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Senate passes rescue with deposit insurance boost

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WASHINGTON (10/2/08)—The U.S. Senate voted 74-25 last night to approve a multi-billion dollar financial rescue package that included a temporary increase in federal share and deposit insurance coverage. The $700-billion rescue plan is expected to be taken up by the U.S. House Friday and, if passed, quickly sent to the President’s desk for his signature transforming the bill to public law. Under the deposit insurance provisions, the current $100,000 limit on share and deposit accounts would be raised for one year to $250,000. The Credit Union National Association (CUNA) supported that increase and sent letters to President George W. Bush, Treasury Secretary Henry Paulson and members of Congress Monday urging them to make sure to include credit unions in any plans for increased deposit insurance coverage. CUNA President/CEO Dan Mica said of the Senate’s vote, “It is important to America’s credit unions that they have parity with banks in any increase in federal deposit insurance coverage. We are pleased to see this goal achieved in the Senate’s financial rescue legislation.” Mica added that another CUNA goal has been to ensure credit unions have access, if needed, to the legislation’s relief measures for troubled assets. “By providing this access, the Senate legislation is careful not to place credit unions at a disadvantage. CUNA will continue to press for similar treatment in the House as it resumes its consideration of this legislation,” Mica said. The overall rescue bill—intended to shore up the nation’s economy in light of such factors as the current mortgage crisis and wildly fluctuating activity on Wall Street—would allocate up to $700 billion to the U.S. Treasury Department to buy up mortgage-backed securities whose values have dropped or become hard to sell. The package gives the government an ownership share in the companies that participate in the program, an element that was missing from earlier rescue drafts. This provision makes it so taxpayers could benefit from any increased value in the securities created by the government’s support.

FASB SEC closer to fair value accounting relief

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WASHINGTON (10/2/08)—On day after clarifying its fair value accounting rules for mortgage-backed securities, the Financial Accounting Standards Board (FASB) Wednesday said it may issue additional guidance as early as this week about its mark-to-market standards, while the Senate may give the Securities and Exchange Commission (SEC) additional flexibility in the matter. In a meeting yesterday, FASB officials said the Statement of Financial Accounting Standards (FAS) No. 157, Fair Value Measurements, which establishes a framework for measuring fair value that applies broadly to financial assets and liabilities, needs additional guidance to provide clarity and assist in these unprecedented times. The expected FASB guidance will address, among other things, the relevant input, such as broker quotes or the use of pricing services, to determine fair value in an inactive market. FASB said it seeks to clarify Statement 157 and illustrate examples of how to determine the fair value of a financial asset when the market for that financial asset is not active. "The objective of the guidance is to clarify the framework within which financial statement users, preparers, auditors, and others are to determine the fair value of assets and liabilities when markets are not active,” said FASB. Many in the financial services industry, including the Credit Union National Association (CUNA), have urged additional FASB accounting guidance on fair value accounting standards. Meanwhile, the Economic Stabilization Act of 2008 passed last night by the Senate includes language that would allow the SEC to suspend the mark-to-market requirements for mortgage-backed securities. In certain instances, Generally Accepted Accounting Principles (GAAP) on fair value require assets to be marked to market. While credit unions are not supervised directly by the SEC, they are required to follow GAAP, and the suspension of these standards would impact the financial statements of credit unions with mortgage related instruments, according to CUNA Accounting Task Force Chairman Scott Waite, who also is senior vice president and chief financial officer at Patelco CU in San Francisco. Access more information from FASB using the resource link below.

Inside Washington (10/01/2008)

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* WASHINGTON (10/2/08)--Arty Arteaga, (right) president/CEO of the Defense Credit Union Council, met with National Credit Union Administration (NCUA) Chairman Michael E. Fryzel Tuesday at the NCUA headquarters. “Military credit unions have been one of the traditional cornerstones of the industry, from the earliest days to the present,” Fryzel said. “The dedication to providing the highest-quality financial services to the military community is impressive, and the Defense Council of Credit Unions is an exceptionally important voice in making certain that the defense credit union story is told.” (Photo provided by the National Credit Union Administration) ... * WASHINGTON (10/2/08)--The Department of Housing and Urban Development was scheduled to release details yesterday about its Hope for Homeowners program, which would allow borrowers nearing foreclosure on homes worth less than their mortgages to refinance into loans backed by the Federal Housing Administration (FHA). If the bailout bill is approved, the FHA would pay the new lender up front. The government facility created to purchase the $700 billion of troubled assets under the bailout plan also could buy loans eligible for Hope for Homeowners (American Banker Oct. 1). The bailout plan requires the government to prevent foreclosures and encourage servicers whose loans were purchased by the Treasury Department to use the FHA program ... * WASHINGTON (10/2/08)--The President’s Advisory Council on Financial Literacy will meet Oct. 14 at 2 p.m. in Washington, D.C. The public is invited to submit comments to or through mail. The department will post all statements on its website ... * WASHINGTON (10/2/08)--The Consumer Advisory Council will meet Oct. 23 at 9 a.m. Attendees should register no later than Oct. 21 by completing a form ... * WASHINGTON (10/2/08)--Twenty-four Maine Credit Union League representatives and 10 Maine credit unions visited Washington, D.C. Sept. 16-18. They talked with each member of Maine’s congressional delegation, heard a legislative briefing from the Credit Union National Association (CUNA) at Credit Union House, toured the National Credit Union Administration with board member Gigi Hyland, and attended a reception on Capitol Hill with the Maine delegation and staff members. “The visits are an important part of why we are so fortunate to have solid and positive relationships with our entire congressional delegation,” said league President John Murphy. Hyland said the current economic uncertainty and credit market dislocation underscore the need for the Credit Union System to work as a system. Liquidity is tight and corporate credit unions continue to work diligently to access all available liquidity sources, she said. “Maintaining calm and confidence in the credit union is vital to overcome the current challenges,” Hyland added. About 17 Hill hikes took place in September. Thirty-six have taken place year-to-date, with 35 leagues participating, according to CUNA ...

Native American CDFI funding requests accepted.

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WASHINGTON (10/2/08)—The Community Development Financial Institutions (CDFI) Fund is accepting applications for the Fiscal Year 2009 funding round of the Native American CDFI Assistance (NACA) Program. Credit unions and other financial institutions that are certified CDFIs can apply for funding for work in Native American, Alaskan Native and Native Hawaiian communities. New certification applications are due Nov. 3. The Fund expects to award approximately $8 million in appropriated funds for the NACA Program in 2009. Applications for grants and technical assistance are due Dec. 19. Applications must be submitted electronically through Applications sent by mail, facsimile or other form will generally not be accepted. For more information on the program and application rules, use the resource link below to access the Federal Register.

Comment date set for NCUA Reg Flex plan

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WASHINGTON (10/2/08)-Interested parties have until Dec. 1 to comment on a National Credit Union Administration (NCUA) plan to allow credit unions eligible under the Regulatory Flexibility Program (Reg Flex) additional time to occupy properties bought in an unimproved state. The agency approved its proposal for comment at its Sept. 25 open board meeting and yesterday’s Federal Register announced the comment deadline. Currently, when a federal credit union acquires unimproved land for future expansion and does not fully occupy the completed premises within one year, it must partially occupy the property within three years or obtain a waiver. The NCUA proposal would extend that three-year period to six years. Also at the meeting, the NCUA approved two final regulations:
* One revises the agency's rule governing the requirements for use of the official insurance sign and official advertising statement to give credit unions the flexibility to use the basic form of the official statement, a shortened form, or just the official sign. * The other to streamlines the agency's system for complying with freedom of information and privacy laws.
Both rules are effective Oct. 31, according to the Federal Register.