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Inside Washington (12/01/2011)

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  • WASHINGTON (12/2/11)--The House Financial Services Committee on Wednesday passed three bills Wednesday related to the derivatives provisions of the Dodd-Frank Act. The first bill, the Swap Execution Facility Clarification Act, would prohibit the Commodity Futures Trading Commission and the Securities Exchange Commission from requiring facilities to maintain a minimum number of participants to receive or respond to quote requests; require facilities to display or delay quotes; limit the means of interstate commerce that market participants can use to execute swap transactions; and require one trading system. The second bill, the Business Risk Mitigation and Price Stabilization Act, exempts end users from margin requirements on swaps that do not go through a clearinghouse. The third bill, H.R. 2779, ensures entities under a common corporate ownership are able to manage risks without unnecessary costs ...
  • WASHINGTON (12/2/11)--Michael S. Gibson was appointed director of the Federal Reserve Board's division of banking supervision and regulation, effective Jan. 1. Gibson, a deputy director in the board's division of research and statistics with an expertise in risk management and financial markets, succeeds Patrick M. Parkinson. Parkinson is retiring after more than 30 years of service with the board. The division develops regulatory policy and oversees the supervision of state member banks; bank, financial, and savings and loan holding companies and their subsidiaries; and U.S. branches and agencies of foreign banking organizations. The director of the division represents the Federal Reserve on the Basel Committee on Banking Supervision and works closely with officials from other U.S. and international government agencies on bank oversight issues. Gibson is an economist who began his career at the Federal Reserve in 1992 in the banking section of the division of international finance. He moved to the trading risk analysis section in the division of research and statistics in 1999 and was selected chief of that section in 2000. Earlier this year, Gibson was promoted to deputy director, with responsibility for the division's financial functions …

Merchants low data security standards harm consumers CUNA

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WASHINGTON (12/2/11)--Data security is a critical issue and the U.S. Congress should consider legislative changes to protect consumers, such as requiring merchants to meet the same high standards for data protection to which credit unions and other financial institutions are subject, the Credit Union National Association (CUNA) said in a letter sent to a key lawmaker Thursday.

Additionally, Congress should permit financial institutions to disclose the source of data breaches affecting their members or customers, and merchants should be required to reimburse consumers and financial institutions for costs associated with data breaches, CUNA President/CEO Bill Cheney wrote in a letter to the chairman of the House Small Business subcommittee on health and technology, Rep. Renee Ellmers (R-N.C.). The subcommittee conducted a hearing yesterday entitled hearing "Cyber Security: Protecting Your Small Business."

Cheney wrote that until merchants are held to high standards for data security as financial institutions, such as credit unions, are, the consumer will "remain vulnerable to a system that does not protect their information."

Without federal requirements forcing merchant to notify their customers of a data breach, the burden of notification to the consumer lies with the financial institution that issued the payment card.

"However, financial institutions cannot specify which merchant was responsible for the breach and also bears the costs of issuing new payment cards, and making any loss to the consumer's account whole. The merchant bears no financial responsibility in the case of a data breach," Cheney underscored in his letter to Ellmers.

Use the resource link to read CUNA's complete letter.

NCUA 3Q numbers show member asset net worth increases

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ALEXANDRIA, Va. (12/2/11)--The results of call reports from 7,179 federally insured credit unions showed increases in member totals, net worth and total assets, as "credit union financials continued to move in the right direction," National Credit Union Administration (NCUA) Chairman Debbie Matz said as the agency released its quarterly update on the credit union system on Thursday.

Credit unions added more than 450,000 members during the third quarter, increasing the nationwide membership total to 91.4 million members, and Matz noted that membership during the first 9 months increased by nearly 1 million.

Credit union total assets also continued to expand, standing at $951.1 billion when the third quarter of 2011 ended on Sept. 30, an increase of almost $8.7 billion for the quarter, the NCUA added.

Although net income growth slowed during the quarter, totaling $1 billion, credit union earnings during the first 9 months of 2011, which total $4.61 billion, exceed the net income total that was reported in 2010.

The net worth ratio totaled 10.15% during the third quarter, and credit union share deposits increased by $7 billion during that time period, totaling $819.2 billion at the end of the quarter.

The NCUA added that checking, savings, and money market shares also rose. However, share certificates and non-member deposits fell.

Lending during the quarter totaled $567.1 billion, a $3.1 billion increase over the second-quarter total, with used vehicle loans, credit cards and other unsecured loans, and first mortgages rising. However, the NCUA noted, loans for new automobiles and other types of real estate fell during the quarter.

The NCUA said demand for non-federally guaranteed student loans increased by 20.5% during the quarter, and investments, cash on deposit, and cash equivalents increased 1.78%, totaling $347.2 billion at the end of the quarter.

For the full NCUA report, use the resource link.

CFPB Treasury form HAMP abuse task force

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WASHINGTON (12/2/11)--The Consumer Financial Protection Bureau (CFPB), the U.S. Treasury Department, and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) on Thursday announced they have established a joint task force to combat scams that target homeowners seeking to apply for the Home Affordable Modification Program (HAMP).

The joint agency task force will investigate companies that charge struggling homeowners a fee in exchange for false promises of lowering the homeowner's mortgage debt or payments through HAMP, among other schemes. The task force said it would end these scams, and provide education programs to vulnerable homeowners.

SIGTARP Deputy Special Inspector General Christy Romero said these types of scams "prey upon the most vulnerable homeowners as they desperately hold out hope of saving their homes.  SIGTARP, the CFPB, and Treasury want to make sure that homeowners know a scam when they see one and know where to turn for help."

CFPB Chief of Enforcement and agency director nominee Richrd Cordray added: "Mortgage scams harm not only homeowners but legitimate businesses and the market as a whole."

The agencies also warned consumers of these types of scams in a consumer fraud alert. The alert reminds homeowners that are struggling to pay their mortgage and are looking for relief that third parties are not able to guarantee or pre-approve HAMP mortgage modification applications. Mortgageholders should also beware of individuals or companies that offer money-back guarantees, or companies that advise them to stop making their payments or to not contact their mortgage servicers, the release adds.

The administration last year claimed that the HAMP program was on course to modify as many as 4 million mortgages by 2012.

For the full release, use the resource link.

CUNA For real job creation pass CU biz lending bill

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WASHINGTON (12/2/11)--Credit unions will be "very concerned" if legislation that would increase the credit union member business lending cap does not move forward, especially if two other bills -- ostensibly meant to spur job creation – do, the Credit Union National Association (CUNA) said in a Thursday letter to Senate Banking Committee Chairman Tim Johnson (D-S.D.) and Ranking Member Richard Shelby (R-Ala.).

The letter was submitted for the record of a Thursday committee hearing on two Senate legislative vehicles: S. 556 and S. 1791.

S. 556, which is sponsored by Sen. Kay Bailey Hutchison (R-Tex.) and has nine cosponsors, would increase the shareholder threshold for registration with the Securities and Exchange Commission from 500 shareholders to 2,000 shareholders.  S. 1791, which is sponsored by Sen. Scott Brown (R-Mass.) and has two cosponsors, would provide registration exemptions for certain crowdfunded securities.

Cheney in the CUNA letter said while these two bills – which have been termed job-creation vehicles – may ultimately be part of the solution to the nation's current job market issues, "credit unions should be encouraged and permitted to help as well."

Cheney added that S. 556 and S. 1791 "would appear to reduce regulatory scrutiny and investor protections," while creating jobs. However, under MBL cap lift legislation, job creation could be accomplished through qualified, well-managed and effectively regulated credit unions, he said.

CUNA has estimated that increasing the current 12.25% of assets MBL cap to 27.5% of a credit union's total assets would have a number of beneficial effects on the ailing economy, including infusing $13 billion in new credit for small businesses and adding 140,000 new jobs within the first year of enactment--all at no cost to the American taxpayer.

Two MBL cap lift bills, Sen. Mark Udall's S. 509 and Rep. Ed Royce's (R-Calif.) H.R. 1418, remain active in Congress. S. 509 has 21 cosponsors, and H.R. 1418 has 104 cosponsors.

Regulatory Accountability Act could see House vote today

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WASHINGTON (12/2/11)--The Regulatory Accountability Act of 2011 (H.R. 3010), which would revise the Administrative Procedure Act to require agencies to consider the costs and benefits of new rules and other regulatory actions, and would require federal regulators to conduct public hearings for most rules estimated to have an aggregate impact on industry of over $1 billion, is expected to come up for a full U.S. House vote today.

The bill, which was introduced by Rep. Lamar Smith (R-Tex.) and has 36 co-sponsors, would also set new data quality standards for agency fact finding in the rulemaking process.

The Credit Union National Association (CUNA) has backed the legislation, saying that it "would give credit unions and others new tools and procedures that would help protect against arbitrary regulatory burdens" and "would significantly enhance the interaction between industry and federal administrative agencies."

Portions of the bill that add cost benefit analysis and information reporting requirements "would be far more effective than the closest existing parts of the Administrative Procedure Act, the Regulatory Flexibility Act and the Paperwork Reduction Act," CUNA added.

The bill would need to be approved by the Senate if it passes the House. President Barack Obama has said he would veto the bill, The Hill reported.

For the full CUNA letter on H.R. 3010, use the resource link.