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Inside Washington (10/19/2010)

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* WASHINGTON (10/20/10)--The Federal Deposit Insurance Corp. (FDIC) is proposing a rule to govern implementation of specific provisions of its resolution authority for financial companies under Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The proposed rule describes how key elements of the FDIC’s authority will take effect to ensure the liquidation process for failing companies with the potential to cause “systemic” damage reflects the act’s mandate for transparency. Written comments and questions must be submitted to the FDIC no later than Nov. 18 … * WASHINGTON (10/20/10)--The Dodd-Frank Act has enabled the Federal Deposit Insurance Corp. (FDIC) to discard plans to impose an across-the-board premium increase in 2011. While Dodd-Frank aims for a stronger Deposit Insurance Fund (DIF), it also provides additional time for the FDIC to replenish reserves (American Banker Oct. 19). The FDIC had scheduled an increase of three cents per $100 of domestic deposits on top of the current rate of 12 cents to 16 cents paid by most banks. Dodd-Frank requires the FDIC to increase the DIF to 1.35% of deposits in 10 years. The FDIC’s proposed hike was designed to return the DIF to a ratio of 1.15% by 2016. The agency’s decision is part of a comprehensive plan for long-term DIF management that includes creating a reserve ratio of 2% by 2027 to enable the FDIC to survive the next crisis …

CUNA WOCCU meet with Fed on Dodd-Frank burdens

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WASHINGTON (10/20/10)--Representatives from the Credit Union National Association (CUNA) and the World Council of Credit Unions (WOCCU) recently met with the Federal Reserve to address credit union-specific issues regarding the remittance transfer provisions in the recently passed Dodd-Frank financial regulatory reform, such as WOCCU's IRnet remittances program, credit union international wire transfer and ACH operations, consumer protection, and credit union regulatory burden concerns. Portions of the Dodd-Frank legislation would require money transfer companies, banks, and credit unions that conduct what the law calls "remittance transfers" -- which are broadly defined by the law to include most consumer cross-border electronic fund transfers not involving plastic cards -- to provide consumers with certain disclosures regarding exchange rates and fees. The law also requires the Fed to establish regulations concerning error resolutions and similar consumer protections. Congress intended to exempt transactions that are initiated from deposit accounts at federally-insured credit unions from many aspects of these rules regarding disclosure of exact exchange rates, fees, and so forth for at least five years. International transfers in which recipient nations do not legally allow, or the method by which transfers are made in the recipient country do not allow, the amount of currency that will be received -- presumably including most, if not all, international wire transfers and ACH transactions -- would also likely be exempted to some degree. “How these exemptions operate in practice, however, will largely depend to the details of the proposed rule issued by the Fed,” CUNA Counsel for Special Projects Michael Edwards said. The Fed “is likely to issue these proposed regulations in mid- to late-spring of 2011,” Edwards added.

Fed issues CARD Act clarifications dates

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WASHINGTON (10/20/10)--Credit unions will want to note a proposal just issued by the Federal Reserve Board, one which is intended to help card issuers more fully understand their compliance obligations under changes to Regulation Z. The Credit Card Accountability Responsibility and Disclosure (CARD) Act, enacted in May 2009, made a series of changes to credit card rules, which were implemented under Reg Z Truth in Lending rules. This new Fed proposal is intended to clarify the Fed’s CARD Act rules. Specifically, the proposed clarifications state:
* Promotional programs that waive interest charges for a specified period of time are subject to the same protections as promotional programs that apply a reduced rate for a specified period. For example, a card issuer that offers to waive interest charges for six months would be prohibited from revoking the waiver and charging interest during the six-month period unless the account becomes more than 60 days delinquent. * Application and similar fees that a consumer is required to pay before a credit card account is opened are covered by the same limitations as fees charged during the first year after the account is opened. Because the total amount of these fees cannot exceed 25% of the account's initial credit limit, a card issuer that, for example, charges a $75 fee to apply for a credit card with a $400 credit limit generally would not be permitted to charge more than $25 in additional fees during the first year after account opening. * When evaluating a consumer's ability to make the required payments before opening a new credit card account or increasing the credit limit on an existing account, card issuers must consider information regarding the consumer's independent income, rather than his or her household income.
The Fed will be publishing its proposal (see resource link) in the Federal Register, likely within the next week. Comments on the proposal must be submitted within 60 days after its publication. The Fed on Tuesday also made official an interim final rule that pushed back the compliance date for gift card-related disclosure rules until Jan. 31, 2011. Those rules were previously slated to come into effect on Aug. 22. For that Fed release, use the resource link.