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Inside Washington (01/21/2010)

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* WASHINGTON (1/22/10)--President Barack Obama Thursday proposed a plan that would limit the size and scope of financial institutions (The New York Times Jan. 22). The changes would prevent bank holding companies from owning, investing, or sponsoring hedge fund or private equity funds and from participating in proprietary trading--which Obama called the Volcker rule, after former Federal Reserve Chairman Paul Volcker. The former chairman champions the restriction, the newspaper said. Obama also seeks to limit consolidation in the financial industry by curbing the growth of the market share of liabilities at the nation’s biggest firms. The banking industry and Republicans said they oppose the proposed changes. Rep. Spencer Bachus (R-Ala.) said the Republicans already proposed a plan last July to end the bailouts and restore market discipline. Obama said he expected opposition, and noted, “If these folks want a fight, it’s a fight I’m ready to have” ... * WASHINGTON (1/22/10)--The Federal Deposit Insurance Corp. (FDIC) announced that it plans to open a temporary satellite office in Chicago to manage receiverships and liquidate assets from failed financial institutions primarily located in Midwestern states. The office will provide facilities for up to 500 non-permanent staff and contractors. FDIC uses temporary satellite offices to keep temporary asset resolution staff closer to the concentration of failed bank assets they oversee. As work diminishes, the offices close. Similar offices operate in Irvine, Calif., and Jacksonville, Fla. ... * WASHINGTON (1/22/10)--The Federal Deposit Insurance Corp. (FDIC) may decide not to use ratings agencies when it sets insurance premiums for large banks, FDIC Chairman Sheila Bair said at a conference Wednesday (American Banker Jan. 21). The FDIC has used debt ratings and other risk factors to calculate premiums, but scrutiny over the performance of private ratings agencies has surfaced recently, causing the agency to re-think its process. The FDIC may do its own analysis, Bair added ...

CARD Act compliance is CUNA audio conference topic

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WASHINGTON (1/22/09)—The Credit Union National Association (CUNA) on Feb. 2 will hold an audio conference call on the recent final rule that implements the provisions of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act that will become effective on Feb. 22, 2010. Topics covered during the audio conference call will include portions of these rules that require new minimum payment warnings on credit card statements, prevent card issuers from increasing interest rates during the first year an account is open, restrict how a card issuer may increase the annual percentage rate of a credit account, require a consumer to opt-in before over-the-limit fees may be charged, impose requirements on how payments are to be applied to different balances, and require co-signers for consumers under 21 years of age. This will also include discussion of the recent provisions that will prohibit creditors from raising their variable rates based on changes to the underlying index if there is a floor on these rates. Additional requirements of these CARD Act rules will also be discussed during the call, which will be led by CUNA Senior Assistant General Counsel Jeff Bloch and CUNA assistant general counsel and senior compliance counsel Michael McLain. The speakers on this call will also include Federal Reserve Board attorneys Benjamin Olson and Amy Henderson and credit union compliance expert Mary-Lou Heighes. To register for the 90-minute, 2:00 p.m. (ET) audio conference, use the resource link.

House subcommittee looks at bank failures

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WASHINGTON (1/22/10)—A House Financial Services subcommittee Thursday took a look at the condition of financial institutions through a case study of a recent bank failure. The House subcommittee on financial institutions and consumer credit, which is chaired by Rep. Luis Gutierrez (D-Ill.), heard from representatives of the banking industry and the U.S. Treasury Department, as well as federal bank regulators. In written testimony, Director Mitchell Glassman of the Federal Deposit Insurance Corp’s (FDIC’s) division of resolutions and receiverships reiterated the agency’s 2009 bank-failure experience. Glassman noted that the FDIC resolved 140 insured institutions with over $171 billion in total assets. He added, “While the economy is showing signs of improvement, recovery in the banking industry tends to lag behind other sectors. We expect to see the level of failures continue to be high during 2010.” Glassman testified that the FDIC is prepared and ready to handle the situation. Due to staffing enhancements that began several years ago and other changes, such as last year’s expansion of the agency’s Receivership Assistance Contractors and geographic expansion through temporary satellite offices on both the west and east coasts, Glassman said the FDIC stands ready to manage bank closing and receivership activities throughout the country. Other witnesses included representatives of: Bethel New Life Inc., a faith-based community group with a focus on Chicago’s West Side; FBOP Corporation; U.S. Bank; Austin Bank; Treasury, and the Office of the Comptroller of the Currency. Today, the parent Financial Services Committee intends to take a look at compensation in the financial industry. Three scheduled witnesses are: Lucian Bebchuk, from Harvard Law School; Nell Minow, editor and founder of The Corporate Library, and Joseph Stiglitz, from the Columbia Business School.

Rep. Camp of Ways and Means joins GAC lineup

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WASHINGTON (1/22/10)--Rep. Dave Camp (R-Mich.), the top Republican on the powerful House Ways & Means Committee, is the latest guest to sign on to speak at the Credit Union National Association’s (CUNA) upcoming Governmental Affairs Conference (GAC). The GAC takes place between Feb. 21 and 25 in Washington, D.C. Camp, who also appeared at last year’s GAC, was one of many co-sponsors of the Credit Union Regulatory Improvements Act, and, more recently, has served as the ranking GOP member of the House Ways and Means Committee. Other key GAC speakers from Capitol Hill include Senate Banking Committee Chairman Chris Dodd (D-Conn.), House Financial Services Commmittee Chairman Barney Frank (D-Mass.) and from that same committee Ranking Minority Member Spencer Bachus (R-Ala), Paul Kanjorski (D-Penn.), Ed Royce (R-Calif.) and Ed Perlmutter (D-Colo). The GAC will also feature further information and entertainment, including an opening day concert, select speakers, and a point-counterpoint debate between MSNBC pundit Joe Scarborough and former Democratic National Committee Chairman Howard Dean. Use the resource links below for more information.

CUNA Little impact seen from high court expenditure ruling

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WASHINGTON (1/22/10)--Thursday’s Supreme Court ruling which lifted restrictions on corporate political spending on communications will likely have little or no impact on the Credit Union National Association’s (CUNA) most effective political action tools, including partisan communications and independent expenditures. The Supreme Court in a 5 to 4 ruling found that existing limits on the campaign spending of corporate interests were not consistent with the political speech protections set forth in the First Amendment. Conservative members of the court supported the ruling, while the four dissenting members included Justices John Paul Stevens, Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor. CUNA Senior Vice President of Political Affairs Richard Gose said the Supreme Court decision “has everything to do with communications by corporations, but little or nothing to do with contributions made to political action committees such as the Credit Union Legislative Action Council (CULAC), CUNA’s political action committee (PAC),” and these types of contributions are expected to continue through the upcoming election cycle. Businesses and labor unions were previously required to use PACs to publicly attack or support a given candidate, and there was a limit on those funds. However, with the Supreme Court ruling, these entities will now be able to support or oppose a given candidate in public advertising campaigns, with no need for a separate PAC. However, they will still be required to disclose their involvement in any campaign-related ads. Direct corporate contributions to candidates will still be prohibited under Federal law. Responding to the ruling, President Barack Obama in a release said his Administration would “get to work immediately” and “talk with bipartisan Congressional leaders to develop a forceful response to this decision.” Sen. Russ Feingold (D-Wis.), who, along with Sen. John McCain (R-Ariz.), authored legislation that reformed some campaign finance laws, has also promised to work to restore “as many of the critical restraints on corporate control of our elections as possible."