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Washington Archive

Washington

Inside Washington (10/16/2009)

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* WASHINGTON (10/19/09)--Sen. Richard Shelby (R-Ala.) said he would push to revise the Federal Reserve Act so bankers would not be able to choose their own regulators. Doing so is “unhealthy” and is a conflict of interest, Shelby told CNBC in a Thursday interview (American Banker Oct. 16). Directors of regional banks are split into three classes: A, B and C. Class A and B directors are chosen by their member banks, while C directors are selected by the Federal Reserve ... * WASHINGTON (10/19/09)--Interest in the Federal Reserve board’s liquidity programs is dropping. On Wednesday, the number of loans the Fed provided to depository institutions through its Asset-Backed Commercial Paper Money Market Fund Liquidity Facility (AMLF) dropped to zero (American Banker Oct. 16 and News Now Dec. 3). AMLF is a lending facility that provides funding to U.S. depository institutions and bank holding companies to finance their purchases of high-quality asset-backed commercial paper from money market mutual funds. The program is intended to assist money funds that hold such paper in meeting demands for redemptions by investors and to foster liquidity in the market, according to the Federal Reserve. No new credit extensions will be made after Feb. 1. In a related item, lending through the Fed’s discount window also grew less than half of 1% during the past week, and traditional borrowing by commercial banks fell 4.7% to $27.2 billion ...

Matz sets corporate CU meeting for Nov. 5

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ALEXANDRIA, Va. (10/19/09)--National Credit Union Administration Chairman Deborah Matz, board members, corporate credit unions, and trade associations will discuss corporate credit union capital accounts and other issues during a Nov. 5 meeting, the NCUA announced on Friday. During a speech before members of the Association of Corporate Credit Unions, Matz said that she has heard “loud and clear” the message that many in the corporate credit union system “believe that there should be some mechanism within the corporate structure to allow contributed capital accounts to be replenished if losses don’t fully materialize as projected.” The meeting, which will feature members of the NCUA’s senior staff and will take place at the NCUA’s headquarters in Alexandria, Virginia, is a response to these concerns. The NCUA continues to develop new rules for corporate credit unions, and the board is looking to release a proposed version of these new rules by its mid-November board meeting, which will take place on Nov. 19.

CUNA NAFCU unite for alternative capital proposal

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WASHINGTON (10/19/09)--The Credit Union National Association (CUNA) and the National Association of Federal Credit Unions (NAFCU) announced their support for secondary capital for credit unions in a Friday joint letter to members of the National Credit Union Administration (NCUA) Board. The letter, which was signed by CUNA President/CEO Dan Mica and NAFCU President Fred Becker, noted that while the credit union system faces many issues, there is “none more important” for beleaguered credit unions than the issue of alternative capital. A similar letter is being sent to the National Association of State Credit Union Supervisors and to the National Federation of Community Development Credit Unions. While CUNA supports broad authority for credit unions to be able to obtain secondary capital, CUNA has agreed to work with NAFCU to support alternative capital for credit unions that would come from their members, which could also include sponsor organizations and select employee groups. They also agreed that credit unions should be able to count in their net worth calculations assistance received from NCUA under section 208 of the Federal Credit Union Act. The alternative capital would not be federally insured, and would be subordinated to other claims against an insured credit union and the National Credit Union Share Insurance Fund. According to the letter, the two groups aim “to achieve alternative capital authority for federally insured credit unions this year.” The credit union leaders asked the NCUA Board members for their support of the measure in an expression of unity by the credit union community as it prepares to take the legislative proposal forward. The legislative proposal represents “an important step forward on this critical issue,” and the CUNA and NAFCU leadership asked for the NCUA’s support going forward as they “move toward expeditious enactment” of the legislation in Congress.”

Conversion application among NCUA agenda items

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ALEXANDRIA, Va. (10/19/09)--The National Credit Union Administration (NCUA) at its upcoming Oct. 22 board meeting will consider a request from US #1364 Federal Credit Union to convert to a community charter. During the early session, the NCUA will also discuss a final rule, which will follow up on previously issued interim final rules on increased National Credit Union Share Insurance Fund coverage to $250,000 through 2013 and increase coverage for revocable trust accounts, NCUA General Counsel Bob Fenner told News Now. The board will also consider an additional request from the Kansas State Supervisory Authority for an exemption from Section 712.3(d)(3) of NCUA’s Rules and Regulations, which dictates that an federal credit union that intends to lend to or invest in a credit union service organization (CUSO) must confirm that the CUSO will grant the NCUA and other regulatory authorities access to its records and internal controls before that federal credit union invests in or lends to the CUSO. Section 712.3(d)(3) also applies to federally insured state-chartered credit unions pursuant to 12 C.F.R. 741.222. It is likely that the Kansas State Supervisory Authority is seeking this exemption on the basis that it will have access to the CUSO's books and records. The NCUA will also consider its monthly Insurance Fund Report at the meeting. As is routine, a closed session of the NCUA board will follow the early open session. The NCUA Board will discuss supervisory activities and personnel matters during this portion of the meeting.

Rep. Frank CUNA meet on CFPA concern

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WASHINGTON (10/19/09)—Credit Union National Association (CUNA) President/CEO Dan Mica and league president Daniel Egan met Friday with House Financial Services Committee Chairman Barney Frank (D-Mass.). They discussed credit union objections to an amendment to Consumer Financial Protection Agency (CFPA) legislation that would divide treatment of credit unions along asset size in an attempt to address unintended competitive disadvantages. Less than 24 hours earlier, Frank’s panel adopted an amendment offered by Reps. Brad Miller (D-N.C.) and Dennis Moore (D-Kan.) that would limit the proposed CFPA’s examination and enforcement authority to credit unions over $1.5 billion in assets and banks with more than $10 billion in assets. For institutions whose assets fall below those thresholds, enforcement authority would stay with their prudential regulator. Egan is president of the Massachusetts Credit Union League, New Hampshire Credit Union League and Credit Union Association of Rhode Island. CUNA has declared it would be compelled to oppose H.R. 3126, the Consumer Financial Protection Agency (CFPA) Act, if its final version included the amendment that would treat credit unions differently based on asset size. Mica has noted, "A key principle of ours in approaching financial regulatory reform has been for examination authority to remain with credit unions' primary regulator. We cannot support legislation that would apply this principle only to a portion of the nation's credit unions, as envisioned in this amendment." He added that "a basic premise of the credit union movement is to never be divided against itself in any way." In their meeting with Rep. Frank, Mica said, the chairman "indicated a willingness to work with us to see if we can find a mutually agreeable solution before the bill goes to the floor for a House vote.”