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Washington

Heavy hearing schedule in House Senate

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WASHINGTON (10/4/11)--With the House and Senate both returning to Washington this week, a number of hearings are on the agenda. One hearing credit unions will want to watch is today’s Senate Banking Committee financial institutions subcommittee hearing entitled: “Consumer Protection and Middle Class Wealth Building in an Age of Growing Household Debt.” Doug Fecher, president/CEO of Fairborn, Ohio-based Wright-Patt FCU, will testify on his own behalf during that hearing. Federal Reserve Chairman Ben Bernanke will also be active on the Hill today, as Bernanke discusses the nation’s economic outlook before the Joint Economic Committee. Another pair of high profile hearings will take place on Thursday, as U.S. Treasury Secretary Tim Geithner delivers the Financial Stability Oversight Council’s yearly report to Congress in separate remarks before the House Financial Services Committee and the Senate Banking Committee. Other hearings of note include:
* A Tuesday House Judiciary Committee hearing on a potential balanced budget amendment to the U.S. Constitution; * A Wednesday Senate Banking Committee economic policy subcommittee hearing on the economic implications of federal budget deficits; * A Thursday Senate Finance Committee hearing entitled: “Tax Reform Options: Incentives for Homeownership,” and * A Thursday House Financial Services Committee insurance, housing and community opportunity subcommittee hearing on the Obama administration’s response to the housing finance crisis.
Markup sessions on a bill that would amend securities law to establish shareholder registration thresholds, the Private Company Flexibility and Growth Act (H.R. 2167), the Entrepreneur Access to Capital Act (H.R. 2930), the Access to Capital for Job Creators Act (H.R.2940), and the Small Company Job Growth and Regulatory Relief Act of 2011 are also on the House Financial Services Committee’s capital markets subcommittee Wednesday schedule. The Joint Select Committee on Deficit Reduction is expected to hold private meetings this week, and potential Consumer Financial Protection Bureau leader Richard Cordray is scheduled to face a Senate Banking Committee confirmation vote. (See related story: Cordray CFPB vote set for this week) Legislation that would continue to fund the government and extend the National Flood Insurance Program until Nov. 18 is set for a House vote today. The House is also scheduled to hold votes on H.R. 1343, a bill that would return unused or reclaimed funds made available for broadband improvements to the Treasury, H.R. 2681, the Cement Sector Regulatory Relief Act, and H.R. 2250, the Environmental Protection Agency (EPA) Regulatory Relief Act, this week.

Cordrays CFPB nomination may be voted this week

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WASHINGTON (10/4/11)--The Senate Banking Committee is expected to vote on the nomination of Consumer Financial Protection Bureau (CFPB) director Richard Cordray this Thursday. His nomination would move on to the full Senate following committee approval.

Credit Union National Association (CUNA) Senior Vice President of Legislative Affairs Ryan Donovan said CUNA expects Cordrays nomination to be approved by the committee, but we are unsure of his prospects after that. Donovan recently noted that Cordray's nomination "faces several obstacles," adding that "over 40 senators have said they will not vote to confirm any CFPB nominee unless changes to the CFPB are enacted."

Among the suggested changes are increasing CFPB leadership from a single director to a five-member commission, reforming some operational rules, and adjusting the voting threshold needed for the Financial Stability Oversight Council (FSOC) to set aside or stay a CFPB issued rule to a simple majority.

Expanding the FSOC's review authority of CFPB rules has also been proposed. These changes passed the House by a 241-173 vote in July, but the Senate prospects for these changes are in doubt.

CUNA has encouraged Cordray to "consider ways in which the bureau can help minimize regulatory requirements for credit unions and other financial institutions" and has also encouraged the CFPB to establish an Office of Regulatory Burden Monitoring to help the agency "track, consider, and help mitigate the cumulative regulatory burden under which credit unions and others must operate."

Consumers lose in CU-to-bank conversions Cheney says

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WASHINGTON (10/4/11)--Following Monday’s announcement that Technology CU, of San Jose, Calif., will seek members’ approval to convert to a mutual savings bank charter, Credit Union National Association (CUNA) President/CEO Bill Cheney said “CUNA continues to believe that the credit union charter remains the best option for serving the interests of consumers.” The value of the credit union charter, Cheney said, was demonstrated over the last several days when Bank of America’s announcement of a $5 monthly debit card fee ”was followed by a resounding and sharp outcry from across the nation, by consumers and the news media alike, that credit union membership is the natural haven from such high fees typically charged by banks.” “As in this instance it is difficult to imagine how converting from a credit union to a bank could really benefit consumers,” Cheney said. Studies have shown credit unions that converted to banks in the past soon begin pricing their services like banks. “Ultimately, of course, the decision to convert has to be made by members of the credit union who own the institution. They can only make that decision based on all of the facts, provided with complete transparency,” the CUNA CEO stated. He urged the credit union to make every effort to completely and transparently inform its members of the pros and cons of “this critical decision.” California Credit Union League President/CEO Diana Dykstra concurred, saying members must be educated on the benefits of being part of a credit union as opposed to a bank, so they are fully informed when their financial institution considers a change of charter. She noted that some of those benefits include:
* Credit union members are owners and elect their board on democratic principle: one member, one vote. In contrast, a stock-owned company like a bank will maximize gain for stockholders, not members; * According to various studies and reports, credit unions typically offer better loan rates than banks; and * Research indicates that consumers nationwide save $6.8 billion a year by using a credit union over a bank. In California, Dykstra noted, that savings amounts to about $930 million, or $183 per member household.
Technology CU was chartered in 1960, serves 73,000 members, and holds more than $1.5 billion in assets. It said in a notice to members that the charter conversion would allow the institution to “significantly expand its commercial lending business” and diversify its loan portfolio “by increasing secured commercial and industrial lending to small and mid-size businesses.” The credit union said member/customer access to the institution’s branches, ATMs, checking, direct deposits and withdrawals, and other standard services would also be unchanged. The credit union will accept comments from members until Oct. 29, and Technology CU’s board of directors said it would consider the charter change on Nov. 2.

Inside Washington (10/03/2011)

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* WASHINGTON (10/4/11)--Amendments to the Federal Credit Union Act's definitions regarding the National Credit Union Share Insurance Fund's (NCUSIF) equity ratio and credit union net worth will be effective on Oct. 31, according to a document published in the Federal Register Friday. The National Credit Union Administration (NCUA) approved the equity ratio and net worth changes in September. They clarify that the NCUSIF’s equity ratio must be based solely on the financial statements of the NCUSIF, without consolidation with other statements such as those of conserved credit unions. They also allow Section 208 assistance, which is provided to troubled credit unions, to qualify as regulatory net worth for natural-person credit unions under the NCUA’s Prompt Corrective Action authority. The Credit Union National Association (CUNA) strongly opposes a requirement that credit unions must deduct the amount of any bargain purchase gain from the net worth of a target credit union before a merger, saying it “could result in a lower post-merger net worth, potentially discouraging mergers”… * WASHINGTON (10/4/11)--The Housing and Urban Development (HUD) inspector general (IG) is recommending that the Federal Housing Administration (FHA) ban corporate officers who have left companies that have not met indemnified the government for delinquent loans. The recommendation was made in a HUD IG report issued Friday (American Banker Oct. 3). The report provides examples of seven companies that had $7.3 million in outstanding indemnification obligations when their FHA-approved lender status was revoked. Twelve corporate officers from those firms re-entered the FHA program through another company or by starting a new firm. FHA will need new legal authority to prevent corporate officers from reentering the FHA program, according to the IG. The FHA cannot block the re-entry of the executives unless it can prove the individuals are personally responsible for loan losses, FHA acting deputy assistant secretary Deborah Holston said … * WASHINGTON (10/4/11)--Wisconsin credit union activists met with the state’s congressional delegation as part of Wisconsin Credit Union League’s (WCUL) annual Hike the Hill event in Washington, D.C. This year’s trip was productive in gaining support for legislation that would raise the member business lending (MBL) cap. U.S. Rep. Tom Petri (R-Wis.) pledged to co-sponsor the bill. Activists also met with Elizabeth Vale, Consumer Financial Protection Bureau assistant director for community banks and credit unions. Vale urged credit unions to keep in direct contact with the bureau so regulatory problems can be averted before they need correction. The group also met with National Credit Union Administration Chairman Debbie Matz, who provided insights on topics such as credit union service organization rules, assessments and examinations, and multi-featured open-ended lending. The Credit Union National Association and credit unions are pressing Congress to increase credit unions’ MBL cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity to offer MBLs, inject $13 billion in loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said. From left, Brett Thompson, WCUL; Sarah Wainscott, WCUL; Pat Lowney, Lakeview CU, Neenah; Ken Beine, Shoreline CU, Two Rivers; Chip Coenen, Lakeview CU; Petri; Sharon Tome, Shoreline CU; and John Morrissey, Southern Lakes CU, Kenosha. (Photo provided by the Wisconsin Credit Union League) …