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Washington Archive

Washington

Inside Washington (01/04/2008)

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* WASHINGTON (1/7/08)--The Nationwide Mortgage Licensing System, which provides license applications and information on mortgage originators, has been launched by state regulators (American Banker Jan. 4). The system was created by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators. The goals of the system are to create a more efficient licensing system, improved consumer protection and better state regulators’ supervision. Individuals and companies can enter their state mortgage license information into the system and use it to apply for other state licenses. Seven states have signed onto the system already, with eight more expected by the end of the year. About 23 other states also have expressed interest. The system is not open to the public yet … * WASHINGTON (1/7/08)--The Federal Reserve will conduct two auctions of 28-day credit through its Term Auction Facility. Each auction will offer $30 billion, scheduled for Jan. 14 and Jan. 28. The minimum bid rate will be announced at noon EST the Friday before each auction, and the results will be announced on Tuesday following each auction. Final settlement will take place on Thursday after each auction. The Fed plans to conduct auctions for as long as necessary to address elevated pressure in short-term funding markets. The Fed held an auction for $20 billion in 28-day credit Dec. 17 (News Now Dec. 17) …

NCUA rules trump California auto repo law

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ALEXANDRIA, Va. (1/7/08)—In its last legal opinion posted in 2007, the National Credit Union Administration (NCUA) declared that its lending regulations expressly preempt state laws affecting the terms of repayment for all loans. The opinion specifically addressed a California law that requires a notice of intent when a creditor acts to dispose of a repossessed vehicle. “The California law at issue affects the terms of repayment by placing additional burdens on lenders before they may recover deficiency balances owed by borrowers. NCUA’s long-standing position is that state laws affecting terms of repayment are preempted,” wrote NCUA Associate General Counsel Sheila Albin. Also, Albin wrote, the NCUA has exclusive authority to take enforcement actions against a federal credit union. Therefore, the letter said, the NCUA views the California statute’s effect of eliminating a right to collect deficiencies for failure to comply with the notice provisions as an enforcement tool and, therefore, its application to FCUs would be “inappropriate.” A footnote in the letter noted that a recent ruling by a California court of appeals found that the notice requirement if preempted by Office of Thrift Supervision regulations for federally chartered thrifts.

Market conditions dictate pace of Norlarco bid approval

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ALEXANDRIA, Va. (1/7/08)—Despite the National Credit union Administration’s (NCUA’s) desire to approve a successful resolution for the troubled Norlarco CU of Fort Collins, Colo., as soon as possible, broader market conditions are making that a longer process than at first expected, according to a source close to the situation. The agency continues to seek ways to preserve the assets of the credit union, but the condition of the real estate market is not cooperating with those efforts, the source noted. In a letter to members posted by the NCUA in November on the Norlarco Website, the agency indicated it expected to approve a purchase-and-assumption agreement by yearend. However, some observers now question whether January will witness a successful resolution of the conservatorship, although that timing is still possible. Three Colorado credit unions have submitted bids to acquire Norlarco, which was placed into conservatorship by Colorado state regulators in May after a number its construction loans issued in Lee County, Fla., became delinquent. In July, the NCUA took control of the credit union and removed its board of directors. Norlarco's delinquent loans total more than $65 million, according to reports. The interested credit union bidders are Bellco CU, Greenwood Village; Ent CU, Colorado Springs; and Public Service Employees CU, Denver, according to the The Coloradoan newspaper published Nov. 27. In December, John McKechnie, NCUA director of public and congressional affairs, acknowledged the bid process was taking longer than expected, but said the delay didn’t indicate a problem with the acquisition, but rather a "problem of timing." "We are making sure the acquirer gets a clean balance sheet," McKechnie said, restating the agency's goal of protecting the members' assets, keeping the acquisition costs down, and avoiding lawsuits. NCUA continues to negotiate with Norlarco creditors. McKechnie said Friday that the agency would not comment on Norlarco nor on the possible timing of a resolution of the conservatorship.

Dodds decision could spur legislative action

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WASHINGTON (1/7/08)--Sen. Christopher Dodd’s (D-Conn.) decision to step off the presidential campaign trail after a smashing loss in the Iowa primary may boost the prospects of legislation of interest to credit unions. Dodd, who is chairman of the Senate Banking Committee, introduced a bill Dec. 12 to affect a major change in the country’s mortgage regulations, in part by establishing minimum standards for subprime mortgages and adding some liability for investors who bought securities backed by the problem subprime loans. With his bid for the Presidency behind him, Dodd now has about two weeks to rest and then redirect attention and energy to such pending business in the Senate, which reconvenes Jan. 22 (CQ Midday Update Jan. 4). Dodd’s top priority, the article said, will be to complete enactment of a bill to modernize the Federal Housing Administration, a measure that has White House backing. The House and Senate have passed very different versions of the legislation, indicating a difficult conference negotiation process that will likely benefit from Dodd’s closer involvement and attention. The article also mentioned that Sen. Joe Biden’s exit from the race for the Democratic Presidential nomination will have a similar beneficial effect on legislation under the purview of the Foreign Relations Committee, which the Democrat from Delaware chairs.