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NCUA answers query on correspondent services to other CUs

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ALEXANDRIA, Va. (1/31/11)--Federal credit unions that provide services such as share draft processing, check collection, automated clearinghouse (ACH) origination and receipt, and wire transfers to their members may also provide those services to other federal credit unions, National Credit Union Administration (NCUA) Associate General Counsel Hattie Ulan wrote in a legal opinion letter. Ulan was responding to a letter to the NCUA that asked if a given federal credit union could provide share draft processing, check collection, ACH origination and receipt, wire transfers, coin and currency, and lines of credit to other credit unions. Federal credit unions may offer lines of credit to other credit unions, according to the Federal Credit Union Act. They may also provide the additional aforementioned services to credit unions under their incidental powers authority, Ulan added. According to the letter, federal credit unions are also expressly authorized to extend lines of credit to other credit unions, subject to approval by the federal credit union’s board. For the full NCUA legal opinion, use the resource link.

Over 10 of 2011 CDFI Fund applicants are CUs

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WASHINGTON (1/31/11)--Credit unions currently represent 13% of the total applicant pool for the 2011 round of the U.S. Treasury’s Community Development Financial Institution (CDFI) Fund Program, according to a Friday Treasury release. Fifty credit unions requested a combined total of nearly $56 million in funding. Thirty-five of those requests were for $54.3 million in total financial assistance, while 15 of the requests were for $1.4 million in technical assistance grants. The CDFI Fund received 393 funding applications from credit unions, banks, loan funds, venture capital funds, thrifts, and holding companies. Under $465 million in funds has been requested by these entities, and $135 million in funding will be distributed during the 2011 round of the CDFI Fund. CDFI Fund Director Donna Gambrell said that while the overall economy is "showing clear signs of recovery,” economic recovery is somewhat slower in many low income communities. “The CDFI Fund is poised to ensure its resources are awarded and disbursed to the CDFIs serving these communities as expeditiously as possible,” she added. The Treasury's CDFI Fund helps locally based financial institutions offer small business, consumer and home loans in communities and populations that lack access to affordable credit. Credit unions that are certified to take part in the CDFI program may apply for as much as $2 million in funding to help maintain their credit union's presence in the community. CDFI fund distributions are merit-based. Twenty-one credit unions were awarded a combined $12 million in funds during the 2010 round of the CDFI Fund, with nearly one-third of those credit unions receiving $750,000 in funding each, the highest amount awarded to any financial institution during that round. The 2010 round of grants totaled $104.9 million in funding for 180 CDFI Fund-eligible institutions, representing the largest combined amount to be awarded since the CDFI Fund program began in 1994. The National Federation of Community Development Credit Unions in November reported that community development credit unions account for 165, or 20%, of CDFI-certified financial institutions. For the CDFI Fund release, use the resource link.

Panel recommends changes to private co. GAAP

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WASHINGTON (1/31/11)--Standards related to U.S. Generally Accepted Accounting Principles (GAAP) for public companies, and the standard setting process itself, should be reformed to “best meet the needs of users of private company financial statements,” a blue-ribbon panel has recommended. The panel consists of 18 members that represent a cross-section of financial reporting constituencies, including lenders, investors, and owners, as well as preparers and auditors. Karen Kelbly, National Credit Union Administration's chief accountant, contributed to the work of the panel as a participating observer, representing the U.S. Federal Financial Institution Regulatory Agencies. The recommendations were provided in a report that was issued to the Financial Accounting Foundation’s (FAF) Board of Trustees last week. That report called for the establishment of a new board to focus on making exceptions and modifications to U.S. GAAP for private companies, which include credit unions, and recommends the creation of a new set of decision criteria to facilitate a standard setter’s ability to make appropriate, justifiable exceptions and modifications, the FAF said. The new board would be overseen by the FAF, which also oversees the Financial Accounting Standards Board (FASB). The FAF noted that the report “does not advocate a move toward a separate, self-contained GAAP for private companies or a comprehensive reorganization of GAAP.” According to the report, the panel believes that the current system has not done a sufficient job of understanding the information that users of private company financial statements consider decision-useful and how those information needs differ from those of users of public company financials. This and other issues "have caused a lack of relevance of a number of accounting standards for many users of private company financial statements and an overall level of complexity in U.S. GAAP that continues to concern preparers of private company financial statements and their certified public accountant (CPA) practitioners." FAF President/CEO Teresa Polley said that her group “applauds the efforts of the blue-ribbon panel and will thoughtfully and thoroughly consider the issues raised by the panel, as well as the recommended solutions. The FAF will soon gather additional input on the panel’s recommendations. For the full release, use the resource link.

30-year mortgages average 4.61 in Dec. 2010

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WASHINGTON (1/31/11)--Conventional 30-year mortgages averaged an interest rate of 4.61% during December, a 23-basis point increase over November’s average, the Federal Home Finance Agency (FHFA) reported last week. Overall, the combined average contract mortgage rate for fixed and adjustable mortgages was 4.52% during that same time period. The effective interest rate, which reflects the amortization of initial fees and charges, was 4.63%, according to the FHFA. The FHFA reported that the average loan amount for loans that closed in December was $209,500, a drop from the previous month’s average of $214,800. Initial fees and charges represented 0.8% of the balance of those loans, and the average term of loans originated in December was 28.4 years. The average loan-to-price ratio was 75.6% in December, an increase from the 74.8% loan-to-price ratio recorded at the end of November. For the full FHFA release, use the resource link.

Inside Washington (01/28/2011)

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* WASHINGTON (1/31/11)--The Appraisal Subcommittee of the Federal Financial Institutions Examination Council (ASC) has initiated a project to study establishing a national appraisal complaint hotline as required by the Dodd-Frank Act. The determination was made during the ASC’s open meeting on Jan. 12. The hotline would receive complaints of noncompliance with appraisal independence standards and the Uniform Standards of Professional Appraisal Practice, and concerns about improper influencing of appraisers or the appraisal process … * WASHINGTON (1/31/11)--Observers are questioning the value of the Financial Crisis Inquiry Commission’s final report, citing a lack of consensus among commissioners, poor narrative of the crisis and bad timing (American Banker Jan. 28). After more than 18 months of research and investigation, the 662-page report is designed to provide bipartisan insight on the reasons behind the crisis and a description of the response following it. But the commission was divided along political lines. Democrats held the majority of the commission, which was established when the Democrats still held both houses of Congress. The majority view held that the crisis was caused primarily by human error related to overpriced housing, inadequate mortgage underwriting and risky securities. Also to blame were the investors, the mortgage giants Fannie Mae and Freddie Mac, and regulators for failing to identify the risk. The four Republican members of the commission all dissented from the majority view. William Longbrake, an executive-in-residence at the University of Maryland, said the report’s value is further diminished because the Dodd-Frank Act has been made into law and various agencies and committees are moving on with the details of the act … * WASHINGTON (1/31/11)--North Carolina Banking Commissioner Joseph A. Smith Jr. has withdrawn his name from consideration to oversee Fannie Mae and Freddie Mac, according to a White House statement (Bloomberg News Jan. 28). Smith was nominated by President Barack Obama in November to head the Federal Housing Finance Agency, which regulates Fannie, Freddie and the 12 Home Loan Banks. Smith failed to win U.S. Senate confirmation after objections from Republicans. Smith would have replaced FHFA Acting Director Edward J. DeMarco. The FHFA has overseen Fannie and Freddie since 2008, when they were taken into government conservatorship …