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Washington

Lame duck Congress still has action plan

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WASHINGTON (11/9/10)--With the House and Senate returning for the final days of the 11th Congress next week, the Credit Union National Association (CUNA) will again begin actively searching for a vehicle for potential member business lending legislation. That vehicle could come in the upcoming lame duck session, or in next year’s 112th Congress. The MBL legislation would lift the cap to 27.5% of total assets, infusing $10 billion in new credit into small businesses at no cost to taxpayers. These funds would help small business owners create over 100,000 new jobs, according to CUNA. CUNA Senior Vice President of Legislative Affairs John Magill said that the MBL legislation could fit in to the House agenda if Republicans follow up on campaign promises of reducing government spending and helping small businesses create jobs. Magill believes that the 112th Congress’s split chambers could make it difficult to move new legislation through. However, smaller items such as the potential enactment of capital reform for credit unions, could see debate. Further discussions of the Community Reinvestment Act, mortgage cramdown provisions, and overdraft protection legislation will be less likely, he added. Housing finance reform will likely remain a high priority for both the House and Senate finance committees, with much debate centering on the role of the federal government in the secondary mortgage market. While Rep. Maxine Waters (D-Calif.) last month announced a Nov. 18 hearing to discuss foreclosures and other related issues, that hearing is no longer on the schedule as of yesterday.

NCUA advises CUs on creditworthiness info

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ALEXANDRIA, Va. (11/9/10)—Federally backed credit unions in most cases “must consider information provided by a member that is not included in a traditional credit report” when making creditworthiness determinations, National Credit Union Administration Associate General Counsel Hattie Ulan wrote in a legal opinion letter. Ulan said that credit unions are required to do this in order to fully comply with section 202.6(b)(6) of the Federal Reserve Board’s Regulation B (Reg B). Reg B “includes requirements regarding additional information creditors must consider in determining creditworthiness in certain circumstances,” Ulan said. UIan added that creditors “may restrict the kinds of credit history and credit references they will consider in making a determination of creditworthiness as long as the restrictions are applied to all applicants without regard to any prohibited basis, such as race, sex, or marital status.” However, Ulan added, if a borrower requests it, “creditors must consider any information an applicant may present tending to indicate the credit history being considered does not accurately reflect the applicant’s creditworthiness.” This information must specifically be considered in situations where credit information that “relates to the same types of credit references and history the creditor would consider if reported through a credit bureau” is not reported through a credit bureau. For the full NCUA letter, use the resource link.

Slight decline in consumer credit at CUs

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WASHINGTON (11/9/10)—The total amounts in outstanding consumer credit, revolving credit and nonrevolving credit accounts held by credit unions all decreased slightly in Sept., the Federal Reserve (Fed) reported in its most recent consumer credit report. "The September weakness in credit union consumer credit reflects a continuation of household sector deleveraging. With short-term market interest rates near zero consumers continue to believe that it makes more sense to pay down debt than put excess cash in savings accounts," explained Mike Schenk, a top Credit Union National Association economist. "In the aggregate, the household debt-to-income ratio has declined from a high of about 125% to 110% at mid-year 2010," he said, The total amounts in outstanding consumer credit, revolving credit and nonrevolving credit accounts held by credit unions all decreased slightly in Sept., the Federal Reserve (Fed) reported in its most recent consumer credit report. Credit unions held $224.9 million in total consumer credit as of September, slightly down from the $226.5 million in credit reported in August. Revolving credit accounted for $35.3 million of the September total, with nonrevolving credit comprising the remaining $189.6 million, the Fed reported. The Fed reported that total consumer credit declined by 1.5%, revolving credit declined by 8.75%, and nonrevolving credit increased by 2.5% during the third quarter of 2010. Consumer credit increased by 1% in September, the Fed added. The Fed report includes credit card debt, auto loans and other debt not secured by real estate. It excludes home mortgages and home equity lines of credit.

Inside Washington (11/08/2010)

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* WASHINGTON (11/9/10)--House Republicans plan to use their oversight powers to influence regulators as they implement the Dodd-Frank regulatory reform law (American Banker Nov. 8). While efforts to repeal Dodd-Frank appear unlikely to succeed, GOP lawmakers can significantly impact the law’s reach by holding oversight hearings, sending letters to regulators and scrutinizing rules as they are drafted. Dodd-Frank provisions already targeted by the GOP are the creation of the Consumer Financial Protection Bureau, including the appointment of Elizabeth Warren as advisor to the president to launch the agency, and the Volcker Rule that aims to restrain large financial institutions from making risky investments. Republicans said these provisions could hurt U.S. firms’ ability to compete and impair job creation efforts. In some cases, legislators’ awareness could provide backing for regulatory proposals such as the Federal Deposit Insurance Corp. (FDIC) plan to make creditors involved in the failure of a large bank take “haircuts,” which limit their claims. Legislators may also target the Durbin amendment, which empowers the Federal Reserve to regulate interchange fees on debit cards … * WASHINGTON (11/9/10)--Thirty-five of the more than 80 new Republican lawmakers elected to the U.S. House of Representatives have never previously served in an elective office. Newly elected GOP representatives come from varied backgrounds, including six medical doctors, three car dealers, two funeral home directors, a former Federal Bureau of Investigation (FBI) agent, a pizza restaurant owner and a Northwest Airlines pilot ( Politics Daily Nov. 8). They add to the ethnic and gender diversity of Congress with five Latinos, two African-Americans and at least seven women. High-profile winners of mid-term elections included Jon Runyan of New Jersey, a former lineman for the Philadelphia Eagles, and Sean Duffy of Wisconsin, who appeared on the MTV reality show “The Real World, Boston” …