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Inside Washington (10/26/2009)

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* WASHINGTON (10/27/09)--Members of the New Jersey Credit Union League (NJCUL) recently hiked Capitol Hill in Washington, D.C., to discuss with their constituents the proposed consumer financial protection agency; the Credit Card Accountability, Responsibility and Disclosures (CARD) Act; and other legislation involving overdrafts, interchange and member business lending. There was a high level of interest in the CARD Act and the effects the law would have on credit unions, according to NJCUL (The Weekly Exchange Oct. 19). “It was clear that Congress is looking for real-world examples of how these laws will affect credit unions and ultimately affect consumers,” said Paul Gentile, league president/CEO. Before hiking the Hill, the group started its day at Credit Union House with a regulatory briefing from the National Credit Union Administration and a legislative briefing with staff at the Credit Union National Association. (Photo provided by the New Jersey Credit Union League) ... * WASHINGTON (10/27/09)--House Financial Services Committee Chairman Barney Frank (D-Mass.) could introduce legislation that would affect how the government deals with financial institutions slated to be “too big to fail” (The New York Times Oct. 26). Frank’s bill would make it easier for the government to take over troubled institutions, eliminate management and shareholders, and change the terms of loans held by the institution. Treasury Secretary Timothy Geithner was expected to endorse the changes to the bill during a House Financial Services Committee hearing Tuesday. The Obama administration’s “too big to fail” plan would already make it more expensive to be a large financial company whose failure could endanger the financial system and economy. The companies would be required to keep more money in reserves and would have more difficulty borrowing against their assets ... * WASHINGTON (10/27/09)--The director of the proposed consumer financial protection agency--approved by the House Financial Services Committee last week--would have extensive power. The director would be under advisement from two oversight panels but would not have to follow recommendations. Instead, the director would have the ability to address unfair or deceptive practices. Elizabeth Warren, professor at Harvard University, is perceived by industry observers to be the top candidate for the position. The financial services industry has balked at the agency, saying it could damage the industry. Rep. Barney Frank (D-Mass.), author of the consumer protection agency bill, supports it. During a press conference last week, Frank said a “top-heavy governance structure” could leave a consumer vulnerable without protection ... * WASHINGTON (10/27/09)--Consolidating bank supervisors into one agency would lead to failure, Rep. Barney Frank (D-Mass.) said. He told reporters at a press conference that there is “no remote chance of it happening." The idea of a single regulator has been pushed by Senate Banking Committee Chairman Christopher Dodd (D-Conn.), who plans to make consolidation a part of an upcoming reform bill ...

Congress this week Overdraft on the agenda

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WASHINGTON (10/27/09)--The most noteworthy Washington news for credit unions may not happen until the end of the week as the House Financial Services Committee has scheduled a hearing on H.R. 3904, "The Overdraft Protection Act of 2009," for this Friday. The legislation, introduced by Reps. Carolyn Maloney (D-N.Y.) and Barney Frank (D-Mass.), would, according to, “amend the Truth in Lending Act to establish fair and transparent practices related to the marketing and provision of overdraft coverage programs at depository institutions.” The bill is cosponsored by Reps. Luis Gutiérrez (D-Ill.), Gary Ackerman (D-N.Y.), Michael Capuano (D-Mass.), Keith Ellison (D-Minn.), Anna Eshoo (D-Calif.), Rubén Hinojosa (D-Texas), Paul Hodes (D-N.H.), Walter Jones (R-N.C.), Paul Kanjorski (D-Penn.), Daniel Maffei (D-N.Y.), Brad Miller (D-N.C.), Gwen Moore (D-Wisc.), Jackie Speier (D-Calif.), and Maxine Waters (D-Calif.). Similar legislation has been introduced in the Senate and the Federal Reserve is also reportedly working to address overdraft protections. House Financial Services Chair Rep. Barney Frank (D-Mass.) has also indicated that the Consumer Financial Protection Agency, the plan for which could come to the House floor within the next month, could itself create new overdraft rules. The Committee had not announced a witness list for the hearing at press time. Another issue of interest to credit unions will be discussed on the Senate side on Thursday, with the Senate Judiciary Committee holding a markup session on S.1490, the "Personal Data Privacy and Security Act of 2009"; and S.139, the "Data Breach Notification Act." The House later today will consider H.R. 3854, the Small Business Financing and Investment Act. The Credit Union National Association has touted credit unions' ability to help small businesses in a tightening market through offering business loans to their members. The House will also discuss H.R. 2996, the Interior Appropriations Bill, and begin work on a continuing resolution to fund the government until December 15, 2009. The Senate also began consideration of H.R. 3548, the Unemployment Compensation Extension Act of 2009, on Monday.

CUNA reloads interchange postcard efforts

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WASHINGTON (10/27/09)--The Credit Union National Association's (CUNA) interchange postcard campaign continues apace, and CUNA has ordered 100,000 postcards in addition to the 250,000 already distributed to meet the demands of the grassroots communication effort. The postcards, which feature the iconic credit union little guy pictured on a credit card, have been distributed to natural person credit unions by the state credit union leagues. The postcards are then handed out by employees, such as tellers, to credit union members as they do business at their local branches. CUNA announced that it hoped to have credit union members mail all 250,000 individual postcards to the Senate by the end of November, and, as noted, CUNA has already ordered another 100,000 pieces in response to requests for more from league nationwide. As Christina Mihalik, vice president of governmental affairs of the Pennsylvania CU Association said in her re-order communication to CUNA, "They're going like hot cakes!" Mihalik said Monday, "We appreciate the response and support of all Pennsylvania's credit unions that made contacts electronically or by postcards. The voice of credit unions and consumers--that interchange hurts us all--has been heard loud and clear by Pennsylvania's Congressional delegation." The interchange outreach effort has also resulted in over 60,000 emails being sent to Congressional representatives. CUNA has fiercely opposed merchant proposals that would affect interchange fees. Interchange reflects a merchant's fair share of the costs of the convenient card system and supports everything from re-issuing cards compromised by merchant data breaches to providing a call center to contact if a card is lost or stolen. Credit union leagues have also used CUNA’s Hike the Hill program, the 2009 version of which concludes this week with a visit from the Iowa Credit Union League, to communicate with Congressional representatives on interchange and other issues central to credit union success.

NCUA sends CU Letters on premium assessments signage

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ALEXANDRIA, Va. (10/27/09)--In the first of two letters to credit unions published on Monday, the National Credit Union Administration (NCUA) reminded credit unions, as it did at last month's board meeting also, that an assessment of 0.15% of insured shares will be collected from federally insured credit unions during the fourth quarter. The NCUA has taken this action to aid the National Credit Union Share Insurance Fund's (NCUSIF) as it works to recapture its equity and repay $310 million in funds the Corporate Credit Union Stabilization fund has borrowed from the U.S. Treasury. “Maintaining the NCUSIF at 1.30% will promote confidence in the NCUSIF and give NCUA maximum flexibility to address troubled institutions,” the NCUA added in the letter. “The invoice for the assessment will be sent in the fourth quarter of 2009 with payment due within 30 days of the invoice date,” the letter added. The NCUA has also notified credit unions of a change in its signage requirements. According to the letter, the NCUA has altered its “official insurance sign and official advertising statement” to “permit federally-insured credit unions flexibility in advertising.” To see the NCUA letters, use the resource link.

Data security debate returns

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WASHINGTON (10/27/09)--The data security debate returns to Congress this week as the Senate Judiciary Committee has scheduled for Thursday a markup session on S.1490, the "Personal Data Privacy and Security Act of 2009"; and S.139, the "Data Breach Notification Act." S. 1490, introduced by Sen. Patrick Leahy (D-Vt.) earlier this year, would “prevent and mitigate identity theft, to ensure privacy, to provide notice of security breaches, and to enhance criminal penalties, law enforcement assistance, and other protections against security breaches, fraudulent access, and misuse of personally identifiable information.” S. 139, introduced by Sen. Diane Feinstein (D-Calif.), would “require Federal agencies, and persons engaged in interstate commerce, in possession of data containing sensitive personally identifiable information, to disclose any breach of such information.” Similar legislation has been active in the House, with H.R. 2221, the Data Accountability and Trust Act, which would require businesses to notify affected customers when outside parties gain access to sensitive information due to a security breach, passing the House Energy and Commerce Committee by voice vote earlier this month. Credit Union National Association (CUNA) President/CEO Dan Mica commented at the time that while entities that have experienced data breaches in recent years may not have the necessary contact information to reach the individuals whose accounts may have been compromised, the financial institutions of affected accountholders do. CUNA supports allowing financial institutions to charge retailers for any costs incurred by the financial institution that is forced to notify its accountholders following a data breach. Data security has long been a hot topic on the Hill, and several data security bills worked their way through the House and Senate in 2005, 2006 and 2007, although lawmakers never completed debate on the issue, and legislation remains pending. However, data security is still an increasingly important issue, and TJX Cos. was at the center of 2007 data breach that resulted in an $8 million gift card and electronic goods scam that used credit card data stolen from the retailer. Also, Heartland Payment Systems announced earlier this year that millions of credit card accounts from credit unions nationwide may have been compromised following a data breach. Visa and MasterCard also fell victim to a less serious data breach earlier this year.