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Treasury recognition for direct deposit promo efforts

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WASHINGTON (12/12/08)—Credit unions and other financial institutions can gain official recognition for efforts to promote direct deposit among senior citizens, veterans, people with disabilities and other who receive federal benefits. The U.S. Treasury Department’s Go Direct campaign will launch a six-month program, called the Community Ambassadors, in January. It will be aimed at small- and medium-sized financial institutions. Institutions that fulfill the Community Ambassador requirements for active participation during the January 2009 to June 2009 period will receive a letter of recognition and certificate from the Treasury’s Go Direct campaign. Requirements include such actions as coaching tellers to tell members about the benefits of direct deposit of government checks, circulating statement messages, and displaying Web banners. The Go Direct campaign reminds that among the benefits to members:
* Direct deposit is safer and easier than paper checks – in fact, when there is a problem with a Social Security payment, nine times out of 10 it is with a paper check, not a direct deposit payment; * Direct deposit also provides “green” benefits by reducing the paper and energy required to distribute checks; and * Direct deposit saves taxpayers money. Since it was launched in 2005, the Go Direct campaign has generated more than two million enrollments in direct deposit representing significant savings to taxpayers in printing, mailing and other costs.
Go Direct also administers a "Go Direct Champions" program to recognize all participant financial institutions that exceed the national average, in their size category, for signing up federal benefits recipients for direct deposit. The Credit Union National Association is a Go Direct national partner.

NCUA advises CUs on foreclosed assets

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WASHINGTON (12/12/08)--The current financial market is forcing credit unions to consider the effects of carrying foreclosed and repossessed assets (FRA) on their statements of financial condition and their federal regulator has issued guidance on the issue. The National Credit Union Administration (NCUA) posted to its website a letter from the chairman (08-CU-06) titled “Working with Residential Mortgage Borrowers,” which instructs credit unions on some of the issues they face when holding FRA. First and foremost, the NCUA letter urges credit unions to work with borrowers when possible because prudent workout arrangements can be in the long-term best interest of both the credit union and the member. “However, when foreclosures are unavoidable, you must consider all risks associated with holding FRA,” writes NCUA Chairman Michael Fryzel. The letter states FRA should only be held temporarily and not permanently as an income-producing asset. The assets should be actively marketed for sale “as evidenced by the fact the credit union has committed to a plan of sale, is seeking a buyer, and expects to collect on the sale within 12 months.” A letter footnote reminds that Federal Credit Union Act authorizes a federal credit union to hold and dispose of real property only necessary or incidental to its operations and that most state regulators have similar requirements. The NCUA advises that a credit union managing FRA should establish policies and procedures that establish an acceptable and manageable level of risk to protect the safety and soundness of the credit union. The guidance states that policies and procedures should consider and address the following applicable risks:
* Liquidity--to determine the level of FRA the credit union can hold and manage before negative implications place undue stress on its liquidity position; * Transaction--to ensure the FRA is appropriately reported on the statement of financial condition; * Compliance--considering all applicable consumer regulations and state laws; * Strategic--understanding implications a chosen strategy places on a credit union’s current and future earnings; and * Reputation--a credit union should determine which properties will be sold immediately and which will be held for a short period of time.
“Examiners will evaluate these policies and procedures as needed to ensure the credit union can safely manage all implications associated with FRA on the statement of financial condition,” Fryzel writes. Use the resource link below to read the complete NCUA guidance letter on FRAs.

Fed to vote open-end disclosures

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WASHINGTON (12/12/08)—The Federal Reserve Board is expected to vote on a plan next week that would make comprehensive changes to the format, timing, and content requirement for the five main types of open-end credit disclosures that are required under its Regulation Z. The types of disclosures covered include credit card application and solicitation disclosures, account-opening disclosures, periodic statements, change-in-term notices, and advertising provisions. For the most part the Credit Union National Association (CUNA) has supported the Fed's efforts to simplify the Regulation Z, but did not support the plan as written because it could unintentionally cut into products favored by credit unions and their members, such as the LoanLiner program offered by CUNA Mutual Group. CUNA and CUNA Mutual have been working closely on this issue and have met with the Fed to seek modifications to its plan. The Fed also has scheduled a vote on its unfair or deceptive practices rule, which is intended to prohibit a number of credit card practices as unfair or deceptive, and which it issued jointly with the National Credit Union Administration (NCUA) and Office of Thrift Supervision. CUNA said in a comment letter that credit unions are strong proponents of fair lending practices and proper consumer disclosures. CUNA said the regulators’ plan is appropriate because some in the marketplace have been subjecting consumers to abusive practices. However, CUNA warned of concerns with a number of operational and practical matters, and reiterated its primary concern about an ever-increasing regulatory burden on credit unions. “While credit unions do not engage in certain practices, they will still need to make disclosure changes and other revisions to meet all the requirements of the proposal,” CUNA wrote. CUNA also urged modifications in a proposed opt-out program for overdraft protection plans and case-by-case accommodations for member overdrafts. According to the Dec. 10 American Banker, the Fed is likely to back away from that proposal—at least for now. The NCUA announced Thursday that it will take a final vote on the rule at its open board meeting next Thursday. Also on the NCUA open board meeting agenda: a final rule on credit union service organizations, and a share insurance fund report.

Inside Washington (12/11/2008)

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* WASHINGTON (12/12/08)--Congress plans to reject requests to use remaining Troubled Asset Relief Program (TARP) funds if the Treasury doesn’t put some of the money toward a foreclosure prevention program, Rep. Barney Frank (D-Mass.) warned at a Wednesday hearing on TARP implementation (American Banker Dec. 11). Frank and other lawmakers argued that the Treasury has used $335 billion without significant results and criticized the agency for not tracking how banks use the money. Rep. Maxine Waters (D-Calif.) told Treasury Assistant Secretary Neel Kashkari not to ask Congress for money until it adopts Federal Deposit Insurance Corp. Chairman Sheila Bair’s plan for loan modifications. Kashkari defended the Treasury, saying its investments in banks prevented economic collapse, and noted that Fannie Mae and Freddie Mac recently announced a voluntary loan modification plan that could help roughly every loan. He also said the Treasury failed to support Bair’s plan because it would actually cause more foreclosures. Democrats at the hearing disagreed. Waters also introduced legislation Wednesday that would require the Treasury to back servicers who modify loans … * WASHINGTON (12/12/08)--Small Business Administration (SBA) lenders are counting on President-elect Barack Obama to win back many other small banks that have ceased SBA lending (American Banker Dec. 11). Some congressional members also are pushing to move the SBA into the Cabinet. Obama has not provided many details on his plans for the SBA, but lenders say they hope his administration will be more open to ideas for improvement. Industry representatives and lenders say that the SBA has not been treated as a priority by the Bush administration--as evidenced by a smaller budget, higher fees charged to lenders and restrictions on some loan programs. In October, the agency changed the requirements of the Community Express program and limited the loans lenders could grant per month under it. The program’s dollar volume dropped 76% in October and November, compared with last year … * WASHINGTON (12/12/08)--The Office of Thrift Supervision (OTS) is seeking nominations for members of a Mutual Savings Association Advisory Committee. The committee will study the needs of mutuals, assess the challenges they face and advise the OTS director on how to support mutual institutions. Nominations are due Jan. 8 …

CUNA audio conference will address CU HARP CU SIP

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WASHINGTON (12/12/08)--A no-charge audio conference focusing on details of the two newly announced federal programs to assist credit union mortgage holders and corporate credit unions will be held by the Credit Union National Association (CUNA), in conjunction with the National Credit Union Administration (NCUA) and state leagues, Tuesday, Dec. 16, from 11 a.m. to noon ET. In particular, the event--open to any CUNA-affiliated credit union--will offer credit unions information about how they can participate in the “Credit Union Homeowners Affordability Relief Program (CU HARP)” and the “Credit Union System Investment Program (CU SIP).” The programs are designed, respectively, to lower monthly mortgage payments for struggling low- and moderate-income credit union members, and to free up collateral pledged by corporate credit unions and thereby provide increased contingent borrowing capacity. Both programs rely on the NCUA-administered Central Liquidity Facility (CLF) to provide funding. The CUNA program will feature two NCUA officials:
* CLF President Owen Cole, and * CLF Vice President Steve Sherrod.
The two federal officials will present details of the two programs and answer questions from conference participants. The audio conference is expected to last about one hour. While there is no charge for participants, it is limited to the first 1,000 who register. To register, CUNA-affiliated credit unions should send an e-mail to:
* CUNARegulatoryAdvocacy@cuna.com.
Please, one phone line per registered credit union only to make room for as many as possible. For those unable to listen in on Dec. 16 at beginning at 11 a.m., the call will be recorded and the recording posted to CUNA’s website for review at a later date by affiliated credit unions.