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Washington

FASB plan would spike costs with no benefits CUNA

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WASHINGTON (10/6/10)--The Credit Union National Association (CUNA) this week was critical of the Financial Accounting Standards Board’s (FASB) proposed financial instrument accounting standards update, saying that the update would force credit unions to incur substantial direct and indirect costs to comply, while providing no benefit to credit unions, their members or their regulators. The proposal would require most financial assets and liabilities to be reported under Generally Accepted Accounting Principles (GAAP) at fair value. The proposal would also require the funding of the Allowance for Loan and Lease Loss Accounts to be under the expected loss model. Credit unions over $10 million in assets are required to comply with GAAP. While forcing financial institutions to report fair value under GAAP is “of questionable value to investors of publicly traded companies,” the information is even less useful to the members, creditors, board members, and regulators of credit unions, CUNA said. The association added that “credit unions generally fund their operations by taking deposits and holding loans for the long term,” and, as a result, “most financial instruments that credit unions hold are not readily marketable.” CUNA raised general concerns with FASB before the proposal was released. CUNA is coordinating with the National Credit Union Administration and other regulators to “ensure” that “available avenues of opposition” are employed, CUNA President/CEO Bill Cheney said. CUNA Accounting Subcommittee Chairman and Patelco CU Chief Financial Officer Scott Waite will, along with CUNA staff, participate in an Oct. 12 roundtable discussion on the proposal at FASB headquarters in Norwalk, Conn. For the full comment letter, use the resource link.

CUNA seeks tweaks on overdraft disclosure rule

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WASHINGTON (10/6/10)--Credit unions should have the option to list overdraft fees on periodic statements as “total overdraft fees for paid items” instead of “total overdraft fees,” the Credit Union National Association (CUNA) said in a comment letter on the National Credit Union Administration’s (NCUA) interim Regulation DD (Truth in Savings) amendments. Doing so would further distinguish the paid overdraft items from items that are returned unpaid and that are also required to be disclosed, CUNA said. The NCUA, along with the Federal Reserve, last year amended Regulation DD to require all financial institutions to disclose on the periodic statement the fees charged for overdraft services and for returning items unpaid, both for the statement period and the year-to-date. The rule also provides a sample form that may be used to comply with these disclosure requirements, and clarifies some key definitions. CUNA also asked the NCUA to provide credit unions with the flexibility needed to continue using a sample overdraft and returned item fee form. Currently, credit unions would be forced to reformat their disclosures due to minor changes in the NCUA’s form, a situation that would result in additional, unneeded burdens for credit unions. For the full CUNA comment letter, use the resource link.

Bridge corporates ready for business

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ALEXANDRIA, Va. (10/6/10)--The National Credit Union Administration (NCUA) on Tuesday chartered the two bridge corporate credit unions to assume the operations of now conserved U.S. Central Corporate FCU (US Central) and Western Corporate FCU (WesCorp), completing another vital step in its corporate credit union resolution process. NCUA announced that the bridge corporates would be created at its special board meeting late last month. During that meeting, NCUA also placed three more corporate credit unions into conservatorship, finalized new rules governing the corporates and approved a plan to isolate and securitize the corporates so-called "legacy" assets. A total of $50 billion of these “legacy” assets will be isolated and funded, and $35 billion of those assets will be reissued as NCUA Guaranteed Notes (NGN), which will then be sold on the open market. The newly created institutions will be known as U.S. Central Bridge Corporate FCU and Western Bridge Corporate FCU, the NCUA said. NCUA Chairman Debbie Matz said that the creation of the bridge corporates “is an important interim step toward an orderly transition that will allow consumer credit unions to exercise real choice about the future of the corporate system.” The bridge corporates will purchase and assume assets and member share deposits from the conserved corporate credit unions. The bridge corporates will offer little in the way of new services, and new loans will only be provided for “settlement purposes,” the NCUA said. Existing loans “will continue to be serviced,” and the field of membership for the new corporates will be identical of that of the now-conserved corporates. New members will not be accepted, according to the NCUA. Overall, the bridge corporates will focus on payment and settlement activities, and will not operate indefinitely, NCUA said. The agency is also “committed to operating the bridge corporate for sufficient time so that members can find individual solutions,” a process that could take up to 24 months. For the full NCUA release, use the resource link.

Inside Washington (10/05/2010)

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* WASHINGTON (10/6/10)--Sen. Olympia Snowe (R-Maine), ranking member on the Senate Committee on Small Business and Entrepreneurship, has asked Elizabeth Warren--who is leading the new Consumer Financial Protection Bureau--for a detailed plan explaining how she will implement small business review panels at the agency. Snowe introduced an amendment in the regulatory reform bill that would create small business advocacy review panels within the agency to consider the impact of federal regulations on small business. A recent Small Business Administration report Snowe cited indicates that regulatory compliance costs small firms 36% more on average per employee than large firms. Firms with fewer than 20 employees spend $10,585 per employee, compared to $7,755 for firms with 500 or more employees ... * WASHINGTON (10/6/10)--Loans generated by the Small Business Administration (SBA) accounted for more than $22 billion in 2010--a 29% increase over 2009--as a result of successful loan enhancements put in place under the American Recovery and Reinvestment Act of 2009, according to the SBA. The SBA made 54,833 loans through its 7(a) and 504 loan programs in fiscal year 2010, compared with 47,897 loans amounting to $17 billion in fiscal year 2009. The highest loan volume in a single month in fiscal 2010 was in November 2009, with $2.18 billion in loans. November 2009 also was the highest single month loan volume SBA had seen since September 2002 when it was $2.34 billion. “The success of these loan enhancements has meant tens of thousands of small businesses have been able to get the capital they needed to not just survive the recession, but to grow and create much-needed jobs in communities all across the country,” said Karen Mills, SBA administrator ... * ALEXANDRIA, Va. (10/6/10)—The National Credit Union Administration’s campaign to raise awareness of its account insurance program began in earnest on Tuesday, as NCUA Chairman Debbie Matz spoke on radio stations in key markets nationwide. “In the past few years, millions of people moved their money from other investments to credit unions – and I want to be sure that consumers do everything they can to set up their accounts so that all of their money is protected,” Matz said. The NCUA-branded “radio tour” precedes the NCUA’s "keep your money NCUA-safe" campaign, which features 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 made the $250,000 account fund guarantee permanent earlier this year…

CDFI to provide up to 135 mil in 2011 round

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WASHINGTON (10/6/10)--The U.S. Treasury Department Tuesday announced the availability of $135 million in funds through its Community Development Financial Institutions (CDFI) Fund. A total of $25 million of the CDFI Fund awards will be distributed under the Obama administration’s new Healthy Food Financing Initiative (HFFI), according to the release. CDFI Fund Director Donna J. Gambrell in a release said that the CDFI program “continues to be a critical tool for building the capacity of community-based financial institutions serving low-income communities, and the need for their services has never been greater." The CDFI Fund will hold an informational teleconference for interested credit unions. That call is scheduled to take place at 3 p.m. ET on Oct. 18. Applications for the CDFI funds must be received by Nov. 19. Twenty-one credit unions were awarded a combined $12 million in funds during the 2010 round of the CDFI Fund, with nearly one-third of those credit unions receiving $750,000 in funding, the highest amount awarded to any financial institution during that round. The 2010 round of grants totaled $104.9 million in funding for 180 CDFI Fund-eligible institutions, representing the largest combined amount to be awarded since the CDFI Fund program began in 1994. For the CDFI Fund release, use the resource link.