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NCUA letters address Corp. CU actions due diligence

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ALEXANDRIA, Va. (10/8/10)--The National Credit Union Administration (NCUA) this week followed up its recent corporate credit union actions by releasing a series of letters to credit unions. Letters 10-CU-17, 10-CU-19, 10-CU-20 and 10-CU-21 address the recently determined National Credit Union Share Insurance Fund Premium, the NCUA’s corporate credit union resolution, the new corporate credit union rule, and the general state of the credit union industry, respectively. The NCUA also makes more specific recommendations to credit unions in letter 10-CU-18. In that letter, the NCUA recommends the risk management processes needed to ensure that credit unions have taken appropriate due diligence. The agency recommends that credit unions risk management practices include examinations of exposure limits, “accurate risk measurement, an understanding of the investment’s structure, knowledge of the collateral performance, and a determination of investment suitability. “Knowing what questions to ask and which documents to review is the foundation of a solid due diligence process,” the NCUA adds. The NCUA said that credit unions should also note the nature of the investment, whether or not it is backed by any collateral, the interest rate structure of the investment, the amount of the investment. The maturity schedule of the investment and whether or not the given investment fits within the credit union’s investment policy and asset-liability management constraints should also be determined, the NCUA said. For the full NCUA letters, use the resource link.

Agency warns of false site phishing scam

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ALEXANDRIA, Va. (10/8/10)—Credit unions should be wary of e-mails that claim to be from the National Credit Union Administration (NCUA) and promise their recipients $50 for taking an NCUA-created survey, the NCUA said Thursday. According to the agency, the survey link directs members to a false version of the NCUA homepage. That site contains “an illicit survey that solicits credit card account numbers and confidential personal information” from survey respondents. In a release, the NCUA warned that the site is a phishing scam, adding that the agency “will never ask credit union members or the general public for personal account or personally identifiable information as part of a survey.” “Any e-mail that alleges to be from NCUA and asks for account information is fraudulent and should be treated as suspicious,” NCUA added. NCUA has advised that those who may have clicked on the link “consult with a computer security or anti-virus specialist to assess the need to re-install a clean image of the computer system.” Generally, credit unions should encourage their members to execute simple antivirus scans, install security patches as needed, and use caution in general when online. For the full NCUA release, use the resource link.

CUNA letter refutes ICBA tax call

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WASHINGTON (10/8/10)--Credit unions at large face no threat--and taxpayers will not pay the costs-–for resolving wholesale, “corporate” credit unions recently conserved by federal regulators, Credit Union National Association (CUNA) President/CEO Bill Cheney told key Treasury officials personally yesterday in response to misinformation spread by a community bank lobby group. Cheney made these points in a visit with Assistant Treasury Secretary Michael Barr and in a letter to Treasury Secretary Timothy Geithner, which he also hand-delivered to Barr. The letter was CUNA's response to a Thursday Independent Community Bankers of America (ICBA) letter that claimed that the “taxpayer bailout of the credit union system should cast doubt on the wisdom and the fairness of [credit unions’] tax exempt status.” Cheney refuted the ICBA’s claims, noting that “the ICBA is clearly trying to capitalize on the corporate credit union situation in order to advance their anti-credit union agenda.” The ICBA’s claims of a taxpayer-funded credit union bailout are “simply not true,” Cheney said. “While the bonds to be issued by National Credit Union Administration (NCUA) have the full faith and credit of the United States Government, credit unions--not taxpayers--will pay all of the costs,” he added. Cheney, citing an SNL Financial analysis of community bank recipients of Troubled Asset Relief Program (TARP) funds, noted that over 621 banks still owe a combined $50 billion in funds that were borrowed from American taxpayers. “More than 100 of these banks are behind on their payments to Treasury,” and “taxpayers will very likely be left on the hook for some of the bailout these community banks have received,” Cheney added. Cheney also noted that that the tax-exempt status afforded to credit unions “is one of the highest-yielding investments the federal government has made.” Consumers save more than $7 billion in better rates and lower fees by using credit unions rather than banks, he noted. “While the bankers may complain of an uneven playing field, if there was any truth to their complaint, the evidence would be in the conversion of banks to the credit union charter. That is simply not happening,” Cheney noted.

CUNA meets with Treasury on Corp. CU issues CFPB

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WASHINGTON (10/8/10)—Credit Union National Association (CUNA) President/CEO Bill Cheney on Thursday thanked the U.S. Treasury for aiding the National Credit Union Administration in its development of the corporate credit union resolution plan. Cheney also discussed the NCUA’s corporate credit union legacy asset plans during his meeting with Assistant Treasury Secretary Michael Barr, and thanked the Treasury official for his agency’s support of increasing the credit union member business lending (MBL) cap.
CUNA President/CEO Bill Cheney meets with Asst. Treas. Secretary Michael Barr (left).
The Treasury was a key supporter of the MBL legislation, as Treasury Secretary Tim Geithner earlier this year publicly backed lifting the MBL cap in a letter to Congress and encouraged the administration to include MBL language in future economics-oriented legislative packages. Cheney told Barr that CUNA is looking for opportunities to reintroduce MBL legislation, which would increase the current 12.25% cap to 27.5% of total assets, during the coming “lame duck” session of Congress. CUNA is also looking for opportunities to introduce legislation that would allow credit unions increased access to additional sources of capital, Cheney added. The CUNA CEO also among a number of industry insiders who met with Consumer Financial Protection Bureau architect Elizabeth Warren earlier in the day. CUNA is working with the developing CFPB to decrease the regulatory burden for credit unions, and Warren earlier this year said that the CFPB’s goal of improving the transparency and consumer-friendliness of many financial products would benefit credit unions, as they already lead their competitors in these core areas.

Inside Washington (10/07/2010)

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* WASHINGTON (10/8/10)--The Securities and Exchange Commission is seeking comment on a proposal it released Wednesday that would require issuers of asset-backed securities (ABS) and credit ratings that rate ABS to provide investors with new disclosures about representations, warranties and enforcement mechanisms. The SEC’s proposed rules would require disclosures of repurchase history and repurchase history in prospectuses and ongoing reports, and require Nationally Recognized Statistical Rating Organizations to provide disclosures in any report accompanying a credit rating ... * WASHINGTON (10/8/10)--Sen. Richard Shelby (R-Ala.), lead party member on the Senate Banking Committee, said Wednesday there should be an investigation regarding improper foreclosure practices at several banks. Regulators should immediately review mortgage servicing and foreclosure activities of Ally Financial, JPMorgan Chase and Bank of America, he said. Regulators have failed yet again to properly supervise those entities, so the committee should commence a separate investigation, he said. House Speaker Nancy Pelosi (D-Calif.) and other state legislators urged Attorney General Eric Holder to investigate violations of law or regulations by financial institutions also. JPMorgan, Bank of America and Ally halted their foreclosure activities in several states after questions arose over their mortgage processing (News Now Oct. 7) ...