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Inside Washington (01/05/2011)

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* WASHINGTON (1/6/11)--The Obama administration is expected this month to unveil a reform package for Fannie Mae and Freddie Mac (American Banker Jan. 5). The White House has offered few clues about its plan for the housing finance system, and has twice delayed the release of a proposal for the government-sponsored enterprises. The consensus among observers is that the plan would include some form of government safety net in the event of a catastrophic loss. Most variations of the plan include Freddie or Fannie continuing operations along with the creation of several federally chartered, privately owned mortgage conduits that would buy loans from the primary market and create federal guaranteed mortgage-backed securities. To back those guarantees, the conduits would pay fees into an insurance fund, similar that of the Federal Deposit Insurance Corp. or the National Credit Union Share Insurance Fund … * WASHINGTON (1/6/11)--The Federal Deposit Insurance Corp. (FDIC) is suing at least 109 former directors and officers of failed banks in an effort to recover more than $2.5 billion losses to its insurance fund. The agency has already filed two director and officer lawsuits naming 15 individuals from the failed IndyMac Bank, Pasadena, Calif., and Heritage Community Bank, Glenwood, Ill. The FDIC guarantees individual deposits up to $250,000, but when an institution fails, the agency’s insurance fund is diminished. One way the agency recovers those funds is through lawsuits against negligent directors and officers of the failed banks. From 1986 through 2009, the FDIC and Resolution Trust Corp. collected $6.2 billion from such claims … * WASHINGTON (1/6/11)--The Consumer Financial Protection Bureau (CFPB) implementation team, currently housed within the Treasury Department, and the Conference of State Bank Supervisors (CSBS) will establish a foundation of state and federal coordination and cooperation for supervision of providers of consumer financial products and services. Under a memorandum of understanding (MOU) signed between the CFPB and the CSBS, state regulators and the bureau will work to promote consistent examination procedures and effective enforcement of state and federal consumer laws. The MOU also calls for state regulators and the CFPB to minimize regulatory burdens and deploy supervisory resources. State regulators and the bureau will work with each other regarding the standards, procedures, and practices used by state regulators and the CFPB to conduct compliance examinations of providers of consumer financial products and services, including non-depository mortgage lenders, mortgage servicers, private student lenders, and payday lenders …

CUNA provides roadmap for reduced regulatory burden

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WASHINGTON (1/6/11)--The 112th Congress, which began on Wednesday, can help lessen the regulatory burden faced by credit unions by allowing credit unions to raise supplemental capital, reviewing and potentially amending the Federal Reserve’s recent interchange fee proposal, and lifting the cap on credit union member business lending, the Credit Union National Association (CUNA) said in a Wednesday letter to Rep. Darrell Issa (R-Calif.) Issa will chair the House Government Reform and Oversight Committee during the 112th Congress. CUNA pinpointed a number of additional ways that Congress could help reduce the regulatory burden on credit unions. Congress could encourage the National Credit Union Administration (NCUA) and other regulators to reward well-run credit unions by lengthening their examination cycles to 18 months, streamlining their 5300 call reports, and providing them with automatic waivers from regulatory limitations that are not required by statute, CUNA said. Further, the budgets and resource allocations of the agency and other federal financial regulators should also be subject to periodic congressional review, CUNA suggested. The Government Accountability Office could also monitor these agencies to review their compliance with the Paperwork Reduction and Regulatory Flexibility Acts, and could force regulators to report on whatever yearly steps they have taken to reduce the regulatory burden on their respective institutions, CUNA added. “The only owners of a credit union are its members, who receive the benefit of ownership through reduced fees, lower interest rates on lending products and higher dividends on savings products,” CUNA President/CEO Bill Cheney wrote. “Because of this structure, the cost of a credit union’s compliance with unnecessary and unduly burdensome regulation impacts its members more directly than bank customers. Every dollar that a credit union spends complying with regulation is a dollar that is not used to the benefit of the credit union’s membership,” Cheney added. CUNA was responding to a specific request made by Issa in a Dec. 10 letter, in which he asked for about 150 companies, think tanks and trade groups to provide their input on various regulations. For the full letter, use the resource link.

CFPB architect Elizabeth Warren to speak at GAC

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WASHINGTON (1/6/11)--Consumer Financial Protection Bureau architect Elizabeth Warren will join a host of other high profile regulators and legislators when she speaks at the Credit Union National Association's (CUNA) upcoming Governmental Affairs Conference.
CUNA President/CEO Bill Cheney (left), CUNA General Counsel Eric Richard and Deputy General Councel Mary Dunn (right) posed with Elizabeth Warren (center) in the U.S. Treasury's offices following their September meeting. (CUNA photo)
Warren is Assistant to the President and Special Advisor to the Secretary of the Treasury on the consumer Financial Protection Bureau. She is currently working with the Obama administration to create the CFPB, an organization created under the Dodd-Frank financial reform legislation that will develop rules governing consumer financial products like credit cards and mortgages. CUNA President/CEO Bill Cheney and other CUNA representatives in September met with Warren to discuss a number of credit union issues. During that meeting, CUNA staff emphasized that their key objective in working with the new agency will be to minimize credit unions' regulatory burdens, costs and requirements. Warren welcomed CUNA's commentary on how both regulations and disclosures can be improved, and noted that improving the transparency and consumer-friendliness of many financial products would benefit credit unions. The GAC will be held at the Washington Convention Center, and will run from Feb. 27 until March 3. House Financial Services Committee chairman Rep. Spencer Bachus (R-Ala.), Rep. Debbie Wasserman Schultz (D-Fla.), are among those policy makers also scheduled to speak. The program will also feature political pundits and co-authors of The New York Times No. 1 best-seller "Game Change" Mark Halperin and John Heilemann. The GAC will open Sunday evening, Feb. 27 with a performance by classic rockers Three Dog Night, and will also feature a keynote speech Feb. 28 by "Miracle on the Hudson" pilot Captain Chesley B. "Sully" Sullenberger III. The GAC also will feature a political point-counterpoint between conservative commentator Mary Matalin and liberal Web commentator Arianna Huffington of the Huffington Post. Additional speakers from Capitol Hill and the regulatory agencies will be announced in coming weeks. To register for this year's GAC, use the resource link.

Obama signs NCUA technical amendments into law

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WASHINGTON (1/6/11)—President Barack Obama this week signed into law a technical corrections bill that would provide the National Credit Union Administration (NCUA) with new tools to address both troubled individual credit unions and the larger corporate credit union crisis. The legislation, which will alter the Federal Credit Union Act by permitting the NCUA to make payments to the Temporary Corporate Credit Union Stabilization Fund without borrowing from the U.S. Treasury, was approved on the final day of the 111th Congress. The legislation also clarifies that the equity ratio of the National Credit Union Share Insurance Fund (NCUSIF) is based solely on the unconsolidated financial statements of the NCUSIF and grants credit unions the ability to count Section 208 assistance as net worth for the purposes of prompt corrective action (PCA). The Government Accountability Office will also soon investigate the NCUA’s handling of recent corporate credit union failures, and that resulting report will be delivered to relevant congressional committees within six months. The Credit Union National Association plans to closely monitor its implementation going forward.

CU reps swarm D.C. as 112th Congress begins

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WASHINGTON (1/6/11)--As the 112th Congress officially kicked off on Wednesday, representatives from a dozen state credit union leagues, credit unions, and the Credit Union National Association (CUNA) swarmed the House and Senate to take the credit union message to over 100 new members of America’s top legislative body. Credit union representatives from as far away as California and as near as Maryland were greeted by CUNA President/CEO Bill Cheney at credit union house before moving on to their congressional visits.
Click for slide show At CUNA’s swearing-in day open house at Credit Union House on Jan. 5, CUNA President/CEO Bill Cheney greets Greg Connor, executive vice president of Associated CU, Norcross, Ga. Looking on are CUNA Vice President of League Relations Patricia Sowick, CUNA Senior Vice President of Legislative Affairs John Magill, and Georgia Credit Union Affiliates CEO Mike Mercer, who is also vice chairman of the CUNA board.
Representatives from Delaware, Florida, Georgia, Kentucky, Illinois, Missouri, North Carolina, New York, Ohio and Texas were also active at the Credit Union House, on Capitol Hill, and at various congressional receptions held throughout the day. In one congressional meeting, Illinois credit union representatives discussed interchange, supplemental capital and taxation with Sen. Mark Kirk’s (R-Ill.) staffers, noting that the proposed interchange fee carveout for credit unions under $10 billion in assets would likely be difficult to enforce. Leagues are also reaching out to the new congressional representatives via their own district and state-based activities, and will continue to do so in the coming weeks. As the new Congress heats up, the credit union tax exemption, supplemental capital, and the proposed member business lending cap lift will remain high priorities for CUNA. CUNA has also asked members of Congress to hold hearings on the Federal Reserve's recently proposed interchange fee regulations, and urged the Fed to delay implementation of the new rules until the Congress can complete a full discussion of the rules with all parties involved.