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Inside Washington (10/03/2008)

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* WASHINGTON (10/6/08)--The New Markets Tax Credit Program has been extended through 2009 as part of the Emergency Economic Stabilization Act, signed into law Friday. The package authorized $3.5 billion in new tax credit allocation authority to encourage further investment of new private sector capital into distressed communities. Credit unions and other non-profits may apply for the credit, but must be certified first as a Community Development Entity (CDE)… * WASHINGTON (10/6/08)--C-SPAN Television cameras videotaped Friday morning's installment of the 2008 presidential election "Power Breakfasts," organized by National Journal. The Credit Union National Association (CUNA) co-sponsors the series.
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More than 150 congressional staffers attended Friday's event, which focused on the previous night's vice presidential debate between Democratic vice presidential candidate Sen. Joe Biden (D-Del.) and Republican vice presidential candidate Gov. Sarah Palin of Alaska. Ronald Brownstein, political director for the Atlantic Media Co., moderated the panel. The event happened at Union Station in Washington, D.C., and featured: Michael Feldman, former senior adviser to Vice President Al Gore; Stan Greenberg, Greenberg Quinlan Rosner; Neil Newhouse, Public Opinion Strategies; and Sara Taylor, former White House political adviser to President George W. Bush. (Photo provided by CUNA) ... * WASHINGTON (10/6/08)--The federal government could receive more “bang for its buck” through a provision in the bailout plan that would allow the Treasury to give enhancements and credit guarantees on loans, according to Federal Deposit Insurance Corp. (FDIC) Chairman Sheila Bair. The provision would allow the government to stabilize home prices and increase the number of loan modifications at a lesser cost, she added. Bair supports the $700 billion plan, which was approved by the House and signed into law by President Bush Friday, but said the provision could be used as a less expensive alternative (American Banker Oct. 3). The plan raises deposit insurance to $250,000 per depositor at each institution. Coverage is in effect through Dec. 31, 2009 ... * WASHINGTON (10/6/08)--Rep. Jason Altmire (D-Pa.) commended credit unions for helping average working Pennsylvanians on Pittsburgh’s business talk radio show, WMNY 1360 AM Thursday (Life is a Highway Oct. 3). Altmire called into the show to praise credit unions. Also on the show were Jim McCormack, Pennsylvania Credit Union Association president/CEO, and Ralph Canterbury Jr., vice president of technology, Clearview FCU, Moon Township ...

250K NCUSIF coverage effective immediately

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WASHINGTON (10/6/08)--Friday's passage of the Emergency Economic Stabilization Act of 2008 will require the National Credit Union Administration (NCUA) to immediately increase share insurance protection to $250,000 on all types of accounts until Dec. 31, 2009. President George W. Bush signed the economic rescue package just hours after it was passed by the House 263-171. The Senate approved the bill on Wednesday. The NCUA said it is reviewing all share insurance coverage materials included on the Internet Share Insurance Tool Kit, such as the "Your Insured Funds" brochure and print advertisement, to make needed revisions. Revised documents reflecting $250,000 coverage will be posted to the NCUA website as soon as possible, according to the agency. The overall rescue bill—intended to shore up the nation's economy in light of such factors as the current mortgage crisis and wildly fluctuating activity on Wall Street—would allocate up to $700 billion to the U.S. Treasury Department to buy up mortgage-backed securities whose values have dropped or become hard to sell. The package gives the government an ownership share in the companies that participate in the program, an element that was missing from earlier rescue drafts. This provision makes it so taxpayers could benefit from any increased value in the securities created by the government's support. After the bill became law, CUNA President/CEO Dan Mica said, "Credit unions had no hand in creating the root cause of the problem this bill aims to fix. Without question, however, they and their members like so many others are collateral damage of the economic hardship that has resulted. "In that sense, Congress had to act to avert any additional damage to the nation's economy and inject confidence in our financial system. Along those lines, credit unions appreciate the fact that the bill reflects our priority of raising the level of federal deposit insurance at credit unions (through National Credit Union Share Insurance (NCUSIF) coverage) to $250,000, giving credit unions parity with the same increase for banks and the FDIC. "This action sends a vital message to credit union members and consumers that their federally-insured deposits in credit unions remain safe."

NCUA changes revocable trust coverage

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ALEXANDRIA, Va. (10/6/08)--The National Credit Union Administration (NCUA) Friday announced changes to simplify its rule determining the coverage available on revocable trust accounts--commonly called payable-on-death accounts or living trust accounts. Applying to existing and future revocable trust accounts at all federally insured credit unions, the rule change eliminates the concept of qualifying beneficiaries, so coverage is based on the naming of virtually any beneficiary. The interim final rule is effective immediately and is substantially similar to one adopted recently by the Federal Deposit Insurance Corp. The NCUA is seeking comments for a 60-day period, to begin when the rule is published in the Federal Register. In light of the new $250,000 insurance coverage that went into effect on Friday, the agency will have to re-issue the interim rule, noted Kathy Thompon, CUNA senior vice president/associate general counsel for regulatory compliance and legislative analysis. It is not clear how NCUA will adjust the new $500,000 rule, she added. Use the resource link below to read the new regulation.

Fryzel Rescue package CLF cap good tools for NCUA

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ALEXANDRIA, Va. (10/6/08)—The passage of the Emergency Economic Stabilization Act last week in combination with recent enactment of a higher borrowing ceiling for the Central Liquidity Facility (CLF) will help the National Credit Union Administration (NCUA) mitigate some current and potential difficulties facing the credit union industry, said the agency’s chairman, Michael Fryzel, Friday. “In addition to the highly publicized increase in share insurance coverage, I am particularly pleased that Congress included important last-minute changes recommended by NCUA. “The final version of the Act incorporates language that allows (the National Credit Union Share Insurance) insurance level to be increased while recognizing the unique elements of the fund that make it different from the (Federal Deposit Insurance Corp.FDIC, and it also provides for NCUA to act in a consultative role with other regulators in determining how the Troubled Asset Repurchasing Program (TARP) will work,” Fryzel said in a statement. His remarks were issued just after the House voted 263-171 to pass the emergency stabilization act. The bill was approved Wednesday by the Senate and awaits the signature of President George W. Bush. “Viewed in their totality, I firmly believe that these actions will add important dimensions of financial and regulatory assistance to NCUA, credit unions and the entire financial services industry. I will move forward expeditiously and with a sense of purpose as we employ the new tools at our disposal,” Fryzel said.

Better debt management terms sought for borrowers

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WASHINGTON (10/6/08)—The National Foundation of Credit Counselors (NFCC) has launched a call to action for the development of affordable debt management plans (DMPs) asking 10 major card issuers to join the effort. The highly regarded NFCC is the nation's oldest association of credit counseling agencies, and the Credit Union National Association (CUNA) is a member of its Advisory Council. The NFCC is asking all card issuers to act by March 31 to use a universal, two-tiered DMP, which would offer either a maximum monthly fixed payment of 2% or a hardship payment of 1.75% of a balance. The development could be important for credit unions and their members, according to Mike McLain, CUNA's assistant general counsel, senior compliance counsel, and NFCC representative. “As a general rule, credit unions will experience higher losses if their members file bankruptcy rather than complete an acceptable debt payment plan. The NFCC is proposing somewhat more reasonable limits for debt payment plans that should enable more CU members—and borrowers in general--to repay their debts through debt payment plans rather than resorting to bankruptcy,” McLain explained. According to NFCC, about 25% of the clients its 108 credit counseling agencies see would benefit from a DMP. However, without modification to DMP terms, the option will be unaffordable by at least a third of those.

NCUA letter CU performance is what counts

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ALEXANDRIA, Va. (10/6/08)—Any credit union involved in advertising that could imply that other financial institutions are not safe for consumers’ deposits should discontinue their activity, said National Credit Union Administration (NCUA) Chairman Michael Fryzel in a new letter to credit unions. The chairman noted that such ad campaigns are “uncharacteristic of credit unions” and he admonished any involved to refrain from such remarks. “In these turbulent times, consumers need to have faith and confidence in the financial system. At NCUA, we have been working with Congress to make certain that I, as the federal insurer, and you, as the financial service provider, have the tools we need to keep credit unions strong and vibrant, and member funds safe and secure,” the chairman wrote in an Oct. 2 letter. “Credit unions do not need to criticize another financial institution regardless of its charter. Your performance is all that matters,” Fryzel said.

CDFI information call for CUs tomorrow

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WASHINGTON (10/6/08)—Credit unions interested in applying in 2009 for grants from the U.S. Treasury Department’s Community Development Financial Institutions (CDFI) Program can tune in tomorrow for an hour-long teleconference for more information. The CDFI Fund is hosting four, one-hour question-and-answer sessions this week and the 2 p.m. Tuesday session is geared toward frequently asked questions pertaining to credit union involvement in the program In August, the CDFI Fund released its notice of funds available for FY 2009 and noted that the program annually provides up to $54 million, subject to final appropriations, in the form of awards to the community-based organizations known as CDFIs. The CDFIs provide affordable financing and related services to low-income communities and populations that lack access to credit, capital and financial services. The CDFI Program application deadline is 12 a.m. EDT on Oct. 29. An applicant not currently certified as a CDFI must first submit a CDFI certification application by 12 a.m. EDT on Oct. 1.