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Bush again highlights CU share insurance

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WASHINGTON (10/8/08)—For the third time in a week, President George W. Bush included federal credit union share insurance in public remarks.
Click to hear President Bush talk about federal insurance for your savings at credit unions
The Credit Union National Association (CUNA) urged the President Sept. 24 to instruct those within his administration to include federal credit union share insurance in messages meant to reassure Americans about the safety of their federally insured deposits. At a small business in Chantilly, Va., Bush spoke in support of the recently enacted Emergency Economic Stabilization Act of 2008. In his remarks, Bush said of the measure: “It temporarily expands federal insurance; bank and credit union deposits of up to $250,000. That's important. In essence, it's a safeguard for a lot of small businesses and a lot of families.” John Magill, CUNA senior vice president of legislative affairs, said, "In addition to our letter to the President, we also talked to the White House at the highest levels and they agreed that credit union share insurance should be mentioned in future remarks. They are making good on that now."

Ad series helps display CU soundness insurance

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WASHINGTON (10/8/08)--The Credit Union National Association (CUNA) has developed and released to credit unions and state leagues a series of print ads for credit unions to use – in a variety of ways--to explain to the public and their members that they have federal insurance, now to at least $250,000. The three ads--released for use by credit unions and leagues at no charge as a member service--focus on safety and soundness of credit unions, as well as their federally insured status.
Click for full details on downloading these ads.
The ads are designed to help credit unions answer questions from credit union members and the public in their communities, particularly in the wake of the enactment last week of the “Emergency Economic Stabilization Act”--which raised federal share insurance coverage to $250,000. Each ad targets credit union members as a primary audience and opinion leaders as a secondary audience. According to CUNA President/CEO Dan Mica, the creative objectives of the ads are to reassure members and the public that their money is safe in a credit union and to remind all of credit unions’ financial mission and track record. “The single most important message in all three,” Mica said, “is: ‘You should feel secure that your money is safe in a not-for-profit credit union; virtually all are also federally insured.’ We hope that credit unions find this message to be useful and easy to incorporate into their own communication plans.” According to Mica, credit unions are already using the ads for a variety of purposes: As print ads in local publications, but also as website art, teller display signs and as posters in lobbies and windows. Use the link below to download or preview any or all of the ads.

Inside Washington (10/07/2008)

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* WASHINGTON (10/8/08)--On Monday, the Treasury Department placed Neel Kashkari, formerly the assistant secretary for international development, in charge of its new $700 billion program to move problem assets off the books of financial institutions. Meanwhile, an unnamed bank was reportedly drawing up its application to be the first to sell its assets under the program signed into law last week. The department must make public the name of the bank within two days of its purchase or sale. Also on Monday, Federal Deposit Insurance Corp. (FDIC) Chairman Sheila Bair said in a speech to the National Association of Business Economists that the FDIC will not balk at using the "systemic risk exception" to resolve failing banks. The exception sets aside a requirement that the FDIC always take the lowest-cost approach to any failing bank…

FDIC premiums up NCUSIFs steady for now

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WASHINGTON (10/8/08)—The Federal Deposit Insurance Corp. (FDIC) announced a “restoration plan” Tuesday, accompanied by a proposal to increase rates banks pay for deposit insurance by seven basis points. At this time, the National Credit Union Administration (NCUA) has no similar intention. Under the FDIC plan, on average banks would pay roughly 13.5 basis points in premiums by the second quarter of next year. They currently pay 6.5 basis points. Credit unions are not facing a similar increase in share insurance premiums—at this time, according to National Credit Union Administration (NCUA) Chairman Michael Fryzel Tuesday. “As of today, everything looks fine in terms of the share insurance fund,” Fryzel said
Click to view larger image NCUA Board Chairman Michael Fryzel during an interview Tuesday. (Photo provided by CUNA)
as part of remarks during a wide-ranging interview. “And as of today I cannot tell you that there will be an increase in the premiums” federally insured credit unions pay for coverage by the National Credit Union Share Insurance Fund (NCUSIF), he added. However, he noted that based on the changes in the financial markets and other factors “everything comes into play and we will be looking at everything we need to do to make sure the fund remains strong, vibrant” and has “sufficient dollars in it to cover anything we need to.” In July, the NCUA Board reported that the NCUSIF's equity level was at 1.24%. Historically, the NCUSIF equity level fluctuates somewhat during the course of a year. Under the Federal Credit Union Act, the Board has authority to charge an insurance premium to federally insured credit unions if the Fund's equity ratio is less than 1.3%, but is not required to. If the equity ratio is below 1.2%, the Board must assess a premium to restore the ratio to 1.2%. “CUs have never cost the taxpayer a penny. We want to make sure that continues and we will do whatever we need to do to make sure the Fund remains strong and that credit unions are able to operate with that strong fund in place,” he said. When asked the earliest the issue of a premium could be raised, the chairman said: “I hope to know something by the end of this year. That is contingent upon my staff putting together all the information I have requested and everything we are working on in regards to what we need to do in the next few months to make sure everything stays—pretty good.” Meanwhile at the FDIC, that agency said its proposed changes to the assessment system include assessing higher rates to institutions with a significant reliance on secured liabilities, which generally raises the FDIC's loss in the event of failure without providing additional assessment revenue. The proposal also would assess higher rates for institutions with a significant reliance on brokered deposits but, for well-managed and well-capitalized institutions, only when accompanied by rapid asset growth. Brokered deposits combined with rapid asset growth have played a role in a number of costly failures, including some recent ones. The proposal also would provide incentives in the form of a reduction in assessment rates for institutions to hold long-term unsecured debt and, for smaller institutions, high levels of Tier 1 capital. "Like any insurance company, we've identified activities that have increased or reduced the cost of insurance, and as a result, want to factor them into our determination of assessment rates," Bair said. The FDIC Board of Directors also voted to maintain the Designated Reserve Ratio at 1.25 percent as a signal of its long term target for the fund. Comments on the proposal are due no later than 30 days after publication in the Federal Register, which is expected soon. The complete interview with NCUA Chairman Fryzel will appear in the next edition of Credit Union Magazine.

FHA foreclosure relief open for business

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WASHINGTON (10/8/08)—The Federal Housing Authority (FHA) has unveiled rules for its statutorily mandated temporary foreclosure relief program—HOPE for Homeowners, effective Oct. 1 to Sept. 30. The program, referred to as H4H on the FHA website, was created this summer when Congress passed the Housing and Economic Recovery Act. It is intended to help borrowers who are at risk of default and foreclosure to refinance into more affordable, sustainable loans. Credit unions, banks and thrifts are eligible to participate in the program, but must be FHA lenders to do so. However, to date, few credit unions FHA-approved lenders. A list of participating lenders is not available yet, but has been promised “in the coming days” by the FHA. According to FHA, there are four ways that a distressed homeowner could pursue participation in the HOPE for Homeowners program:
* Homeowners may contact their existing lender and/or a new lender to discuss how to qualify and their eligibility for this program. *Servicers working with troubled homeowners may determine that the best solution for avoiding foreclosure is to refinance the homeowner into a HOPE for Homeowners loan. * Originating lenders who are looking for ways to refinance potential customers out from under their high-cost loans and/or who are willing to work with servicers to assist distressed homeowners. * Counselors who are working with troubled homeowners and their lenders to reach a mutually agreeable solution for avoiding foreclosure.
It has been estimated that as many as 400,000 homeowners over three years could avoid foreclosure through this program by refinancing loans into new 30-year fixed rate loans with lower payments. The FHA information provides the requirements lenders must meet to make these types of loans, including additional consumer disclosures and certifications to the FHA that there has been proper underwriting. It is expected that the program will be tweaked as any need of modifications becomes apparent. The Credit Union National Association (CUNA) has been contacted by the FHA and will work with the FHA to provide more information to credit unions on the H4H program in the coming weeks. The FHA is part of the Department of Housing and Urban Development. Use the resource link below to read more program details.