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GOP members named to House Financial Services

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WASHINGTON (1/9/08)—The ranking Republican member of the House Financial Services Committee Thursday began announcing new GOP members of that panel—including some credit union friends. Rep. Spencer Bachus announced that freshman Congresswoman Lynn Jenkins of Kansas will join the committee. A former Kansas State Treasurer and a long-time credit union advocate, Jenkins won against Rep. Nancy Boyda (D-Kan.) in the 2008 federal election. The Credit Union National Association (CUNA) and the Kansas CU Association supported Jenkins’ campaign, with the Credit Union Legislative Action Council spending more than $203,000 in campaign contributions and Independent Expenditures on her behalf, according to Trey Hawkins, CUNA Political Director. Also named to the committee was freshman Rep. Erik Paulsen of Minnesota. During his race, the Minnesota CU Network for the first time endorsed a candidate when it backed Paulsen over his strongest opponent. The opponent was a candidate who had considered a plan to remove the credit union tax exemption to fund small business health insurance benefits. CULAC also supported the ultimate victor with $10,000 and the league provided additional support in the form of grassroots volunteers. Also newly named to the financial services panel, according to Bachus, were Rep. Leonard Lance of New Jersey and Rep. Bill Posey of Florida. The other Republican members for the committee during this session of the 111th Congress are: Bachus and Reps. Michael Castle (Del.), Peter King (N.Y.), Ed Royce (Calif.), Frank Lucas (Okla.), Ron Paul (Tex.), Donald Manzullo (Ill.), Walter Jones (N.C.), Judy Biggert (Ill.), Gary Miller (Calif.), Shelley Moore Capito (W.V.), Jeb Hensarling (Tex.), Scott Garrett (N.J.), J. Gresham Barrett (S.C.), Jim Gerlach (Pa.), Randy Neugebauer (Tex.), Tom Price (Ga.), Patrick McHenry (N.C.), John Campbell (Calif.), Adam Putnam (Fla.), Michele Bachmann (Minn.), Kenny Marchant (Tex.), Thaddeus McCotter (Mich.), Kevin McCarthy (Calif.), and Christopher Lee (N.Y.).

NCUA launches enhanced supervisory effort

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ALEXANDRIA, Va. (1/9/09)--The National Credit Union Administration (NCUA) activated its National Examination Team (NET) Thursday, an effort meant to respond to current market difficulties facing credit unions. The NET was announced in October as part of the NCUA's budget process and is in response to difficulties caused by declining home values, high mortgage delinquency rates, high foreclosure rates, high unemployment rates, and concentrations of real estate loans that have affected credit unions to varying degrees. The agency has also indicated it will utilize a 12-month exam schedule for federal credit unions, beginning this year, and encourage state regulators to follow suit. The NET is comprised of a director, five problem case officers and the equivalent of one loss-risk analysis officer. In addition, regional subject matter examiners will be detailed to NET on an as needed basis. The team will supervise assigned credit unions until problems are resolved, either returning the credit union to regional supervision or activating merger, conservatorship or closure, according to the NCUA announcement. Additionally, the agency said, the NET will be responsible for examining and supervising approximately ten credit unions, mainly large and more complex institutions. A side benefit of the program, though not unintended, is that the NET also represents an opportunity to expose NCUA examiners to a broad range of credit unions and varying levels of risk, thereby augmenting the NCUA’s succession planning objectives. NCUA Chairman Michael Fryzel, in launching the new trouble-shooting team, said, “The knowledge, skill, and experience of NET members will enable them to quickly identify complex problems, recommend appropriate corrective actions and thereby improve the overall quality of NCUA supervision during a very volatile period for all financial institutions, including credit unions. The NET is a logical and essential component of our overall NCUA's focus on strong and proactive regulation, and the priority we place on safety and soundness."

Rep. Sherman backs more MBL authority

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WASHINGTON (1/9/09)—In a statement on the House floor this week, a senior member of the House Financial Services Committee backed lifting the credit union member business lending (MBL) cap as foremost among options that could help the economy without costing taxpayers money. Rep. Brad Sherman, a California Democrat, said it was “folly” for the U.S. Congress to “take one of the healthy groups of financial institutions in this country namely, the credit unions, and tell them they can't make the $100,000 loan that is desperately needed by the small businesses in our respective districts.” He made his remarks as he laid out his 2009 legislative agenda for his House colleagues Wednesday. He said, in part, that he looks forward to passing legislation within the jurisdiction of the Financial Services Committee that can help deal with the economic crisis and noted “ a couple of opportunities” for doing so. “First,” he said, “we can increase the amount of business lending that can be made by credit unions. Right now, we limit credit unions severely as to how much business lending they can do.” Congress could, for the duration of the country’s economic crisis, allow credit unions to make more small business loans of $100,000 to $150,000, he suggested. “We need to allow businesses in all of our districts to get that $100,000 loan that they need to expand or even to stay in business.” The Credit Union National Association (CUNA) has asked lawmakers to lift the business lending cap in upcoming economic stimulus legislation. An additional $10 billion in business loans could be made by credit unions in the first twelve months once the cap is lifted, CUNA has told members of the House and Senate, the Bush administration and President-elect Barack Obama’s transition team. Small businesses pay the price of the credit union business lending cap because they have fewer options; and in the credit crunch, some are finding they have no options at all, CUNA has advised.

Inside Washington (01/08/2009)

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* WASHINGTON (1/9/09)--House Financial Services Committee Chairman Barney Frank (D-Mass.) could release a bill as early as today that would attach conditions to how the remaining $350 billion of the Troubled Asset Relief Program (TARP) funds would be spent (American Banker Jan. 8). Frank’s legislation would restrict executive compensation, require banks who receive capital from TARP to follow lending requirements, and ensure the Treasury uses the funds for foreclosure prevention. Changes to the Hope for Homeowners program also are expected to be in the bill. Frank said he anticipates a hearing on the legislation next week ... * WASHINGTON (1/9/09)--Comptroller of the Currency John Dugan said he won’t leave until the end of his term in August 2010, though the transitioning Obama administration has asked him to step down, observers said (American Banker Jan. 8). If Dugan is unsuccessful in his bid to stay, his possible successors include Greg Baer, deputy general counsel of regulatory and public policy for Bank of America, and former Treasury assistant secretary for financial institutions under the Clinton administration; and Chuck Muckenfuss, a senior deputy comptroller for policy at the Office of the Comptroller of the Currency from 1978-1981 and partner at Gibson, Dunn and Crutcher ... * WASHINGTON (1/9/09)--The Federal Deposit Insurance Corp. (FDIC) plans to retain a chunk of failed IndyMac’s assets, though the agency has found a buyer for the institution. FDIC will share 80% of the bank’s losses on $13 billion of loans, and will take 80% of a $2 billion construction loan portfolio (American Banker Jan. 8). The agency’s agreement to retain some of the failed bank’s assets indicates that the FDIC is using loss-sharing and participation models to deal with failed institutions. Observers note the FDIC may be using loss-sharing because it has worked in the past, while others say the FDIC may not have many options in resolving failures. The FDIC, in order to get a buyer for IndyMac, had to provide support, said Oliver Ireland, a partner at Morrison & Foerster. Ireland also is a former Federal Reserve Board lawyer ...