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Washington Archive

Washington

Inside Washington (01/30/2009)

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* WASHINGTON (2/2/09)—Credit Union National Association (CUNA) analysis of the stimulus package (H.R. 1) passed recently by the House showed it would restore the high-cost area limit on Fannie Mae and Freddie Mac loans to $729,750 for loans made in 2009. The high-cost limit reverted to $625,500 on Jan. 1. The conforming loan limit remains at $417,000. The Senate as of late Friday had not yet scheduled a vote on its stimulus bill. However, President Barack Obama has said he wants final passage by Feb. 23 … * WASHINGTON (2/2/09)--Lawmakers plan to question the Treasury Department on how it is handling the financial crisis, Sen. Christopher Dodd (D-Conn.) said Thursday. Treasury Secretary Timothy Geithner will appear before the Senate Banking Committee, of which Dodd is chairman, to discuss how the Obama administration will use the second half of the $700 billion bailout (American Banker Jan. 30). Geithner is scheduled to meet with the committee Feb. 10. Dodd said he will ask if the Treasury plans to request more money. The administration must demonstrate it knows how to handle the funds it’s been given before asking for more, Dodd said. The senator is planning two meetings next week on regulatory reform and on Troubled Asset Relief Program oversight ... * WASHINGTON (2/2/09)--Three areas of regulation could have prevented the current economic crisis: basic consumer protection rules, supervision of credit rating agencies and regulation of companies slated to be “too big to fail,” according to a report released Thursday by the Congressional Oversight Panel for the Troubled Asset Relief Program. The report examines how deregulation of financial markets over the last 25 years have returned the boom-and-bust cycles that had plagued the U.S. economy until reforms of the Great Depression ushered in a half-century of financial stability. It also addresses eight areas of reform to avoid another financial crisis in the future ... * WASHINGTON (2/2/09)--The Federal Emergency Management Agency, known as FEMA, has issued a revised Standard Flood Hazard Determination Form, which includes a new Office of Management and Budget control number. The form is used for determining whether real property offered as collateral on a loan is located in a special flood hazard area. The form's format and content have not changed. The updated form must be used beginning June 16 …

Alternatives to premium assessment urged by CUNA

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WASHINGTON (2/2/09)—Federal regulators must consider alternatives to their plan to assess a share insurance premium to help fund a stabilization plan for corporate credit unions, the Credit Union National Association (CUNA) urged. CUNA has expressed great concern that the National Credit Union Administration (NCUA) has not adequately explored a complete range of choices available or ways the plan could be less of a cost burden to credit unions already coping with tough economic conditions. (See related story: “CUNA concerned about costs of NCUA corporate plan.”) "We are fully aware of and troubled by the pressures that the agency's decision will have on credit unions,” said CUNA President/CEO Dan Mica. He added, “There is a wide range of alternatives that the agency can and must consider.” Among them, Mica identified:
* Allow credit unions to tap the U.S. Treasury Department’s TARP (Troubled Asset Relief Program), as soon as possible to deal with the corporate credit union liquidity emergency. This may require a statutory change and CUNA will sound out federal lawmakers to assess support: * Use the Central Liquidity Facility (CLF) to provide the funding. CUNA is currently analyzing CLF’s legal obligations and whether there may be opportunities for additional approaches or flexibility; * Permit credit unions to pay the assessment from reserves rather than running it through CUs’ balance sheets; and * Assess the premium in stages, rather than all at once. For example, split the premium into two or more equal parts, and allow credit unions to pay over time. CUNA is currently exploring the accounting and regulatory permissibilities of this approach.
Mica noted that the late 2009 time-frame that the agency has set for assessing a premium gives the NCUA, and credit unions, the opportunity to flesh out and choose among better alternatives.

CDFI notes funds availability

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WASHINGTON (2/1/09)—The U.S. Treasury Department’s Community Development Financial Institutions Fund (CDFI) Friday issued a notice of funds availability (NOFA) for its Bank Enterprise Award (BEA) program. Although eligible applicants must be federally insured banks and thrifts, those awarded BEA funds are encouraged to increase their financial assistance to Community Development Financial Institutions (CDFI), including credit unions. The Treasury noticed, published in the Jan. 30 Federal Register, noted that the NOFA does not obligate the CDFI to make any award or to obligate any available funds. However, the notice also projected that the Fund may award approximately $20 million for FY 2009 BEA Program awards, and reserved the right award in excess of that amount, if funds are available.

CUs eligible for proposed excess balance accounts

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WASHINGTON (2/2/09)—The Federal Reserve Board is proposing to establish limited-purpose “excess balance’ accounts (EBAs) from which eligible institutions, including credit unions, can earn interest. The Fed intends its authorization of EBAs to allow eligible institutions to earn interest on their excess balances at the excess balance rate. Under the proposal, eligible institutions will be able to earn this rate without having to open separate individual accounts at the Federal Reserve Banks by using accounts managed by a correspondent institution, who would manage the account on behalf of the eligible institution. The Fed believes this arrangement allows depository institutions to earn interest on excess reserve balances without disrupting existing correspondent relationships they may have with other institutions. The proposal would amend the Fed’s Regulation D, Reserve Requirements of Depository Institutions. The plan is being proposed to address current market disruptions and the use of EBAs will be reevaluated when normal market conditions are restored. Comments are due by March 2.

CUNA concerned about costs of NCUA corporate plan

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WASHINGTON (2/2/09)--The Credit Union National Association (CUNA) said that is does not welcome federal regulators’ action to support corporate credit union liquidity by extracting a high price from credit unions, but does understand the need for the agency to act. CUNA, in a statement issued today, said the agency must consider other solutions to mitigate the costs on credit unions during these difficult economic times. The NCUA announced Wednesday it would:
* Guarantee uninsured shares at all corporate credit unions through February 2009, and establish a voluntary guarantee program for uninsured shares of all corporate credit unions through Dec. 31, 2010; * Issue a $1 billion capital note to U.S. Central Corporate FCU (U.S. Central); and * Declare a premium assessment to restore the National Credit Union Share Insurance Fund (NCUSIF) equity ratio to 1.30 percent. The premium will be collected in 2009.
CUNA said there is real concern about whether the agency adequately explored the complete range of choices available, and ways the plan could be less of a cost burden on credit unions already coping with tough economic conditions. “We are fully aware of and troubled by the pressures that the agency’s decision will have on credit unions. Our view is that other choices can and must be explored, immediately, to mitigate the impact on credit unions,” said CUNA President/CEO Dan Mica. “Based on what we know from both NCUA and the corporate network, the agency was compelled to act promptly to address growing demands on corporate liquidity and capital.” Mica said. The CUNA Corporate Task Force met all day Thursday and discussed with NCUA, natural person credit union and corporate experts concerns about NCUA’s actions. The group also began the process of identifying alternatives to recommend to NCUA. For the next weeks, CUNA will continue a dialog with the agency and urge it to consider other approaches to this challenge, Mica declared.

NEW CUNA concerned about costs of NCUA corporate plan

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WASHINGTON (1/30/09, UPDATED 10:30 a.m. ET)—The Credit Union National Association (CUNA) said that is does not welcome federal regulators’ action to support corporate credit union liquidity by extracting a high price from credit unions, but does understand the need for the agency to act. CUNA, in a statement issued today, said the agency must consider other solutions to mitigate the costs on credit unions during these difficult economic times. The NCUA announced Wednesday it would:
* Guarantee uninsured shares at all corporate credit unions through February 2009, and establish a voluntary guarantee program for uninsured shares of all corporate credit unions through Dec. 31, 2010; * Issue a $1 billion capital note to U.S. Central Corporate FCU (U.S. Central); and * Declare a premium assessment to restore the National Credit Union Share Insurance Fund (NCUSIF) equity ratio to 1.30 percent. The premium will be collected in 2009.
CUNA said there is real concern about whether the agency adequately explored the complete range of choices available, and ways the plan could be less of a cost burden on credit unions already coping with tough economic conditions. “We are fully aware of and troubled by the pressures that the agency’s decision will have on credit unions. Our view is that other choices can and must be explored, immediately, to mitigate the impact on credit unions,” said CUNA President/CEO Dan Mica. “Based on what we know from both NCUA and the corporate network, the agency was compelled to act promptly to address growing demands on corporate liquidity and capital.” Mica said. The CUNA Corporate Task Force met all day Thursday and discussed with NCUA, natural person credit union and corporate experts concerns about NCUA’s actions. The group also began the process of identifying alternatives to recommend to NCUA. For the next weeks, CUNA will continue a dialog with the agency and urge it to consider other approaches to this challenge, Mica declared.