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Comment on NCUA Corp. CU charter guidance sought

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WASHINGTON (10/12/10)--The Credit Union National Association (CUNA) has asked credit unions to comment on the National Credit Union Administration’s (NCUA) proposed guidance on the requirements and process for chartering federal corporate credit unions. The NCUA currently does not provide guidance in this area. Under the NCUA corporate credit union guidance, a group of at least seven representatives from natural person credit unions would need to provide detailed business planning information and several types of supplemental information. To approve the corporate, the NCUA and its Office of Corporate Credit Unions (OCCU) will judge whether the proposed corporate credit union would uphold the provisions of the Federal Credit Union Act, promote safety and soundness within the credit union industry, and provide quality services to members. The NCUA and its OCCU will also assess the economic and long-term viability of the proposed corporate. The NCUA has estimated that creating a corporate charter that complies with its guidance would take 330 hours, total. In the comment call, CUNA asks if there is a need for corporate credit union chartering guidance, and, if so, whether or not the proposed collection of information is necessary for the NCUA to properly perform its functions as the regulator of corporate credit unions. Comments should be sent to CUNA by Oct. 26. The NCUA will accept comments on the proposal until Nov. 1.

Interchange rules unconstitutional lawsuit charges

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WASHINGTON (10/12/10)—Decrying Sen. Richard Durbin’s (D-Ill.) interchange fee legislation as “unconstitutional,” TCF National Bank on Tuesday brought legal action against the Federal Reserve, the agency charged with implementing the law. According to the TCF complaint, the law is unconstitutional because it only applies to banks of a certain size and does not allow recovery of cost and profit for affected financial institutions. TCF also cited a lack of legislative history for the amendment. A single, brief hearing was held in the weeks leading up to the financial reform legislation vote, and the interchange legislation also saw little debate in Congress prior to its passage. The complaint also noted that while Durbin claimed his amendment would reduce fees charged by credit card issuers and debit network operators, the legislation only addresses the fees charged by debit card issuers. “There is no obligation under the amendment to pass cost savings on to consumers,” the complaint adds. The interchange legislation, which was passed as part of comprehensive financial regulatory legislation earlier this year, directs the Federal Reserve Board to write rules on interchange fees for debit card purchases. While the interchange provision exempts small credit unions and other financial institutions with under $10 billion in assets from any interchange changes, these institutions would still be impacted directly by whatever rates are established. TCF in the complaint called this $10 billion threshold “arbitrary.” The Credit Union National Association’s (CUNA) Senior Vice President/Deputy General Counsel Mary Dunn said that the lawsuit aims to delay the Fed from writing regulations until a full hearing on the interchange provisions can occur. The federal government has 60 days to respond to the complaint. TCF will file a motion for a preliminary injunction within a few weeks, and will ask the court for an expedited judgment.

FASB listens to fair-value concerns at first roundtable

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NORWALK, Conn. (10/12/10)—The Credit Union National Association (CUNA) during a Tuesday roundtable again made the case that the Financial Accounting Standards Board's (FASB) proposed update to financial instrument accounting standards would provide no benefit to credit unions while substantially increasing their compliance costs. CUNA also continued to oppose the proposed application of fair value accounting rules to loans and other credit union products. The FASB proposal would require most financial assets and liabilities to be reported under Generally Accepted Accounting Principles (GAAP) at fair value. The proposal would also require the funding of the Allowance for Loan and Lease Loss Accounts to be under the expected loss model. Credit unions over $10 million in assets are required to comply with GAAP. CUNA Accounting Subcommittee Chairman and Patelco CU Chief Financial Officer Scott Waite also reiterated CUNA’s claim that reporting fair value under GAAP is simply not useful to the members, creditors, board members, and regulators of credit unions. Waite told the FASB panel that credit unions “provide an economic value to consumers by leveraging their not for profit status in the higher rates on deposit and lower rates on loans.” “For us to be unfairly fair valued on this business model changes the purpose of accounting standards,” he said. “Accounting standards should not be the driver of shaping acceptable business models,” but should “provide comparability, transparency, and relevancy,” Waite added. FASB held the Tuesday roundtable, which is the first of several, in an effort to collect commentary from industry insiders. Representatives from the National Credit Union Administration (NCUA) and the American Institute of Certified Professional Accountants, as well as several community bankers, were also in attendance, though the regulators did not take part in the forum. The roundtable discussion follows a number of comment letters on the fair value proposal. FASB released the fair value proposal in May. Though FASB expects the final rule to take effect sometime in 2013, that date is not concrete, and CUNA Senior Vice President/Deputy General Counsel Mary Dunn said CUNA will “continue pursuing a positive result for credit unions on this issue.”

NCUA to combine LA and Phoenix Town Hall meetings

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ALEXANDRIA, Va. (10/13/10)--To “consolidate efforts and minimize expenditures and resources,” the National Credit Union Administration announced it is combining the Phoenix, Ariz. and Los Angeles, Calif. town hall-style meetings into the single location of Los Angeles. The combined meeting will take place on Oct. 29 at the Hilton Los Angles Airport from 9:30 a.m. (PDT) to 12:30 p.m. (PDT). The session is one of 10 being hosted by the NCUA across the country during October in an effort to reach stakeholders to discuss the comprehensive new rules relating to corporate credit union operations and corporate legacy assets resolution that the NCUA board adopted at its open meeting on Sept. 23. Free NCUA Town Hall meetings also are being held in Atlanta, Boston, Dallas, Chicago, Columbus, Detroit, Los Angeles, Orlando, Portland, and Alexandria, Va. (Use the resource link to access the schedule and registration.)

FinCEN webinar Nov. 4 offers e-filing info

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WASHINGTON (10/12/10)--The Financial Crimes Enforcement Network (FinCEN) will “provide an overview” of its free Bank Secrecy Act (BSA) E-Filing system during a Nov. 4 webinar. FinCEN in a release said that the webinar “will highlight the benefits” of the BSA E-Filing system “and instruct financial institutions on the simple process of signing up and using E-Filing.” FinCEN will also cover how to complete both single and multiple report filings during the webinar. BSA E-Filing, which was developed in 2002, is a free, web-based system that is user-ID and password protected. Financial institutions subject to BSA reporting requirements use the system to electronically file a variety of BSA forms, either individually or in batches, through a FinCEN secure network. Currency Transaction Reports (CTRs), Designations of Exempt Persons (DEPs), and Suspicious Activity Reports (SARs) may currently be filed online. To sign up for the webinar, use the resource link.

Inside Washington (10/12/2010)

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* WASHINGTON (10/13/10)— kicked off its new Tuesday Talks live video chat by featuring Elizabeth Warren. The Tuesday Talks chats will be held every Tuesday at 1 p.m. EDT, according to a White House press release. Warren joined President Barack Obama’s administration in late September as assistant to the president and special adviser to U.S. Treasury Secretary Tim Geithner. She is charged with launching the Consumer Financial Protection Bureau, which is a core element of Wall Street reform efforts. The bureau is designed to serve as a watchdog for American consumers by streamlining and enforcing financial protection rules. The National Credit Union Administration and other financial regulators are required to transfer functions and authorities regarding consumer financial laws to the CFPB by July 21, 2011… * WASHINGTON (10/13/10)--The Small Business Administration (SBA) and the U.S. Treasury Department are implementing core provisions of the Small Business Jobs Act to increase small business lending (American Banker Oct. 12). The SBA raised the maximum for small business loans from $2 million to $5 million for several programs, including general small business loans and fixed asset loans, as was reported earlier by News Now. The Treasury Department allocated $1.5 billion to states as part of the State Small Business Credit Initiative that encourages states to work with local lenders to help entrepreneurs expand. States must demonstrate that they gain $10 in private lending for every $1 of federal funding received … * WASHINGTON (10/13/10)--The Federal Deposit Insurance Corp. (FDIC) plans to pursue more than 50 lawsuits to attempt to recapture more than $1 billion in losses from banks that failed due to the credit crisis. The lawsuits, which were authorized by the FDIC board in closed session, are aimed at officers and directors of failed banks (American Banker via Oct. 12). The FDIC typically takes about 18 months to investigate bank failures and determine whether litigation can be used to recover losses to its insurance fund. To date, the FDIC’s only lawsuit related to the credit crisis is a July filing that asks for $300 million in damages from four executives at IndyMac Bankcorp Inc. … * WASHINGTON (10/13/10)--The Federal Deposit Insurance Corp., Federal Reserve Board, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision have published revisions to Community Reinvestment Act (CRA) rules. The new rules, effective Nov. 3, implement two statutory changes. One requires the agencies named above, when assessing a bank’s or thrift’s record of meeting community credit needs, to consider low-cost education loans to low-income borrowers. The other change permits the agencies to consider various activities undertaken with minority- and women-owned financial institutions and low-income credit unions… * WASHINGTON (10/13/10)--The Federal Deposit Insurance Corp. (FDIC) last week proposed a rule to clarify how the agency would treat certain creditor claims under a new “orderly liquidation authority “established under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Title II of the Dodd-Frank Act allows the appointment of the FDIC as receiver for a financial company if its failure and liquidation--under the Bankruptcy Code or other insolvency procedures-- would pose a significant risk to the financial stability of the United States. The Notice of Proposed Rulemaking approved Friday includes a request for comment on a proposed regulation on specific issues related to creditor claims and a request for comment on broader questions to inform a future rulemaking addressing other orderly liquidation issues under the Dodd-Frank Act. The proposed rule is open for comment for 30 days and the broader set of questions for the future rulemaking will be open for public comment for 90 days…