 13). On Monday, the Bush administration requested the second half of the bailout fund at Obama’s request. At a luncheon Tuesday, Obama asked senators not to stand in the way of the bailout, and said that Troubled Asset Relief Program (TARP) funds are necessary to stimulate the economy. House Financial Services Committee Chairman Barney Frank (D-Mass.) agreed and said the second $350 billion is needed for foreclosure relief. However, some lawmakers are resisting the release of TARP funds. Rep. Spencer Bachus (R-Ala.) questioned if the funds are needed or would be used as a “grab bag” of taxpayer money. Frank is working on legislation to set conditions on the way the second half of the funds will be spent. His bill is slated for release Wednesday ... * WASHINGTON (1/14/09)--The Small Business Administration was ranked No.1 in the highest overall improvement in Talent Management, and Leadership and Knowledge Management, according to the 2008 Federal Human Capital Survey. The agency also had the second largest gain in Job Satisfaction, and the sixth largest gain for establishing a Results-Oriented Performance Culture. The survey measures employees’ perceptions of whether, and to what extent, conditions characterizing successful organizations are present in their agencies ...

Rep. Baca offers plan for CUs under TARP

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WASHINGTON (1/14/09)—Rep. Joe Baca (D-Calif.) offered an amendment to Troubled Asset Relief Program (TARP) legislation that would provide a limited form of alternative capital to help credit unions participate in government assistance programs. Baca offered his amendment Tuesday during a House Financial Services Committee hearing titled, "Priorities for the Next Administration: Use of TARP Funds under EESA (Emergency Economic Stabilization Act).” The hearing also focused on H.R. 384, a newly introduced bill intended to modify rules governing TARP. A member of the financial services committee, Baca questioned the fact that credit unions have not received any of the U.S. Treasury’s TARP funds even though they are included in statutory language as eligible institutions. The California CU League met with Baca on this and other credit union issues just last week. The Credit Union National Association (CUNA) Tuesday also kept the heat on for credit union inclusion in any new program developed by Treasury under TARP. In a letter to the top members of the House Financial Service, CUNA urged that as Congress considers the conditions under which the administration may use a second installment of TARP funds, lawmakers should ensure credit unions are included in any additional programs developed for mutual institutions. CUNA President/CEO Dan Mica noted in the letter that, to date, Treasury has focused its TARP efforts on capital injections. “As a result, credit unions, including corporate credit unions, that may need access to TARP funds are shut out because the Federal Credit Union Act does not generally permit credit unions to obtain capital from outside sources,” wrote Mica. The CUNA leader recommended that Congress consider a statutory change to the definition of net worth to allow credit unions to access TARP funds. The CUNA letter also sought statutory systemic risk authority for the National Credit Union Administration Board (NCUA), on a similar basis to that which the Federal Deposit Insurance Corporation enjoys. “Without a specific systemic risk provision, NCUA has been reluctant to take this action. We believe that given the uncertainty of the economic crisis, parallel authority for NCUA to address systematic risk issues in a timely fashion is reasonable.” Mica wrote. He noted that CUNA recognizes that the challenges that our economy is facing are extraordinary, and that credit unions, as an industry, remain relatively healthy. “While there is rightly a tendency to deal with the largest problems first, the legislative changes described herein would provide avenues to assistance for which Congress intended credit unions to be eligible, and which some credit unions may need in the near future,” Mica urged. The letter was addressed to House Financial Services Committee Chairman Barney Frank (D-Mass.) and the panel’s ranking member, Rep. Spencer Bachus (R-Ala.).

House FS Republicans Slow down on TARP mods

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WASHINGTON (1/14/09)—The ranking Republican members of the House Financial Services Committee urged their chairman to slow his drive for a bill to modify rules governing the U.S. Treasury Depaertment’s Troubled Asset Relief Program (TARP). Frank introduced the TARP Reform and Accountability Act (H.R. 384) last week and the House is expected to vote on it this week, without the normal legislative process of a committee mark up. (See related story "Rep. Baca offers plan for Cus under TARP.") In a letter to Chairman Barney Frank (D-Mass.), the committee Republicans wrote, ““The original TARP was considered and enacted in a panicked rush to judgment. We are again moving far too quickly in considering whether to approve the expenditure of hundreds of billions of taxpayer dollars.” The letter continued: “The hurried nature of this legislation is particularly mystifying when the Senate had indicated that it has no intent of taking up this bill. Accordingly, we respectfully request that you postpone Floor consideration of H.R. 384 and schedule a mark up in the Financial Services Committee.” The letter was signed by ranking member Spencer Bachus (Ala.), and Reps. Randy Neugebauer (Tex.), Judy Biggert (Ill.), Jeb Hensarling (Tex.), Scott Garrett (N.J.), Shelley Moore Capito (W.V.), Gary Miller (Calif.), and Ron Paul (Tex.).

Five cited in NCUA prohibition orders

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ALEXANDRIA, Va. (1/14/09)--The National Credit Union Administration (NCUA) recently cited five individuals in prohibition orders as the result of offenses ranging from “fraudulent misappropriation by a fiduciary” to “bank larceny.” According to NCUA, the following former credit union personnel are now banned from participating in the affairs of any federally insured financial institution:
* Adelle Herron, a former employee of Peoria Hiway CU. Peoria, Ill., who pled guilty to bank fraud and was sentenced to 36 months in prison, five years probation, and ordered to pay $540,627 in restitution; * Lori A. Kloss, a former employee of Niagara Falls Memorial Medical Center FCU, Niagara Falls, N.Y., who was convicted of petit larceny and sentenced to 60 days in jail and three years of probation; * Marcella G. Miller, a former employee of Georgia-Pacific Toledo Employee FCU, Toledo, Ore., who pled guilty to bank larceny and was sentenced to 24 months in prison, 36 months probation and ordered to pay $506,161.86 in restitution; * Judy N. Putman-Speight, who in 2003 was convicted in the Maryland Circuit Court for Montgomery County of “fraudulent misappropriation by a fiduciary.” Putman-Speight was sentenced to 12 months in prison, with all but 15 days suspended, 18 months probation, fined $1,000, and ordered to pay $38,000 in restitution; and * Winston Louis Smith, a former employee of State Employees CU, Jacksonville, Fla., who pled guilty to embezzlement, defrauding a financial institution, and false statements. Smith was sentenced to 18 months in prison, five years probation, and ordered to pay $178,921 in restitution.
Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million. Use the resource link below to see these and other NCUA enforcement orders.

CUNA VP Klavitter exits for CU gig

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WASHINGTON (1/14/09)--News Now editor David Klavitter is leaving the Credit Union National Association (CUNA) after 10 years to rejoin a Dubuque, Iowa-credit union for which he worked earlier in his career. Klavitter will join Dupaco Community CU as senior vice president of marketing and communication, starting Feb. 9. He previously worked on Dupaco's marketing staff from 1996 to 1999 before joining CUNA. "We are excited to welcome him back to our credit union family and onto our senior management team as he is the perfect fit to lead brand Dupaco into the future," Dupaco President/CEO Bob Hoefer said in a release. Klavitter has been vice president of editorial communications in CUNA's Washington office for six years, where his duties have included editing News Now. Before that he held editorial and public relations positions for four years in the CUNA Madison office. Dupaco has $545 million in assets.

FASB adopts impairment plan

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WASHINGTON (1/14/09)—The Financial Accounting Standards Board (FASB) approved changes to its guidance for determining impairment of certain debt securities. Historically, there have been two similar models for determining when a security is other-than-temporarily-impaired (OTTI), but they included some key differences. One of FASB's primary objectives in issuing the amended guidance was to increase consistency between the models, an objective supported by the Credit Union National Association (CUNA). CUNA Regulatory Research Counsel Luke Martone reviewed the changes and noted they shift the determination of impairment from market participants' assessment of cash flows to management's assessment. “That’s a change supported by CUNA and by many in light of the current dislocated market,” Martone said. He added that while the guidance modifies the method for determining when securities are OTTI, a subsequent requirement that such securities are then to be written down to their fair value is unchanged. In its guidance EITF 99-20-1, FASB noted that a determination of OTTI requires analysis and judgment based on all available relevant information. It stated that it is “[i]nappropriate to automatically conclude that a security is not other-than-temporarily-impaired because all of the scheduled payments to date have been received,” nor is it appropriate to “automatically conclude that every decline in fair value represents an other-than-temporary-impairment.” According to Martone, the new guidance was not approved unanimously by FASB. Some dissenting board members maintained that the FASB staff position (FSP) “does not result in sufficient benefits to investors to warrant its issuance.” “While CUNA supported the change, we agree that it does not afford complete relief from the problems related to applying fair value standards to securities that are not intended to be sold,” Marton said. CUNA will continue working to improve the application of fair value standards to credit union assets. “The dissenters’ primary concern is that this FSP will only lessen the already shaky confidence of many investors, and that ‘the majority of investors who responded [to FASB’s proposal] strongly opposed the FSP,’” Martone explained. He said they maintained that FASB’s rules should focus on investors. The FSP is effective for interim and annual reporting periods ending after December 15, 2008, and are to be applied prospectively.