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Inside Washington (10/12/2009)

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* WASHINGTON (10/13/09)--Interested credit unions are reminded to sign up for the Credit Union National Association's (CUNA) audio conference call Oct. 20 at 2 p.m. EDT on portions of the Credit Card Accountability, Responsibility and Disclosure Act that will take effect Feb. 22. The call will cover parts of the act addressing minimum payment warnings on credit card statements, interest rate increase prohibitions, and portions of the act that require co-signors for cardholders under age 21. The call will be led by CUNA Senior Assistant General Counsel Jeff Bloch and feature Federal Reserve representative Benjamin Olson, PSCU Financial Services’ Steve Salzer, CUNA assistant general counsel and senior compliance counsel Michael McLain and University of Wisconsin CU Chief Credit Officer Mike Long ... * WASHINGTON (10/13/09)--Divisions over foreclosure mitigation--particularly between liberal Democrats and the Obama administration--are widening. On Friday, the Treasury issued a statement saying it had met its goal to modify 500,000 loans before a Nov. 1 deadline. On Monday, the Congressional Oversight Panel released a report indicating Treasury needs to re-examine the Home Affordable Modification Program because it deals with the housing crisis as it was six months earlier instead of the current situation (CongressDailyPM Oct. 9). The panel found that the program works only for certain mortgages, and does not help those struggling with job loss. Sen. Jack Reed (D-R.I.) has introduced legislation to fund grants for states to create mandatory mediation programs between lenders and borrowers; require lenders to evaluate if a borrower is eligible for a modification before; and give $7 billion to states to offer homeowners’ grants. House Financial Services Chairman Barney Frank (D-Mass.) also has said he would attach legislation to allow bankruptcy judges to cram down the terms of a mortgage onto the House’s regulatory reform measure. The Credit Union National Association has said that allowing bankruptcy judges to change the terms of a mortgage would lead to borrowers’ gaming of the system. A dissatisfied borrower could stop payments on a home and possibly be able to keep it ...

Sunday i NY Timesi Mica urges dont be fooled on interchange

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WASHINGTON (10/13/09)--In an op-ed published in the Sunday edition of The New York Times, Credit Union National Association President/CEO Dan Mica urged legislators “not to be fooled” into passing “legislation that hurts one of the most important building blocks of our economy at a time when we can least afford it.” Responding to a recent Times story on interchange legislation, Mica said that “nearly all” credit unions are “concerned about the extremely harmful effects that interchange legislation would have on the services credit unions offer their members.” Eliminating or reducing interchange fee income could force credit unions “into the impossible decision” of raising member fees or ceasing participation in card programs, Mica added. CUNA has fiercely opposed merchants proposals that would affect interchange fees, saying that interchange reflects a merchant's fair share of the costs of the convenient card system.

Congress this week Reg reform votes on calendar

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WASHINGTON (10/13/09)--While the week for Congress began with the Columbus Day holiday, legislators on the House side will discuss H.R. 3606, the CARD Act Technical Corrections Act, when they reconvene today. H.R. 3606, which was introduced by Rep. Peter Welch (D-Vt.) last week and has been supported by the Credit Union National Association, would clarify that the 21 day notification requirements of the CARD Act apply only to credit card accounts. The week will continue with a pair of committee meetings set for Wednesday, and one of them will feature National Credit Union administration Chairman Deborah Matz representing the NCUA before Congress for the first time since her confirmation earlier this year. The hearing, which will focus on the state of the banking industry, will take place before the Senate financial institutions subcommittee and will also feature testimony from Federal Deposit Insurance Corporation Chairman Sheila Bair, Comptroller of the Currency John Dugan, and Federal Reserve Governor Daniel Tarullo, among others. The House Financial Services Committee on Wednesday has also scheduled full committee markup sessions of H.R.3763, which would amend the Fair Credit Reporting Act to provide an exclusion from so-called “red flag” guidelines for certain businesses, and H.R. 3639, the "Expedited CARD Reform for Consumers Act of 2009." H.R.3126, the "Consumer Financial Protection Agency Act of 2009"; will also be discussed during this markup session, which could extend into Thursday. CUNA’s Vice President of Legislative Affairs Ryan Donovan speculated that amendments addressing examination, enforcement, credit insurance, and preemption issues could come up during the discussion of H.R. 3126.

Fryzel details intense start to NCUA career

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WASHINGTON (10/13/09)—Financial failures, market crashes, and the overall economic impact on individual credit unions and the corporate credit union system punctuated what was a “very intense” beginning to his tenure as National Credit Union Administration (NCUA) chairman, and the board had to make many tough decisions during that time, current NCUA board member Michael Fryzel told News Now. “We faced many problems,” but once those problems were laid out for credit unions “the industry was able to pull together” and handle those problems from within, without the need for direct government assistance, Fryzel added. Working to ensure the viability of the corporate credit union system and, in turn, of individual credit unions was the greatest accomplishment of his tenure, Fryzel said. However, Fryzel added, he regrets not having a long enough tenure to adequately address some internal NCUA issues and make certain improvements to the NCUA staff. Having both a former chairman and former board member turned chairman on the NCUA board--as is now the case--is an unprecedented event. Fryzel said that the combination of himself, NCUA Chairman Deborah Matz, and board member Gigi Hyland gives credit unions the “most knowledgeable and credit-union-familiar board that has ever been in charge of the NCUA.” Fryzel expressed his confidence in Matz’s ability to “move forward with what needs to be done” and keep the agency moving in the “right direction” while continuing to address the needs of natural person and corporate credit unions. The NCUA continues its work toward the creation of its own consumer protection agency, and while Fryzel said that he cannot comment on how that agency would interact with the Obama administration’s proposed Consumer Financial Protection Agency (CFPA), the NCUA plans to have its own safeguards in place so that it can “make the argument for credit unions.” An NCUA’s consumer protection agency should not create “significant additional costs” for credit unions, he said, adding that he did not think that the CFPA, if approved, would create additional burdens for credit unions. Of member business loans, Fryzel said that there is a “niche” for some credit unions to offer business loans to their members, and does not oppose lifting the member business loan cap as long as credit unions make them “carefully and with the full understanding of how difficult those loans can be.” The NCUA should also be allowed to “put in place the necessary rules that will ensure the safety and soundness of the funds of the credit unions that are making those loans,” Fryzel added. The NCUA’s recent town hall meetings, which took place in 3 sites nationwide, have given the board “excellent” feedback, and the board is reviewing comments as it develops its new rules for corporate credit unions, which are expected to become permanent in early 2010. While he expects credit unions and the nation in general to continue to see financial hardship in the near future, Fryzel said that credit unions remain the “premier source” of financial services in this country, and will continue to serve their members into the future. Read the Oct. 19 issue of CUNA's Credit Union NewsWatch for more of Fryzel's views on credit union issues, including the future of alternative sources of capital.