Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Washington Archive

Washington

Final FASB guidance not far enough says CUNA

 Permanent link
WASHINGTON (10/14/08)—The Financial Accounting Standards Board’s (FASB) released final guidance on using FASB Statement No. 157, Fair Value Measurements, in a market that is not active. According to the Credit Union National Association (CUNA), the guidance does not go far enough in addressing key issues used to determine the fair value for certain assets where there is an ability and intent to hold until recovery or maturity. However, the credit union trade association generally supports two points of additional guidance, said CUNA Deputy General Counsel Mary Dunn, who, under the auspices of CUNA’s Accounting Task Force, authored CUNA’s letter to FASB last week. In its final guidance, FASB provides that in determining fair value of the mortgage-backed security, information about the performance of the underlying mortgage loans--such as delinquency and foreclosure rates, loss experience, and prepayment rates--may be appropriate. Also, FASB added a change to the summary of the key existing principles of Statement 157 to help clarify that not all asset sales in a troubled market are forced liquidations or fire sales. Likewise, it is not appropriate to simply accept any transaction price as reflecting the fair value of an asset, according to FASB. The recently-enacted Emergency Economic Stabilization Act, among other things, authorizes the Securities and Exchange Commission (SEC) to suspend the mark-to-market standards and to evaluate that application. CUNA has urged the SEC to proceed with its evaluation of the fair value standards under the new Emergency Economic Stabilization Act “as expeditiously as possible.” Use the link below to access the complete final FASB Staff Position.

Inside Washington (10/13/2008)

 Permanent link
* WASHINGTON (10/14/08)--The U.S. Treasury Department announced Monday that EnnisKnupp and Associates will serve as its investment adviser for the implementation of the Troubled Asset Relief Program (TARP) authorized under the Emergency Economic Stabilization Act. Treasury said it hired the Chicago-based firm Saturday and the firm began work immediately to help administer the “complex portfolio of troubled assets” the Treasury will purchase under the program ... * WASHINGTON (10/14/08)--The Bush administration will work to help banks access capital, the president announced Monday after a meeting with Silvio Berlusconi, Italian premier. He also said the U.S. would work with other countries to solve the global financial crisis. Bush called the Monday meeting with executives from financial firms to firm up details of the Treasury’s $700 billion bailout plan (The New York Times Oct. 13). The financial crisis has shaken Europe, but European markets opened in a strong position Monday after coordinated U.S. and European efforts to beef up the banking system ... * WASHINGTON (10/14/08)--The Bank of England (BoE), the European Central Bank (ECB), the Federal Reserve, the Bank of Japan, and the Swiss National Bank (SNB) are jointly announcing further measures to improve liquidity in short-term U.S. dollar fund. The BoE, ECB, and SNB will conduct tenders of U.S. dollar funding at 7-day, 28-day, and 84-day maturities at fixed interest rates for full allotment. Funds will be provided at a fixed interest rate, set in advance of each operation. Swap lines between the Federal Reserve and the BoE, the ECB, and the SNB will be increased to accommodate whatever quantity of U.S. dollar funding is demanded. The Bank of Japan will be considering the introduction of similar measures ...

ID theft help from NFCC CUNA others

 Permanent link
WASHINGTON (10/14/08)—Next week has been named Protect Your Identity Week by the National Foundation for Credit Counseling (NFCC), which will launch a nationwide grassroots consumer outreach at that time. The effort is supported by organizations such as the Credit Union National Association, the Jump$tart Coalition, and others who have become NFCC coalition members. NFCC credit counseling member agencies in more than 100 locations across the country will offer free programs for the public, such as ID theft workshops, credit report reviews, and shredding events, as well as a variety of other protection-oriented education events. Identity theft touched the lives of more than eight million consumers last year, with thefts totaling close to $50 billion, the NFCC noted in an announcement of its effort. It noted that the Federal Trade Commission has named ID theft as the top consumer complaint for the past five years in a row. “We need to fight back, and the way to do that is to arm consumers with concrete steps they can implement into their daily lives,” said Gail Cunningham, spokesperson for the NFCC. To back its community events, the NFCC created a consumer website created to highlight the events and provide valuable identity theft awareness and prevention education. The site features a map of National Protect Your Identity Week events, the “Identity Theft Risk Check,” an interactive quiz to help consumers assess their risk of identity theft; a video of an ID theft victim; steps to take if one becomes a victim of identity theft; and identity theft protection tips and resources.

Comment Fed interest payments OFAC enforcements

 Permanent link
WASHINGTON (10/14/08)—The Credit Union National Association (CUNA) is seeking comment on two recent, unrelated proposals: the Federal Reserve Board’s plan to pay interest on depository institutions’ required and excess reserve balances; and proposed guidelines from the Office of Foreign Assets Control (OFAC) for enforcement of its economic sanctions. Although it was the Financial Services Regulatory Relief Act of 2006 that originally authorized the Fed to begin paying interest on balances held by or on behalf of depository institutions, the 2008 Emergency Economic Stabilization Act moved the effective date up three years from Oct. 1, 2011. The Fed will pay interest on average balances maintained over the reserve maintenance periods as of Oct. 9 this year. In its Comment Call, CUNA noted such details as:
* The initial rate of interest for required reserve balances will be the average targeted federal funds rate over the reserve maintenance period less 10 basis points; * The interest rate for excess balances will be the lowest targeted federal funds rate during the reserve maintenance period less 75 basis points; and * Interest will be paid on correspondent balances, which does not have to be passed back to the respondent.
CUNA requests that comments be sent by Nov. 1; they are due to the Fed Nov. 21. Regarding the OFAC proposal, the guidelines reflect factors that will be considered in determining the appropriate enforcement response to any apparent violation of an OFAC sanctions program. The guidelines identify enforcement actions that OFAC may take and list “general factors” that will be considered in determining both enforcement action and penalty amount. The interim final rule supersedes all previous guidance issued by OFAC, and applies to all persons and entities subject to any of the sanctions programs administered by OFAC. For more on each regulatory plan, and to read CUNA’s complete Comment Calls, use the resource links below.

Exam procedures approved for red flags and more

 Permanent link
WASHINGTON (10/14/08)—Federal credit union, bank and thrift regulators have approved the examination procedures required to determine a financial institution’s compliance with rules regarding identity theft “red flags” (12 CFR 222.90) and other regulations under the Fair Credit Reporting Act (FCRA). The other FCRA regulations addressed by the Federal Financial Institutions Examination Council’s (FFIEC) Task Force on Consumer Compliance address the following areas:
* Duties of users regarding address discrepancies (12 CFR 222.82); and * Duties of card issuers regarding changes of address (12 CFR 222.91).
The FFIEC is comprised of representatives of the National Credit Union Administration, the Federal Reserve Board, Office of the Comptroller of the Currency, Federal Deposits Insurance Corp., and Office of Thrift Supervision. The FFIEC release announcing examination procedures also reviewed the requirements of the attendant regulations”
* The “red flags” rule requires an institution must to develop and implement a written identity theft prevention program designed to detect, prevent, and mitigate identity theft in connection with any new or existing “covered account.” A covered account generally is a consumer account or any other account the institution determines carries a foreseeable risk of identity theft. * The address discrepancy rule, in part, requires a user of consumer reports to develop reasonable policies and procedures to confirm that the report relates to the consumer whose report was requested when there is an address discrepancy. * The card issuer rule requires credit and debit card issuers to develop reasonable policies and procedures to assess the validity of a change of address that is followed closely by a request for an additional or replacement card. In such situations, the card issuer must not issue an additional or replacement card until it assesses the validity of the change of address in accordance with its policies and procedures.
Examiners are asked to include an evaluation of a financial institution’s compliance with these provisions during the next regularly scheduled examination or supervisory cycle after the mandatory compliance date of November 1, 2008. Use the resource links below to access information about exam procedures and CUNA resources on the red flags rule.

CU CEO Mica talk up CUs on FOX Business TV

 Permanent link
WASHINGTON (10/14/08)--An Illinois credit union CEO and Credit Union National Association (CUNA) President/CEO Dan Mica during a nationally broadcast television interview discussed credit unions’ financial strength and organizational structure. The seven-minute segment aired live last week on FOX Business TV. In the segment’s first half, Robert M. Palumbo, president/CEO of the $268 million-asset Dupage CU in Naperville, Ill., explained credit unions’ unique structure bolsters their financial strength and better returns for members. Palumbo said credit unions can offer lower rates on loans and higher rates on savings because “we are not-for-profit financial cooperatives--any profit goes back to the member” in the form of rates, service or fee structure.
Click to watch FOX Business TV video segment.
“Our whole culture is to serve members,” he said. Palumbo noted Dupage CU continues to lend money. “In fact, September was one of our best months for mortgage lending,” he said. The reporter at the credit union pitched the segment from Naperville back to Washington, where CUNA’s Mica reiterated Palumbo’s points. He said credit unions are part of the solution to the current economic upheaval, and paraphrased House Financial Services Committee Chairman Barney Frank (D-Mass.) that “if everyone acted like credit unions, we wouldn’t have this crisis.” Mica pointed out that credit unions continue to make home loans and provide capital to small businesses. To help more small businesses, the CUNA leader said the trade association wants Congress to raise statutory limits on credit union member business loans from 12.5% of assets to 25%. Credit union mortgage and member business loans combined have very low default rates, Mica told the television audience. Watch the video online on CUNA News Now.