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Inside Washington (01/26/2010)

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* WASHINGTON (1/27/10)--President Barack Obama will deliver the State of the Union address tonight, and his speech is expected to be of significant interest to the banking industry, according to financial observers. Obama may use his speech to garner support for his proposed tax on big banks, said Brian Gardner, KBW Inc. analyst. In addition to the tax, Obama last week proposed to ban proprietary trading and curb growth of large financial institutions. Obama also could use his speech to convince the Senate to reappoint Ben Bernanke as Federal Reserve Board chairman, said Chris Whalen, managing director at Lord, Whalen LLC. Bernanke’s nomination is expected to generate one of the closest votes in history for the re-election of a Fed chairman. Camden Fine, president/CEO of the Independent Community Bankers of America, told American Banker (Jan. 26) that he hopes Obama will announce programs to help financial institutions provide credit to small businesses ... * WASHINGTON (1/27/10)--The Treasury Department will spend the next couple weeks drafting legislation that will be shared with lawmakers working on financial reform, according to Neal Wolin, department deputy secretary. The legislation aims to control companies’ growth by restricting financial firms from owning hedge funds and participating in proprietary trading (American Banker Jan. 26). It will attempt to constrain growth by acquisition as opposed to organic growth, Wolin said. Commercial banks that do not accept consumer deposits and are not insured by the Federal Deposit Insurance Corp. are not subject to restrictions, but they will be subject to more aggressive supervision, he added ... * WASHINGTON (1/27/10)--Treasury Secretary Timothy Geithner is scheduled to testify today before a House committee on oversight and government reform as part of an investigation regarding allegations that American International Group (AIG) improperly limited disclosures while it was being bailed out by the government (MarketWatch Jan. 26). Geithner was president of the New York Fed when the bailout took place. The bank has said Geithner was not involved with AIG’s discussions regarding the disclosures. Thomas Baxter, the New York Fed’s general counsel, is also slated to testify ...

Average 30-year mortgage rate drops in Dec. FHFA reports

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WASHINGTON (1/27/10)--The Federal Housing Finance Agency (FHFA) on Tuesday reported that the average 30-year conventional mortgage rate for December was 5.05%, slightly down from the mortgage rate reported in the previous month. The rate for conventional fifteen year fixed mortgages averaged 4.54% during December, a .09% decrease from the rate reported in November. These average rates are based on mortgages which closed during the last week of December, and reflect the mortgage conditions present during the last week of November, when the loans were started. The average loan amount increased by $6,600 from the number reported during the previous month, for a total average of $217,800 in December. The FHFA reported a decrease in the contract rate on fixed- and adjustable-rate mortgage loans, which dropped to 4.92% in December, .08% less than the rate reported in November. The FHFA report does not contain any information on adjustable-rate mortgages “due to insufficient sample size.”

Sen. Udall Help Main St. lift MBL cap

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WASHINGTON (1/27/10)--Sen. Mark Udall (Colo.) last week reiterated his support for “unleashing the power of loans to small businesses” by raising the cap on member business lending (MBL) for credit unions. Speaking at a small salon in Thornton, Colo., Udall said that his S. 2919, which 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, was “all about helping Main Street, not Wall Street.” Congress has “loaned a lot of money to Wall Street and to the big banks,” and Udall said that it is “now time to loan money in every way possible to small businesspeople and families and those who really put it to use.”
Click to view larger image From left: John Burke, president, Westminster FCU, Sen. Mark Udall (D-Colo.), Stacy Hamon, owner, 1st Street Salon, and John Dill, president/CEO, Credit Union Associations of Colorado and Wyoming. (Credit Union Associations of Colorado and Wyoming Photo)
Stacy Harmon, the salon owner whose salon business has grown exponentially since she secured a credit union loan, John Burke, President of Westminster FCU, and Credit Union Associations of Colorado & Wyoming President/CEO John Dill also attended the press conference. Udall cited Credit Union National Association (CUNA) predictions that lifting the MBL cap would result in $10 billion in new loans to small businesses and create as many as 108,000 new jobs, and estimated that raising the cap would allow Colorado-based credit unions to provide $200 million in loans to small businesses in Colorado, creating around 2,000 new jobs. The MBL cap lift would provide this funding at no cost to taxpayers, according to CUNA. Udall will be one of many high profile speakers at CUNA’s Governmental Affairs Conference (GAC) which will take place in Washington, D.C. from Feb. 21-25. For more on the GAC, use the resource link.

NCUA orders bar ten from financial institution work

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ALEXANDRIA, Va. (1/27/10)--The National Credit Union Administration issued orders prohibiting the following individuals from participating in the affairs of any federally insured financial institution.
*Brenda Alexander, a former employee of the merged TRICARE FCU, Newark, N.J., without admitting or denying fault, consented to an order of prohibition to avoid the time and cost of administrative litigation; *Becky Joyce Hughes, a former employee of Wiregrass FCU, Dothan, Ala., was convicted of misapplication of credit union funds and sentenced to 15 months in prison, 5 years supervised probation and ordered to pay $138,318 in restitution; *Charice Kaahanui, a former employee of Leahi FCU, Honolulu, Hawaii, was convicted of bank fraud and sentenced to 14 months in prison, 5 years supervised release, and ordered to pay $26,980 in restitution; *Steven Long, a former employee of Citizens FCU, Midland, Texas, was convicted of theft and ordered to pay $3,200 in restitution; *Steven Pennington, a former manager of the merged First Future CU, San Diego, Calif., without admitting or denying fault, consented to an order of prohibition to avoid the time and cost of administrative litigation; *Ana Santana, a former employee of the merged TRICARE FCU, Newark, N.J., without admitting or denying fault, consented to an order of prohibition to avoid the time and cost of administrative litigation; *Henry L. Slootmaker, a former employee of Peoples First Choice FCU, Glen Rock, N.J., without admitting or denying fault, consented to an order of prohibition to avoid the time and cost of administrative litigation; *Crystal L. Smith, a former employee of Bluegrass Community FCU, Ashland, Ky., was convicted of unauthorized use of an access device with intent to defraud. Smith was sentenced to 57 months imprisonment; 5 years supervised probation and ordered to pay $178,709 in restitution; *Emily Vanterpool-Charles, a former employee of St. Thomas FCU, St. Thomas, U.S. Virgin Islands, was convicted of embezzlement and ordered to serve 2 years in prison, with all but 6 months suspended, and placed on supervised probation for 2 years; and *Betty Lee Wing, former vice chairman of New England Lee FCU, Boston, Mass., was convicted of larceny and filing false reports in relation to employment at the Massachusetts Department of Public Safety, and is therefore prohibited from being affiliated with or participating in the affairs of any federally insured depository institution.
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 view NCUA enforcement orders online.

Mica YouTube video urges move money to a CU

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WASHINGTON (1/27/10)—The Credit Union National Association (CUNA) is making good use of YouTube again on behalf of credit unions. “Move your money to a credit union” is the title of the latest video posted there by CUNA President/ CEO Dan Mica.

The video plays off of and highlights a recent “Move Your Money” campaign prompted by editors of “The Huffington Post,” a quasi-blog/news website. It urged readers Dec. 29 to move their money from the big banks to community banks. The original “Move Your Money” posting on the website has led to more than 5,000 comments by readers of Huffington Post – most of them supportive and many of them also urging other readers to move their money to credit unions. In fact, CUNA’s Dan Mica posted a response on the blog, urging readers to consider credit unions – and that posting garnered more than 240 responses, most of them supportive of Mica’s message and credit unions. All that action spawned the idea for Mica’s “Move Your Money to a CU!” on YouTube as a way of further spreading the word. “There’s no doubt that what the Huffington Post started has really caught the fascination of many – some even calling it a ‘clarion call,’” said Mica. “Consumers deserve to know that credit unions are just as important a place for them to turn to for doing their financial business. We hope this YouTube posting will help point the way for them.”