Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Washington Archive


Inside Washington (01/29/2010)

 Permanent link
* WASHINGTON (2/1/10)--Senators told American Banker (Jan. 29) that they are split on whether President Barack Obama’s State of the Union speech helped or harmed regulatory reform efforts. Obama commended the House for passing a reform bill last year but said bank lobbyists are working to squelch it. “We cannot let them win this fight,” Obama said. He noted that he would veto any final bill that does not equal “real reform.” During his speech, he also spoke about his proposal to tax big banks and limit their growth. Sen. Mike Crapo (R-Idaho) said Obama’s proposal makes reform more difficult because increasing taxes was not part of reform. Sen. Richard Shelby (R-Ala.), who said he does not support taxing big banks because many have repaid their bailout money. He added that lawmakers are working in good faith on reform, though nothing has developed yet. Obama did not touch on other topics of interest to the financial industry such as preventing foreclosures and the proposed Consumer Financial Protection Agency ... * WASHINGTON (2/1/10)--Sen. Richard Shelby (R-Ala.) said he would like to see Fannie Mae and Freddie Mac become privatized (American Banker Jan. 29). But, doing so would “take a lot of money,” he said. The Obama administration is expected to release a proposal for the enterprises in its 2011 budget. The budget is scheduled to be released today. Fannie Mae and Freddie Mac were taken into conservatorship in 2008 and lawmakers have speculated about their futures for some time ...

UDAP rule withdrawn with a twist

 Permanent link
ALEXANDRIA, Va. (2/1/10)—As expected, the National Credit Union Administration (NCUA) at its Friday open board meeting voted to withdraw its rule on Unfair or Deceptive Acts and Practices (UDAP). The agency announced last week that it would consider withdrawing its UDAP rule. The Credit Card Accountability, Responsibility and Disclosure Act of 2009 (Credit Card Act) essentially codified that rule and would supersede regulations to the extent there are differences among the provisions. The final UDAP rule was adopted jointly in December 2008 by the NCUA, the Federal Reserve Board, and the Office of Thrift Supervision and provisions were set to take effect July 1, 2010. The Fed has also voted to withdraw the rule. For administrative reasons the withdrawal is effective July 1. The NCUA board made it clear that federal credit union examiners will not be checking for compliance preparations with the UDAP rule, but instead will be instructed to consider a credit union’s compliance with the CARD Act provisions. Some provisions took effect Aug. 20, 2009, while most of the provisions take effect in a few weeks on Feb. 22. The only other item on the NCUA meeting agenda was the regular monthly report on the National Credit Union Share Insurance Fund. (See related story: Problem CUs continue to be an NCUA focus)

Whitehead named NCUA Region V director

 Permanent link
ALEXANDRIA, Va. (2/1/10)— Elizabeth Whitehead has been named as National Credit Union Administration Region V Director, with supervisory oversight of 480 federal credit unions with $57.6 billion in combined assets. Whitehead is currently NCUA Associate Regional Director, Programs, in Region I. She joined NCUA as a district examiner in 1988, and also has served as a senior supervision analyst and principal examiner. Prior to federal service, Whitehead was CEO of Hurlbut Employees FCU in South Lee, Mass. Region V covers Alaska, Arizona, Colorado, Hawaii, Idaho, Montana, New Mexico, Oregon, Utah, Washington, and Wyoming and Guam. Whitehead replaces Jane Walters, who has served as acting regional director since March 2009 and now returns to her position as Region II Director. NCUA Chairman Debbie Matz said in a release, "I am extremely pleased that the NCUA board selected Liz Whitehead as Region V director. Her varied and substantive body of regulatory experience, common-sense approach to problem solving, and demonstrated ability to assemble and direct talent makes her an ideal candidate for this position."

Problem CUs continue to be an NCUA focus

 Permanent link
ALEXANDRIA, Va. (2/1/10)—National Credit Union Administration (NCUA) Chairman Debbie Matz Friday expressed concern at the agency’s open board meeting about the high number of CAMEL 3, 4, and 5 credit unions and the percentage of insured shares which they represent. Matz said, as she has before, that the NCUA is being proactive with respect to looking for “red flags” that indicate a credit union is experiencing problems which could lead to a CAMEL downgrade if not corrected. She added that credit unions with these red flags may be subject to unplanned examinations in order to help address their problems before a CAMEL downgrade is required. Areas of concerns mentioned by Matz included increased loan delinquencies, especially increased problems with indirect lending, loan participations, or other areas in which credit unions may not have undertaken sufficient due diligence regarding their business partners. Another warning sign Matz mentioned was credit union exposure to interest rate risk by making large numbers of fixed-rate mortgages and holding them in portfolio. Matz said that the agency is encouraging examiners to adopt a cooperative attitude and not be “bullying.” However, she warned that examiners will issue letters of resolution to credit unions unresponsive to examiners’ concerns. She added that the agency will also consider issuing letters of understanding and agreement, and possibly making those public, in those situations as well as taking other actions as needed to protect the National Credit Union Share Insurance Fund (NCUSIF). According to agency figures, there are currently 351 lowest-ranked CAMEL 4 and 5 credit unions, 80 more than at year-end 2008. They represent 5.82% of insured shares, up from 2.7% in 2008. Staff indicated that, in the aggregate, CAMEL 4 and 5 credit unions hold approximately $41.2 billion of insured shares. NCUA staff also noted that there are currently 1,688 CAMEL 3 credit unions, which represent 13.67% of insured shares. Combined, insured shares in CAMEL 3, 4, and 5 credit unions represent approximately 19.5% of insured shares. Also reported, the NCUSIF’s equity ratio is projected to be 1.24% as of the end of December 2009, down from 1.27% at the end of November 2009 and 1.30% at the end of September. The NCUA indicated that the decrease in the equity ratio was the result of an estimated 9.5% increase in member shares and deposits , higher than they expected and loss expenses. Insured shares is the denominator in determining the ratio, and therefore the higher denominator drives down the ratio. Another factor in the decrease, according to NCUA staff, was the agency’s decision in 2009 to expense an additional $270 million to the NCUSIF’s reserves beyond what had been budgeted. The NCUSIF’s reserves, which are not included in the insurance fund’s equity ratio, now stand at $758.7 million. A closed meeting of the board--during which the NCUA was scheduled to discuss supervisory activities and personnel matters—followed the open session. The board also voted to withdraw its 2008 Unfair or Deceptive Acts or Practices rule because it was made redundant by a 2009 law. (See related story: UDAP rule withdrawn, with a twist)