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Inside Washington (01/22/2010)

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* WASHINGTON (1/25/10)--Missouri Credit Union Association’s (MCUA) President/CEO Rosie Holub and Kevin Brueseke, MCUA chief financial officer and chief operating officer, met with National Credit Union Administration (NCUA) Chairman Debbie Matz and Senior Policy Adviser Sarah Vega in Washington, D.C. on Thursday (The Missouri difference Jan. 22). Scott Hunt, director of NCUA’s Office of Corporate Credit Unions; Mike McKenna, NCUA deputy general counsel; John McKechnie, director of public and congressional affairs; and Steve Bosack, Matz’s chief of staff, also attended. They discussed member business lending, risk-based capital, and two proposed rules regarding the corporate credit unions and the federal charter field of membership. MCUA also met with Reps. Todd Akin (R-2); Roy Blunt (R-7); William “Lacy” Clay (D-1); Jo Ann Emerson (R-8); Blaine Luetkemeyer (R-9) and Ike Skelton (D-4) ... * WASHINGTON (1/25/10)--The results of Ben Bernanke’s confirmation vote for a second term as Federal Reserve Board chairman might be even closer than expected, according to The Wall Street Journal (Jan. 21). Bernanke’s term expires at the end of the month. His confirmation vote will take place next week at the earliest. Sens. Byron Dorgan (D-N.D.) and Jeff Merkley (D-Ore.) said they will vote against Bernanke. Sen. Bernie Sanders (I-Vt.) also said he plans to vote against him. Senate Majority Leader Harry Reid (D-Nev.) said he was readying to file cloture--which requires 60 senators to limit debate on the nomination. A vote would come two days after the cloture is filed. A final vote--which could follow up to 30 hours of debate--requires a simple majority. If the full Senate votes the way the Senate Banking Committee did, 16-7, Bernanke would receive 69 votes--fewer than Paul Volcker, who received 84-16 when he was confirmed for a second term as chairman in 1983 ... * WASHINGTON (1/25/10)--A proposal by President Barack Obama Thursday to limit the size and scope of large financial institutions could be difficult to implement, according to some industry observers. Obama proposed limits on big banks and their ability to take on risk, and said he is ready to fight any opposition to the plan (The New York Times Jan. 22). The president also said the banking industry’s “irresponsibility” contributed to the financial crisis. Sen. Richard Shelby (R-Ala.), ranking member of the Senate Banking Committee, appeared to agree with some of Obama’s positions. He told American Banker (Jan. 22) that some banks put themselves at risk--and banks that focused solely on banking were in “a lot less trouble.” However, Robert Albertson, chief strategist at Sandler O’Neill and Partners LP, said that the problem isn’t banks--it’s that credit is dead. Jamie Cox, managing partner with Harris Financial Group, said it would be difficult to limit banks’ portion of the nondeposit liability market because the problem affects banks globally ... * WASHINGTON (1/25/10)--The Obama administration is expected to revamp its Making Home Affordable program to help homeowners avoid foreclosure and streamline the documents borrowers must submit to lower payments. The changes are expected to prompt mortgage companies to move faster in lowering borrowers’ payments. The changes also could help alleviate the paperwork mortgage companies must process to qualify borrowers for lower payments (The New York Times Jan. 22). However, requiring fewer documents could mean companies will lend to people who can’t afford their homes, and thus cause more delinquencies. Edward Pinto, mortgage industry consultant and former chief credit officer for Fannie Mae, said the program may change from one that tries to legitimately prevent foreclosures into one that simply postpones them. The $75 billion Making Home Affordable program has been slated as a “disappointment” by the industry ... * WASHINGTON (1/25/10)--The Department of Housing and Urban Development (HUD) is cleaning up its Federal Housing Administration (FHA) lending program by eliminating underperforming lenders (American Banker Jan. 22). Every three months, FHA will review all loans that were originated within the last two years. Lenders whose default and claim rates were more than triple than that of its region and higher than the national rate will be terminated. The first review will cover loans made through Dec. 31, 2009. HUD also will consider account changes in a lender’s circumstances, loan volumes and whether a lender operates in an underserved area. A terminated lender can be re-instated after six months but must undergo an analysis to figure out the cause of its high default rates ...

Mica seeks Obamas support for MBL cap lift

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WASHINGTON (1/25/10)--The Credit Union National Association (CUNA) has called on President Barack Obama to endorse credit union member business lending (MBL) “as part of the solution to the small business credit crunch” in his upcoming State of the Union address. Legislation that would lift the MBL cap is pending in both the House and the Senate, and CUNA has estimated that lifting the MBL cap could result in as much as $10 billion in new capital for small businesses and the creation of over 108,000 new jobs within one year. In a letter sent to Obama late last week, CUNA President/CEO Dan Mica asked him to “not let this money go unused and these jobs go uncreated” and urged Obama to “call on Congress to pass legislation to permit credit unions to lend more to their business-owning members.” Reps. Paul Kanjorski (D-Pa.) and Ed Royce (R-Calif.), as well as Sen. Mark Udall (D-Colo.) have respectively introduced legislation that would increase the current MBL cap from 12.25% of total assets to 25% of total assets, and increase the de minimis amount of a credit union business loan to $250,000. “This does not represent a complete solution to the problems we face, but this lending could be done safely and soundly without costing the taxpayers a dime and without increasing the size of government,” Mica added.

Rep. Cantor joins full CUNA GAC lineup

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WASHINGTON (1/25/10)--Rep. Eric Cantor (R-Va.) will join a number of his congressional colleagues, including Reps. Dave Camp (R-Mich.), Spencer Bachus (R-Ala.), Paul Kanjorski (D-Pa.), Ed Royce (R-Calif.), and Ed Perlmutter (D-Colo.), as well as House Financial Services Committee Chairman Barney Frank (D-Mass.) and Senate Banking Committee Chairman Chris Dodd (D-Conn.), at the Credit Union National Association's Governmental Affairs Conference (GAC). Cantor took part in the 2009 edition of the GAC, publicly opposing mortgage cramdown efforts and telling the assembled crowd that cramdown would make it “more difficult” for credit unions to provide their members with credit. The GAC takes place Feb. 21-25 in Washington, D.C., and will feature a plethora of political and economic heavyweights, with Financial Accounting Standards Board Chairman Robert Herz, former Federal Reserve Chairman Alan Greenspan, and economist and host of CNBC's The Kudlow Report Larry Kudlow also scheduled to appear. For more information on the GAC, use the resource link.

NCUA releases schedule for first 2010 board meeting

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ALEXANDRIA, Va. (1/25/10)--The National Credit Union Administration (NCUA), at its upcoming board meeting at 10 a.m. ET Friday, will consider withdrawing a final rule that addresses Part 706 of its Unfair and Deceptive Practices rules. The UDAP rule withdrawal is a technical action, as the UDAP rule codifies many of the same provisions as the rules that were recently enacted by the Credit Card Accountability, Responsibility and Disclosure (CARD) Act and issued in the Fed's final Truth in Lending Regulation Z rules. The board will also be updated on the status of the National Credit Union Share Insurance Fund during the meeting. A closed meeting of the board--during which the NCUA will discuss supervisory activities and personnel matters--will follow the open session.

Check fraud is 2009 big-growth area for SARs

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VIENNA, Va. (1/25/10)—Mid-year numbers for 2009 indicate a shifting focus of suspicious activity reports (SARs) with a 19% increase in check-fraud reports and a 36% jump in counterfeit check SARs filed by credit unions and other depository institutions. Those figures, provided by the Financial Crimes Enforcement Network’s (FinCEN’s) most recent “SAR Activity Review-By the Numbers” report released Friday, also revealed the following: SARs filed by money services businesses showed a 76% increase in suspected fraud involving Traveler's Checks; SARs filed by casinos indicated an 18% rise in suspicious activity involving checks; and, there was a 19% spike in SARs by the securities and futures industries involving check fraud. The figures result from a comparison to activity for the corresponding time periods from the previous year. A much smaller increase—just one percent—was noted for SARs filings indicating suspected mortgage loan fraud. However, FinCEN underscored that sustpected mortgage fraud reports remain at a historically high level. Prior to the current report, mortgage-fraud SARs witnessed six straight years of double-digit growth. "FinCEN remains focused on its proactive efforts to assist state, local and federal investigators in efforts to use SARs to crack down on mortgage fraud and foreclosure rescue scams, and to identify other emerging trends and patterns," said FinCEN Director James H. Freis, Jr. in a release accompanying the report. "Fraudulent and criminal activity is seldom static and predictable, each financial industry sector has an important role to play in identifying these activities."