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Washington Archive

Washington

Compliance Reg Z guidance for CUs with card rate floors

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WASHINGTON (1/29/10)—As reported earlier (News Now Jan. 20), the Federal Reserve Board surprised everyone when it included in the official staff commentary accompanying its final Regulation Z rules a new prohibition that will not allow a credit union to offer a variable rate card account with a floor that prevents the rate from decreasing consistent with reductions in the independent index. The Credit Union National Association (CUNA) has discussed this issue with Fed staff, specifically the implementation issues, the requirements to send change-in-terms notices, and how they can comply with a 45-day notice requirement when the Feb. 22 effective date is just weeks away. In a memo to credit unions, CUNA discusses two options that credit unions have to consider. The first option is when the credit union decides to convert its current variable rate to a fixed rate, which will apply to existing balances, and to establish a new variable rate, with a higher margin but without a floor, for new purchases. The memo explains when a change-in-terms notice is necessary and when a required notice needs to be sent. The second option is when the credit union decides to keep its current variable rate card but to eliminate the existing floor. The memo describes the Regulation Z requirement and notes why this approach may be of interest to some credit unions. This issue will be discussed on CUNA’s audio-conference scheduled for next Tuesday, Feb. 2 at 1:00 p.m. CT on the new Credit CARD Act regulation. See the resource links for more information and registration.

Treasury HUD update guidance for mortgage mod program

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WASHINGTON (1/29/10)—An official from the U.S. Department of Housing and Urban Development (HUD) said in a release Thursday that while the administration is meeting goals with its Home Affordable Modification Program (HAMP), new guidance should enable servicers to” transition borrowers more quickly and easily from trial to permanent modification." According to administration numbers, more than 850,000 homeowners have been helped under HAMP with trial and permanent modifications to their troubled mortgages. However, William Apgar, HUD’s senior advisor for housing finance, said, "While we continue to meet our goals to provide immediate assistance, the updates announced today should enable servicers to transition borrowers more quickly and easily from trial to permanent modification." The new guidance from the agencies with HAMP oversight addresses two major issues regarding converting a HAMP trial modification to a permanent one:
* New Requirements that Documentation be Provided Before Trial Modification Begins: A simple, standard package of documents will be required prior to the servicer's evaluation of the borrower for a trial modification. This process will be required for all new HAMP modifications that became effective after June 1, although mortgage servicers may implement it sooner; and * Converting Borrowers in the Temporary Review Period to Permanent Modifications: Describes the proper procedures for conversion of those borrowers who are current on their monthly payments to permanent modifications.
Use the resource link below for more HAMP information.

UDAP NCUSIF report stand alone on NCUA agenda

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ALEXANDRIA, Va. (1/29/10)—Today’s National Credit Union Administration (NCUA) open board meeting, the first of the new year, is expected to be relatively short and sweet with just a UDAP action and insurance fund report on the agenda. The agency announced last week that it will consider withdrawing a final rule that addresses Part 706 of its Unfair and Deceptive Practices rules. The Credit Card Accountability, Responsibility and Disclosure Act of 2009 (Credit Card Act) essentially codified the final rule and would supersede the rule to the extent there were differences among the provisions, a point made by the Credit Union National Association in a comment letter to the agency. 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. It is unusual for an open board meeting to be scheduled for any day other than the third Thursday of the month; however, the agency had an off-site senior staff planning session that presented a scheduling conflict. All other 2010 board meetings are currently scheduled for Thursdays.

Inside Washington (01/28/2010)

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* WASHINGTON (1/29/10)--The Senate voted Thursday to confirm Ben Bernanke as Federal Reserve Board chairman for another four years. The vote on the final confirmation was 70-30. The final vote followed a cloture vote to avoid filibuster threats (MarketWatch Jan. 28) ... * WASHINGTON (1/29/10)--Treasury Secretary Timothy Geithner said Wednesday during a hearing on the bailout of American International Group (AIG) that he supports President Barack Obama’s plan to tax big banks and limit their growth. If Obama’s plan is adopted, taxpayers will not have to pay for industry bailouts, Geithner said. He also addressed questions about whether Obama’s plan would roll back Depression-era Glass-Steagall legislation, saying that the proposed Volcker rule--which would ban proprietary trading--is not the same as Glass-Steagall. Under Volcker, banks could still underwrite securities, Geithner said. During the hearing, he was questioned on his involvement with AIG’s bailout and the limits on some disclosures. Geithner said he was not involved with the decision to limit disclosures on the payments because he had recused himself after being nominated for a Treasury job (American Banker Jan. 28) ... * WASHINGTON (1/29/10)--The Federal Reserve’s policymaking committee said it will hold a final cash auction March 8 for $25 billion. A Feb. 8 auction also will be held for $50 billion (American Banker and News Now Jan. 28). The auctions, launched in December 2007, are a way for banks to borrow money from the central bank. The Fed auctioned off as much as $150 billion at the height of the financial crisis ...

New rule for GSEs reporting fraud

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WASHINGTON (1/29/10)—Starting Feb. 26, Fannie Mae, Freddie Mac, and the Federal Home Loan Banks (FHLBs) will be operating under a new fraud-reporting rule. The Federal Housing Finance Agency published a final rule this week that puts into effect requirements of the 2008 Housing and Economic Recovery Act, the statute that transferred oversight power of the government-sponsored entities (GSEs) to the FHFA. The final rules requires Fannie, Freddie and the FHLBs to report all fraud or suspected fraud in all their mortgage programs. The GSEs must do so “upon discovery that it has purchased or sold a fraudulent loan or financial instrument, or suspects a possible fraud relating to the purchase or sale of any loan or financial instrument.” The final regulation also requires the regulated entities to establish and maintain internal controls, policies, procedures, and operational training programs to ensure that any fraudulent loan or financial instrument or possible fraudulent loan or financial instrument is discovered and reported. The rule states clearly that the GSEs and affiliated entities are protected from liability “in making a report or requiring another to make a report if it acts in good faith.”

Move Your Money drumbeat continues

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WASHINGTON (1/29/10)—Arianna Huffington, founder of the news website and aggregator of blogs The Huffington Post, appeared on the Larry King Live show late Wednesday and repeated her call to consumers to move their money away from big banks and into smaller institutions, like credit unions. Appearing as part of King’s State of the Union wrap up—just hours after President Obama presented the first such address of his presidency—Huffington brought the conversation around to the topic of banks that have been TARP bailout recipients. “We've been advocating that for a long while, asking people to move (their money from) their banks too big to fail and putting it into community banks and credit unions that have a much better chance of actually lending to small businesses that create jobs,” Huffington said, in part. The Huffington Post launched a "Move Your Money" campaign last December. It urged readers to move their money from the big banks. The site then carried included an article by Credit Union National Association President/CEO Dan Mica and also a link to CUNA's credit union locator at creditunion.coop. The campaign also inspiredthe nost recent YouTube video posted by Credit Union National Association (CUNA) President/CEO Dan Mica to further spread the good word about credit union membership. (News Now1/27) Mica has said of his latest video, "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." Use the resource link to view the Mica video.

CUNA keeps up drive CUs can help countrys credit job woes

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WASHINGTON (1/29/10)—The Obama administration should not overlook credit unions as part of the solution to the country’s credit and job woes, Credit Union National Association President/CEO Dan Mica reiterated after the president’s State of the Union Address Wednesday night. CUNA had 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 State of the Union address. Legislation that would lift the MBL cap is pending in both the House and the Senate, and CUNA estimates lifting the 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. After hearing Obama’s remarks, which did not include credit unions, Mica said, “We are disappointed that the administration is going to give banks $30 billion in taxpayer money in the hope that they do the right thing and lend it to small businesses, while keeping the credit union no-cost-to-the-taxpayers solution on hold.” The $30 billion is a reference to Obama’s proposal to channel that amount in TARP funds to community banks to encourage them to lend. “Remember, banks are the ones who are telling Congress -- as recently as two weeks ago -- that demand for small business loans is down. Credit unions know there is demand for small business loans and they are ready to lend,” Mica said. “Mr. President,credit unions are willing and able. Tell Congress to lift that cap and let credit unions help small businesses." CUNA will continue to press the MBL issue with key U.S. Treasury Department officials and in the U.S. Congress.