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Inside Washington (11/15/2010)

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* WASHINGTON (11/16/10)--The nomination of Joseph Smith, commissioner of banks in North Carolina, to serve as director of the Federal Housing Finance Agency (FHFA) won acclaim from a number of sources who said he is a consensus broker and careful listener. FHFA will play a crucial role in the upcoming reform of the housing finance system. Both consumer advocates and banking industry leaders praised Smith’s nomination, which must be confirmed by the U.S. Senate (American Banker Nov. 15). In North Carolina, Smith helped develop strong regulations for nonbank mortgage lenders and backed the development of a national mortgage licensing system. Colleagues also described him as one who seeks practical solutions while balancing the needs of consumers and bankers. Smith has yet to share his opinion on the reform of government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac. The Dodd-Frank Act requires the administration to present its plan for reshaping U.S. housing policy, including the housing finance GSEs, no later than January 2011. Edward DeMarco has been FHFA acting director since Sept. 1, 2009 … WASHINGTON (11/16/10)--The Basel III rules on global capital represent an important step forward despite their flaws, said Federal Reserve Governor Daniel Tarullo. Speaking during a Dodd-Frank Act conference at George Washington University, Tarullo said the Basel III rules address some areas of capital regulation that were lacking, such as a new minimum common equity ratio (American Banker Nov. 15). The Group of 20 (G-20) nations last week approved Basel III standards calling for banks to hold common equity of 4.5% by 2015. In addition, banks must hold a 2.5% conservation buffer, which will be gradually introduced by 2019, and increase Tier 1 levels from 4% to 6% by 2015. But the Basel III rules failed to address some issues, such as the impact of economic cycles on capital regulation and the amount of additional capital “surcharge” needed for systemically important financial institutions. Tarullo also called for consistent implementation of Basel III rules … * WASHINGTON (11/16/10)--National figures emphasized the need to address America’s budget deficit in weekend television interviews and appearances. Sen. Kurt Conrad (D-N.D.) told “This Week with Christine Amanpour” that borrowing 40 cents of every $1 spent is an “unsustainable” practice that dooms America to become a second-rate economic power (The New York Times Nov. 14). Conrad is chairman of the Senate Budget Committee and a member of the president’s bipartisan commission on reducing the national debt. The bipartisan committee’s chairmen recently proposed reining in the deficit by cutting military and domestic spending, gradually increasing the retirement age for Social Security to 69 and eliminating major tax deductions. Speaking on “Meet the Press” and “Fox News,” David Axelrod, senior adviser to President Obama, said extending tax cuts for wealthy Americans would cost $700 billion in the next decade and favored permanently retaining cuts only for couples earning less than $250,000. Also speaking on “Meet the Press,” Sen. John McCain (R-Ariz.) favored extending tax cuts for all income groups, including Americans earning more than $250,000, until the recession ends … * WASHINGTON (11/16/10)—Whistle-blowers who expose corporate wrongdoing that leads to penalties of more than $1 million could qualify for substantial financial rewards from a $451 million reward fund established by the Dodd-Frank Act. The fund will pay for tips about violations of specific securities and commodity laws to help overcome the tendency to remain silent within the financial services industry (The New York Times Nov. 14). The whistle-blowers’ fund replaces a bounty program that was supposed to reward whistle-blowers but paid out only $160,000 over 20 years. People assigned to investigate corporate wrongdoing and those involved in violations are excluded from receiving rewards. The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission oversee the program, which mandates payment of 10% to 30% of the penalty or the amount recovered when a tip provides the basis for a case. Employees are encouraged to report violations to corporate compliance departments first, with a 90-day grace period for bringing the issue to the SEC …

Cheney NCUA corp. CU deadline extension was needed

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WASHINGTON (11/16/10)--Credit Union National Association President/CEO Bill Cheney on Monday said that the National Credit Union Administration’s decision to extend the previous December 31 corporate credit union business plan deadline until March 31 “will allow some breathing room for corporates and the movement to consider broader solutions that will ensure all (credit unions) have ready and efficient access to the services they depend upon." The NCUA confirmed the decision to CUNA yesterday. While it is “important” that credit unions have a deadline in place to “encourage progress,” Cheney noted that the need for a limited deadline extension was widely expressed during CUNA's recently completed Corporate Credit Union Issues Summit, which took place on Saturday in Chicago, Ill. CUNA immediately raised these concerns with top officials at NCUA, and Cheney said that he was “pleased NCUA has responded to CUNA and others so quickly." Several summit participants told CUNA staff that the deadline extension is a positive development that will be helpful as corporate and natural person credit unions consider their options. The corporate credit union business plans are expected to detail the individual corporate credit union’s future plans for operations, focusing on capitalization and the services that they plan to offer to natural person credit unions.

NCUAs Matz regulators join to back student fin. lit.

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ALEXANDRIA, Va. (11/16/10)--The National Credit Union Administration (NCUA) on Monday officially joined the U.S. Department of Education and the Federal Deposit Insurance Corp. (FDIC) to “facilitate partnerships among schools, financial institutions, federal grantees and other stakeholders to provide effective financial education; increase access to safe, affordable and appropriate accounts at federally insured banks and credit unions, and encourage saving.” NCUA Chairman Debbie Matz joined Department of Education head Arne Duncan and FDIC Chairman Sheila Bair in a Monday event at Alexandria, Va.’s T.C. Williams High School. The regulators toured a student-run credit union met with students from T.C. Williams’ Academy of Finance, as well as other students, educators and parents. Matz said that there is “no better place” for students to learn about financial concepts “than from their teachers at school, and no better partner to provide subject matter expertise for schools than financial institutions. “In many underserved communities, studies show that parents learn about finances from their children, so youth financial education can benefit adults as well,” Matz added. The agency heads also signed an agreement that will lend the support of the NCUA and the FDIC to a Department of Education low-income college access program. Under the agreement, the agencies will also “work together to increase participation in the National Financial Capability Challenge, a voluntary awards program designed to challenge educators to teach high school students the basics of personal finance, and reward success.” For the full release, use the resource link.

Cooperative solutions among themes at CUNA corp. issues summit

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WASHINGTON (11/16/10)--The future role of corporate credit unions in providing key payments, settlement, liquidity, and investment advisory services to natural person credit unions was addressed by nearly 80 attendees of the Credit Union National Association’s (CUNA) Corporate Credit Union Summit, which took place in Chicago on Nov. 13. CUNA President/CEO Bill Cheney on Monday said that the 80 attendees, who represented corporate and natural person credit unions, credit union leagues, trade associations, and third-party system service providers, “recognized there really is no more important issue facing the (credit union) movement today than the future of the corporate network and the services it provides to natural person credit unions.” Cheney reiterated that the goal of the summit “was not for CUNA to impose a solution,” but “to bring key participants together, have a dialogue, seek opportunities for coordination, and begin to chart a path to ensure all credit unions will have access to the critically important services they need to run their operations—especially payments, settlement and liquidity services.” “The system is in a state of flux, and the decisions the (credit union) movement makes in the next few months will have very long-lasting effects,” he said. Overall, Cheney said, credit unions are “a cooperative movement” and thus “need to find a system-based solution. “A cooperative solution and a viable business model are not mutually exclusive,” Cheney added. The attendees also agreed that greater back office consolidation and, potentially, front office consolidation would be helpful, but said that passive consolidation would not be a viable option. Increased, quicker consolidation and aggregation “needs to take place in the corporate system to provide the scale and scope needed to deliver payments and settlement services efficiently and seamlessly,” Cheney said. The summit attendees noted that a comprehensive external analysis of the corporate credit union system should be pursued, and should be completed by the end of the first quarter of 2011. CUNA has also formed a new working group, comprised of some members of its current corporate credit union working group alongside new additions.

NCUA unveils Times Square deposit insurance ad

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ALEXANDRIA, Va. (11/16/10)--The National Credit Union Administration (NCUA) on Monday continued its "Keep Your Money NCUA-safe" public awareness campaign by unveiling a 520 square-foot ad in New York’s Times Square. The 15-second ad, which features NCUA campaign spokesperson Suze Orman touting the benefits and safety of federally insured credit union deposits, will run on a 26-foot tall commercial message board. That message board, which is centrally located in Times Square, also broadcasts The Late Show with David Letterman and other CBS programming, and is viewed by an estimated 1.5 million people per day. The ad will run until Jan. 1.
NCUA Chairman Debbie Matz said that the newest phase of the NCUA’s ad campaign “could not have come at a more opportune time. “With millions of consumers flooding Times Square for the Thanksgiving Parade, the 'Black Friday' start to the holiday shopping season, New Year’s Eve, and other days that see large numbers of visitors, NCUA’s share insurance campaign has hit prime time,” Matz added. The NCUA has also publicized its $250,000 credit union share insurance coverage through video and radio ads, as well as a comprehensive website that includes an insurance coverage calculator and other resources. The NCUA has also created an online widget that links to that website and a facebook page. To view the NCUA’s advertisement, click on the picture above. For the full NCUA release, use the resource link.