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Inside Washington (10/04/2010)

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* WASHINGTON (10/5/10)--At the Financial Stability Oversight Council’s first meeting Friday, members moved forward to establish criteria to determine which nonbanks are systemically risky and to ban proprietary trading. During the meeting, Treasury Secretary Tim Geithner said that a study on how to enforce the Volcker Rule--which bans proprietary trading--would be due at the end of January. The Volcker Rule proposal, which the council approved Friday, asks financial institutions how to impose such a ban and restrict investment with private-equity and hedge funds. It also questions how to protect taxpayers and consumers by minimizing risks that firms take on (American Banker Oct. 4). Under the regulatory reform law, the council must make recommendations about how to implement the Volcker Rule by Jan. 22. Regulators will then have nine months to implement the rule. Debbie Matz, chairman of the National Credit Union Administration, was among meeting attendees ... * WASHINGTON (10/5/10)--The National Credit Union Administration (NCUA) is accepting comment on its Proposed Interpretive Ruling and Policy Statement, which sets forth the requirements and process for chartering corporate federal credit unions, as published in the Federal Register Friday. Comments must be received by Nov. 1. NCUA recently finalized its Corporate Credit Union Rule, changes which are likely to result in a fundamental restructuring of the corporate credit union system. As part of the restructuring, NCUA believes some groups may wish to form new corporate credit unions, according to the Federal Register ...

Pro-CU legislation still possible in post-recess action

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WASHINGTON (10/5/10)—While the Congress has officially left Washington for the pre-electoral recess, credit union related legislation could see action during a “lame duck” session. That session is scheduled to begin on Nov. 15, and while many legislative priorities were wrapped up in recent weeks, Congress still needs to approve legislation that would continue to fund the government itself and the nation’s defense. Additional legislation could be considered during this time period, and the Credit Union National Association’s Senior Vice President of Legislative Affairs John Magill said that CUNA continues to look for potential vehicles for member business lending cap legislation. That MBL legislation, if enacted, would increase the MBL cap to 27.5% of a credit union's total assets, up from the current 12.25% limit. Doing so would infuse $10 billion of new credit into small businesses and create more than 108,000 new jobs--at no cost to the American taxpayer. CUNA is also working to promote allowing credit unions to raise alternative capital. CUNA Vice President of Legislative Affairs Ryan Donovan said that CUNA has seen genuine interest in maintaining the capital level of credit unions and other financial institutions in Congress, and added that this type of awareness could be key to credit union’s legislative prospects going forward.

CUNA CUs must assess FinCEN cross-border rule impact

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WASHINGTON (10/5/10)—The Credit Union National Association recommends that credit unions analyze the Financial Crimes Enforcement Network’s (FinCEN) recent cross-border electronic fund transmittal proposal to determine how it applies to their business activities. FinCEN recently proposed rules to require some depository institutions and money services businesses (MSB) to "affirmatively provide records to FinCEN of certain cross-border electronic transmittals of funds (CBETF). FinCEN has acknowledged that a final rule on CBETFs cannot be issue until the systems needed to accept the required reports are in place. According to the proposal, such systems may not be in place before 2011, and a final rule may not be issued until January of 2012 . While CUNA cannot say how many credit unions would be subject to the rule, CUNA Federal Compliance Counsel Nichole Seabron said it is estimated that approximately 300 financial institutions would be impacted. The World Council of Credit Union's (WOCCU) recently said that neither the proposed rule nor the potential final rule would impact its remittance programs. (See related story: FinCEN plan won't affect CU remittances, WOCCU says, Sept. 30) The FinCEN CBETF reporting requirement does not apply to all financial institutions, only those that transmit the electronic funds transfer instructions directly to a foreign financial institution ("last-out financial institution") or that receive the electronic funds transfer instructions directly from a foreign financial institution ("first-in financial institution"). According to FinCEN, the proposal will likely impact larger institutions that utilize centralized message systems like SWIFT, Fedwire and CHIPS. Reporting credit unions would be required to file reports on all CBETF transactions and such reports would need to be filed with FinCEN no later than five business days after issuing or receiving the transmittal notice or advice. Under the FinCEN proposal, credit unions and other financial institutions may file the reports directly or have them filed by a third party. However, the financial institution will be ultimately responsible for compliance with the reporting obligation. The proposal exempts from reporting funds transfers that are conducted and messaged entirely through a bank/credit union's proprietary systems. Also, CBETF reporting requirements do not apply when there is no third party consumer to the transaction, i.e. where the transmitter and recipient of a funds transfer are both either credit unions or banks. There is also an annual taxpayer ID reporting requirement under the proposal that is designed to help flesh out instances of money laundering and tax evasion. This requirement would apply to all banks/credit unions that maintained a consumer account that was debited or credited in relation to a CBETF. Institutions are required to provide FiNCEN with the consumer's account number and tax ID for all accounts that originated or received CBETFs in the previous calendar year. Comments must be received by FinCEN no later than December 29. For the full FinCEN proposal, use the resource link.

Fed delays new 100 bill issue date

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WASHINGTON (10/5/10)--Production problems at the Bureau of Engraving and Printing have pushed back the issue date of the new $100 bill, the Federal Reserve (Fed) announced last week. The new bill was scheduled to be issued on Feb. 11. The Fed has not established a new issue date. According to the Fed, the Bureau of Engraving and Printing has identified “sporadic creasing of the paper” during the printing of the bill. “As a consequence, the Federal Reserve will not have sufficient inventories to begin distributing the new $100 notes as planned,” the Fed added. The bill design combines the usual portrait of Ben Franklin, and some previously added security enhancements, with a pair of brand new, advanced counterfeit-deterrent security features. The bill also features a blue three-dimensional security ribbon and an interpretation of the classic liberty bell image which, when tilted, changes colors from copper to green, making the bell appear to disappear and reappear in an inkwell. The new security features were researched and developed for more than a decade, according to U.S. Treasurer Rosie Rios. For the Fed release, use the resource link.

NCUA kicks off keep your money NCUA-safe campaign

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WASHINGTON (10/5/10)—The National Credit Union Administration (NCUA) on Monday officially began its "Keep your money NCUA-safe" campaign. The campaign will feature television, radio and billboard ads with financial guru Suze Orman touting the benefits of NCUA account insurance. The ads aim to educate potential and current credit union members on the similarities between the NCUA and Federal Deposit Insurance Corporation’s customer account guarantees. The NCUA recently made the $250,000 account fund guarantee permanent. The NCUA has also created a new website with links to the video ads and other information. The NCUA’s site also features an “e-calculator” which will help users find out how much of their money is “NCUA-safe.” The calculator will also tell members what they can do if their account is not 100% protected. NCUA Chairman Debbie Matz in a Monday release said that the campaign “will give consumers the tools to make sure their accounts are properly set up so that they can have the peace of mind they deserve.” An NCUA official told News Now that the agency has not yet established a channel lineup or an airing schedule for the PSAs. For the new NCUA site, use the resource link.