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Senators urge greater interchange consideration by Fed

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WASHINGTON (12/13/10)--In an action strongly encouraged by the Credit Union National Association (CUNA), 13 senators late last week wrote to the Federal Reserve to voice their concerns over proposed interchange regulations. The letter, which was delivered to Fed Chairman Ben Bernanke on Thursday, encourages the Fed to “take sufficient time to gather and analyze all of the relevant facts” before issuing a proposal, and to “ensure that consumer interests are protected” in any rate standards that are set. Sens. David Vitter (R-La.), Thomas Carper (D-Del.), Judd Gregg (R-N.H.), Chris Coons (D-Del.), Pat Roberts (R-Kan.), Evan Bayh (D-Ind.), Mark Warner (D-Va.), Richard Shelby (R-Ala.), Robert Bennett (R-Utah), Jon Tester (D-Mont.), Mike Crapo (R-Idaho), Sam Brownback (R-Kan.), and Bob Corker (R-Tehn.) cosigned the letter. The interchange provisions, which were passed as part of comprehensive financial regulatory legislation earlier this year, direct the Fed to write rules on interchange fees for debit card purchases. While the interchange provision exempts small credit unions and other financial institutions with under $10 billion in assets from any interchange changes, these institutions would still be impacted directly by whatever rates are established. The letter noted that while many have assumed that the $10 billion threshold would in effect “level the playing field” for smaller institutions, the interchange amendment could make credit union and small bank cards more expensive for merchants to accept, putting smaller institutions at a competitive disadvantage. CUNA Senior Vice President of Legislative Affairs John Magill on Friday said that CUNA has been "actively working with a number of senators to weigh in on this issue. “Their views on taking an adequate amount of time in considering these proposals--considering the impact on small institutions such as credit unions--need to be carefully considered by the Fed governors before they take action," Magill added.

Inside Washington (12/10/2010)

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* WASHINGTON (12/13/10)--Mortgage rates jumped to a five-month high in the U.S., moving in step with bond yields as President Barack Obama sought to extend tax cuts (Bloomberg Dec. 9). The average for a fixed-rate mortgage for the week ending Dec. 9 increased to 4.61% from 4.46%, the fourth straight week Freddie Mac reported increases in fixed rates. The average 15-year rate jumped to 3.96% from 3.81%. President Obama’s agreement to extend tax cuts caused yields on mortgage-bond securities to reach six-month highs last week amid speculation that the budget deficit would increase and inflation accelerate. The surge in rates is a blow to consumers who looked to refinance at record-low rates. Mortgage application volume fell 0.9% for the week ended Dec. 3, the Mortgage Bankers Association reported. The drop of 16.5% the previous week was the largest decrease in a year. The association’s refinancing gauge declined 1.4% in its most recent report; new purchases increased 1.8% … * WASHINGTON (12/13/10)--Joseph Smith appears likely to be confirmed by the Senate as director of the Federal Housing Finance Agency (FHFA). The North Carolina banking commissioner faced little opposition during his Senate Banking Committee confirmation hearing Thursday (American Banker Dec. 10). Smith, who would oversee Fannie Mae and Freddie Mac as FHFA director, vowed to run the government-sponsored mortgage giants independently and said that their current conservatorship status was not a long-term solution for taxpayers. Both outgoing Banking Committee Chairman Chris Dodd (D-Conn.) and incoming Chairman Tim Johnson (D-S.D.) praised Smith and indicated his nomination would be approved by the panel and the full Senate next week. The FHFA also oversees the 12 Federal Home Loan Banks. Smith said the FHLBs would receive his “full attention” … * WASHINGTON (12/13/10)--A video webcast of the Dec. 9 Senate Banking Committee hearing, featuring National Credit Union Administration Chairman Debbie Matz, is now available for viewing online. For The State of the Credit Union Industry, use the link.

Interchange discussions will lead Dec. 16 Fed meeting

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WASHINGTON (12/13/10)—Interchange amendments will be on the agenda when the Federal Reserve holds its December open meeting this Thursday. The debit card interchange fee regulations, which will amend Regulation E, Electronic Fund Transfer Act, are required under the Dodd-Frank Act. The Fed meeting will take place at 2:30 p.m. ET and will be the first Fed meeting to be broadcast live on the internet. The debit card interchange provisions that were passed earlier this year as part of comprehensive financial regulatory legislation direct the Fed to write rules on the structure for interchange fees in connection with the debit card transactions involving larger issuers. While the interchange provision exempts small credit unions and other financial institutions with under $10 billion in assets, as well as certain government programs and prepaid cards, from any interchange fee structure rules, the impact of the Fed’s rule could nonetheless be severe for these entities. Larger issuers have also expressed grave concerns about how much their debit interchange fee income could decrease once the rule takes effect. Under the Dodd-Frank Act, the final debit interchange rule is supposed to be final by April 21, 2011. “No one outside of the Fed, except possibly key folks in Congress and the Administration, know how the Fed proposes to handle the complex issues presented under the Durbin interchange amendment,” Credit Union National Association (CUNA) President/CEO Bill Cheney said on Friday. CUNA, following the meeting, will work closely with leagues, credit unions and its interchange working group to coordinate a response to the Fed and other key policymakers, Cheney added. “We want to do everything we can to help ensure the rule is implemented as favorably as possible, despite the deficient language contained in the Dodd-Frank Act,” Cheney said. CUNA expects the interchange proposal to have a shortened comment period due to the approaching April 21 statutory deadline. Ahead of the Thursday meeting, CUNA encouraged the Fed to support congressional efforts to delay implementation and allow further consideration of interchange rules. However, if a delay is not an option, CUNA urged the Fed “to consider phasing in requirements to the greatest extent permissible” to “facilitate compliance and minimize disruption to the operations of issuers, networks, and processors.” Specifically, CUNA called on the Fed to use the authority granted to it by the interchange rule to “help ensure” that financial institutions with under $10 billion in assets are exempt from the terms of the new interchange regulations. The Fed could develop amendments or recommend legislative changes to Congress to “help ensure the exemption for small issuers is feasible,” the CUNA letter adds. The Fed should also allow merchants to have routing choices that will help limit their costs, a move that CUNA said could avoid situations in which merchants route debit card transactions “in a manner that disadvantages small issuers.” A group of 13 senators also voiced their concerns over proposed interchange regulations and encouraged the Fed to “take sufficient time to gather and analyze all of the relevant facts” before issuing a proposal. (See related story: Senators urge greater interchange consideration) For CUNA’s letter to the fed, use the resource link.

SBA extends Patriot Express loan program for 3 years

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WASHINGTON (12/13/10)--The Small Business Administration’s (SBA) Patriot Express loan program, a streamlined pilot loan product aimed at current and former servicemembers and their families, has been renewed for an additional three years, the SBA said on Friday. The loan program has provided more than $560 million in loan guarantees to just under 7,000 eligible recipients since it began in 2007, according to SBA figures. Several credit unions participate in the program. SBA Administrator Karen Mills in a release said that “the impact of this program over the last three-and-a-half years has meant thousands of veterans and their families have had the resources to pursue their dreams as entrepreneurs, and at the same time create jobs and drive economic growth at a critical time for our country. Renewing it means we can continue to fulfill our sacred commitment to the men and women who serve our country by giving them every opportunity for success.” Eligible borrowers may borrow up to $500,000 through the Patriot Express loan program, and the loans, which feature enhanced guarantees and interest rates, may be used for business start-up, expansion, equipment purchases, working capital, inventory or business-occupied real-estate purchases, according the SBA. For the SBA release, use the resource link.

Senators urge greater interchange consideration

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WASHINGTON (UPDATED: 1:15 P.M. ET)--In an action strongly encouraged by the Credit Union National Association (CUNA), 13 senators late last week wrote to the Federal Reserve to voice their concerns over proposed interchange regulations. The letter, which was delivered to Fed Chairman Ben Bernanke on Thursday, encourages the Fed to “take sufficient time to gather and analyze all of the relevant facts” before issuing a proposal, and to “ensure that consumer interests are protected” in any rate standards that are set. Sens. David Vitter (R-La.), Thomas Carper (D-Del.), Judd Gregg (R-N.H.), Chris Coons (D-Del.), Pat Roberts (R-Kan.), Evan Bayh (D-Ind.), Mark Warner (D-Va.), Richard Shelby (R-Ala.), Robert Bennet (R-Utah), Jon Tester (D-Mont.), Mike Crapo (R-Idaho), Sam Brownback (R-Kan.), and Bob Corker (R-Texas) cosigned the letter. The interchange provisions, which were passed as part of comprehensive financial regulatory legislation earlier this year, direct the Fed to write rules on interchange fees for debit card purchases. While the interchange provision exempts small credit unions and other financial institutions with under $10 billion in assets from any interchange changes, these institutions would still be impacted directly by whatever rates are established. The letter noted that while many have assumed that the $10 billion threshold would in effect “level the playing field” for smaller institutions, the interchange amendment could make credit union and small bank cards more expensive for merchants to accept, putting smaller institutions at a competitive disadvantage. CUNA Senior Vice President of Legislative Affairs John Magill on Friday said that CUNA has been "actively working with a number of Senators to weigh in on this issue. “Their views on taking an adequate amount of time in considering these proposals -- considering the impact on small institutions such as credit unions -- need to be carefully considered by the Fed governors before they take action," Magill added.