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CUNA GAC lineup adds FASB Chair Herz

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WASHINGTON (11/10/09)--The Credit Union National Association (CUNA) has added another notable presence to its 2010 Governmental Affairs Conference, with Financial Accounting Standards Board (FASB) Chairman Robert Herz committing to speak at the conference on Thursday, Feb. 25, the final day of the conference. FASB continues to work on potential changes to its fair value accounting standards in the aftermath of the financial crisis, and CUNA representatives last month discussed the range of potential difficulties that credit unions could face if fair value accounting rules are changed during a conference call with FASB Chairman Robert Herz and other senior FASB members. CUNA's 2010 GAC is Feb. 21-25 at the Washington Convention Center in Washington, D.C. Larry Kudlow, economist and host of CNBC's The Kudlow Report, will explain on Monday, Feb. 22 how government, markets and industry can join together to make a true difference, real progress and a lasting recovery. On Tuesday, Feb. 23, long-serving former Federal Reserve Chairman Alan Greenspan will provide analysis of economic trends and offer new insights into the current economic challenges. Joe Scarborough, former Congressman and current host of MSNBC's Morning Joe will spar with Governor, Presidential candidate and former Democratic National Committee Chairman Howard Dean as the two debate politics, economics and the course of the nation on Wednesday, Feb. 24. Richard Phillips, Captain of the Maersk Alabama, which was hijacked by Somali pirates earlier this year, will be the closing speaker as the conference ends on Thursday, Feb. 25. The informational portion of the conference will be finely balanced with entertainment, as the World Classic Rockers, featuring member of Santana, Journey, Boston, Steppenwolf, Toto and Lynyrd Skynyrd, will perform as the conference opens on the night of Sunday, Feb. 21. The concert is sponsored by the CUNA Councils. Registration and housing lines are open. Click the resource link below for more information. Use the resource link below for more 2010 GAC information.

Inside Washington (11/10/2009)

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* WASHINGTON (11/11/09)--Credit conditions are still tight, and about 35% of domestic banks said they had restricted standards for commercial real estate loans (CRE), compared with 45% in July, according to results of the October Senior Loan Officer Opinion Survey on Banking Lending Practices. The Federal Reserve Board released the results Monday. Roughly 25% of banks said they had tightened prime real estate loan standards during the third quarter--slightly higher than July but lower than 75% in July 2008 (MortgageNewsDaily Nov. 10). Loan officers said about 10% of their CRE loans were in foreclosure (American Banker Nov. 10). The loan officer study focused on CREs, commercial and industrial loans, and pending implementation of the Credit Card Accountability, Responsibility and Disclosures Act. It is based on responses from 57 domestic banks and 23 U.S. branches of foreign banks ... * WASHINGTON (11/11/09)--Critics said the Gramm-Leach-Bliley Act, which was enacted in 1999 and allowed banks and other financial services companies to consolidate, fell short in the nation’s financial crisis. The act may not be directly to blame for the financial crisis, but its shortfall paved the way for firms slated “too big to fail” to be too tough for the government to resolve and regulate, observers said (American Banker Nov. 10). Eugene Ludwig, CEO of the Promontory Financial Group, said the act failed to “produce a coherent regulatory mechanism that was up to the new powers it created.” Gramm-Leach-Bliley gave the Federal Reserve Board more power to oversee financial institutions, but some critics question whether the restrictions on the Fed’s power were too strict by allowing holes in the Fed’s “umbrella” to permit risky activity. Ludwig noted that financial holding companies had new powers, but regulators didn’t have an increasing ability to monitor how the companies used the powers--leading to a “recipe for trouble,” he said. Former Sen. Phil Gramm, who helped author Gramm-Leach-Bliley, said he could have done more to prevent the nation’s financial troubles, but shifted some of the blame to former Fed Chairman Alan Greenspan for inflating the housing market. Gramm, who chaired the Senate Banking Committee from 1999 to 2001, also said he is “perplexed” by the idea of giving the Fed the role of systemic risk regulator, because the Fed was given that role under Gramm-Leach-Bliley ...

NCUA Premium assessment bills in the mail next week

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ALEXANDRIA, Va. (11/11/09)--The National Credit Union Administration (NCUA) has confirmed that the bill will be in the mail to credit unions the week of Nov. 16 for the 2009 National Credit Union Share Insurance Fund (NCUSIF) premium assessment of 0.15% of insured shares. The NCUA in September approved the 0.15% of insured shares assessment on federally insured credit unions to help raise the NCUSIF equity to 1.3% of June 30, 2009 shares and repay $310 million in funds the Stabilization Fund has borrowed from the U.S. Treasury. The assessment would also repay all interest accrued by the NCUSIF as of June 30, 2010. Payment of the assessment will be due by mid-December. The assessment will not include extra NCUSIF premiums or an additional special assessment. Although it was anticipated that the NCUA would discuss at its October meeting a more finely honed prediction for next year’s share insurance assessments than the 15-30 basis points currently being circulated, that discussion did not occur. Shortly before that meeting, board member Gigi Hyland foreshadowed the board’s decision by stating publicly that the NCUA could not predict the amount of the assessment in 2010 due to the unknown nature of future expenses, share growth, investment yields and resolution costs. One concern about stating too narrow an estimate is the accounting repercussions such an action could have. The NCUA staff is once again expected to make a presentation before the board at the Nov. 19 open meeting: How this is presented will be of great interest because, some observers note, if the agency were to announce too precise a figure for the future premium assessment, accountants might require credit unions to book the costs this year.

CUs among awardees of 8 million in VITA grants

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WASHINGTON (11/11/09)—At least two credit unions are among the dozens of organizations that were awarded nearly $8 million total in matching grants from the Internal Revenue Service (IRS) to support the tax agency’s Volunteer Income Tax Assistance (VITA) program. Under the VITA Grant Program, the IRS awarded matching grants to 147 organizations that will offer free tax preparation services during the 2010 filing season at locations in all 50 states and the District of Columbia. Among them were State Employees' CU (SECU) of Raleigh, N.C. and El Paso CU, in Texas. SECU received $150,000 and El Paso CU received $90,0000. VITA is an IRS program that helps low- and moderate-income taxpayers complete their annual tax returns at no cost. Credit unions and community organizations receive IRS-provided training in the preparation of basic tax returns and establishment of tax preparation sites. As reported in News Now earlier this year, SECU reported in April that its VITA staff completed more than 25,000 returns, generating more than $33 million in total refunds during this year's tax season. The previous year, SECU said it helped 15,000 qualifying individuals claim more than $8 million in tax credits over a three-month span. The IRS said there was a strong response to the 2010 VITA grant program with 360 organizations submitting applications requesting more than $30 million in matching funds, similar to the prior year. The VITA program has the backing of the National Credit Union Administration, and the agency has encouraged credit unions to participate.

CUs need unique agency in new reform bill CUNA

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WASHINGTON (11/11/09)--Responding to Sen. Christopher Dodd’s (D-Conn.) Tuesday introduction of draft financial legislation that would, among other things, create a single prudential financial regulator, Credit Union National Association (CUNA) President/CEO Dan Mica said that credit unions “need a unique regulator in all aspects of examination and supervision.” The bill would also promote the creation of a consumer financial protection agency (CFPA) similar to that proposed by both the Obama administration and members of the House of Representatives. The consumer protection duties of the National Credit Union Administration (NCUA) would be folded into this agency under Dodd’s bill. However, Dodd's bill would preserve the NCUA as an independent safety and soundness regulator for credit unions. While credit unions “have long advocated strong consumer protection,” the additional regulatory burden imposed by Dodd’s legislation would only take away from their ability to provide “continued and effective service” to their members, Mica said. The additional examinations and supervision that credit unions would face from the CFPA “is a significant issue for credit unions and can be a factor in our ultimate disposition toward this legislation,” Mica added. Dodd’s legislation would task a single regulator with the work of several financial regulatory bodies, including the Federal Reserve. Dodd during the Tuesday press conference indicated that legislators would have two to three weeks to review the bill, and that formal markup of the bill could begin in the first week of December. Calling the establishment of a single prudential regulator “critically important,” Dodd said that the legislation’s intent to reallocate all Federal Reserve Board responsibilities outside of determining monetary policy is meant “not to punish the Federal Reserve, but to strengthen and enhance their role.” The bill also creates a systemic resolution fund under the Federal Deposit Insurance Corp (FDIC) that would be used to help unwind troubled financial firms. However, the legislation would strip the FDIC of some of its supervisory activities. Overall, the bill would give some additional oversight responsibilities to the states. While Sen. Richard Shelby (R-Ala.) has not publicly commented, Dodd commented that he has been working with Shelby, adding that he hopes for significant additional input from his fellow senators. The Credit Union National Association is currently analyzing how the bill would affect credit unions.