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CUs offer how about us for biz lending

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WASHINGTON (12/15/09)--As President Barack Obama met with bankers Monday to urge them to loosen unnecessary restrictions on credit to help the economy recover, credit unions pointed out that they are, in fact, lending to business – and could be doing much more. In fact, according to Credit Union National Association (CUNA) President/CEO Dan Mica, credit unions could be pumping more than $10 billion into the economy and creating more than 108,000 jobs if Congress would agree to expand credit union capacity to make business loans. However, Mica pointed out, “The very people who met with the president today are the same people who oppose allowing credit unions to help.” “The only lobbyists who oppose giving credit unions the opportunity to do more small business lending represent the banks with whom the president met today,” Mica said. “That’s right: The same ‘fat cat’ bankers -- as President Obama put it on national television Sunday night -- who accepted billions of dollars of taxpayer money while restricting access to credit for consumers and small businesses, oppose allowing well-capitalized, not-for-profit credit unions to lend money to their small business-owning members. “It is absolutely unconscionable that these bankers would block credit unions from helping the nation, while simultaneously being rebuked by the president for not doing enough to help. Were we in the room, the president could have easily pointed to us and said ‘these guys want to help – why can’t you be more like them?’” Mica noted that credit unions have worked closely with both the U.S. Congress and the Obama administration as financial regulatory restructuring legislation has taken shape, looking out for credit union interests – but choosing to remain neutral on the overall bill. “By not opposing the regulatory restructuring bill in the House, we kept the door open to the administration to work on our needs,” Mica said. He pointed out that credit unions are part of the solution for consumers, and now is the time to let them be part of the solution for their members who own small businesses. “Credit unions are subject to a 12/25% -of-assets statutory cap on the amount of small business lending they can do. This cap restricts not only the credit unions which are approaching the cap, but it also discourages other credit unions from offering this type of lending to their members. There is no economic or safety and soundness rationale for the cap. “In fact, recently the top federal regulator for credit unions -- the chairman of the National Credit Union Administration -- endorsed lifting the statutory cap,” Mica added. Mica noted that credit unions are joined in their quest for more business lending capacity by groups across the political spectrum, as well as those representing business itself, including:
* Americans for Tax Reform * League of United Latin American Citizens (LULAC) * National Association of Manufacturers * National Cooperative Business Association * National Association for the Self-Employed * National Association of Mortgage Brokers * Competitive Enterprise Institute
Mica reminded that credit unions are urging Congress to support HR 3380, introduced by Rep. Paul Kanjorski (D-Pa.) and Rep. Ed Royce (R-Calif.), which would increase the capacity of credit unions’ business lending by raising the statutory cap on business loans to 25% of assets, and treat as business loans only those of $250,000 or less, up from the current ‘de minimus’ amount of $50,000.

Inside Washington (12/14/2009)

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* WASHINGTON (12/15/09)--National Credit Union Administration (NCUA) Board Member Michael Fryzel met with Illinois credit unions Dec. 7 in Springfield, Ill. He visited Heartland CU, Springfield, where he met with President/CEO Ed Gvazdinskas; Keith Sias, director of state and governmental affairs for the Illinois Credit Union League; and other league officials. Fryzel then addressed a group of Illinois credit union representatives at a league event. “Having a clear understanding of the challenges consumers are facing aids in the decision-making process as we work with credit unions throughout these difficult times,” Fryzel said. Pictured are (from left): Steve Olson, Illinois league executive vice president, general counsel and chief operating officer; Fryzel; and league President/CEO Dan Plauda during a luncheon with Sangamon Valley Chapter credit union managers after Fryzel's tour of Heartland CU. Heartland CU has $180 million in assets. (Photo provided by the Illinois Credit Union League) ... * WASHINGTON (12/15/09)--Federal Deposit Insurance Corp. (FDIC) Chairman Sheila Bair said Friday that her agency at first hesitated to provide federal aid for Bank of America Corp.’s takeover of Merrill Lynch (American Banker Dec. 14). The FDIC raised questions about whether assistance was necessary, she said. The agency later consented when the Federal Reserve Board expressed concerns that BoA posed a systemic risk. The FDIC agreed to help BoA Jan. 16 ...

Congress Committees show a slower week for CUs

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WASHINGTON (12/15/09)--With H.R. 4713, the Wall Street Reform and Consumer Protection Act, passing the full House on Friday, this week will provide a legislative respite for credit union-related issues. Although the Senate may continue to work into next week, this is expected to be the last House weeklong session of the year, with the Defense Department Appropriations Act being the largest piece of potential legislation on the docket at this time. However, there is some speculation that a jobs bill could be attached to the appropriations bill. The Credit Union National Association (CUNA) has urged House members to include expanded business lending authority for credit unions in the jobs bill, and Rep. Paul Kanjorski (D-Penn.), who authored legislation that would expand the current member business lending cap for credit unions, has also asked his colleagues to address MBL through this legislation. It will also be quiet on the Committee front, as the House Financial Services Committee on Thursday will hold hearings on H.R. 476, the Housing Fairness Act. The Senate Banking Committee has also planned some business for Thursday, with a vote on the nomination of Ben Bernanke to serve another term as Chairman of the Federal Reserve Board of Governors scheduled.

What does H.R. 4173 do

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WASHINGTON (12/15/09)--The House late last week passed H.R. 4173, the Wall Street Reform and Consumer Protection Act, which the House in a release hailed as “a comprehensive set of measures that will modernize America’s financial regulations and hold Wall Street accountable.” The final vote on the legislation followed over 50 hours of debate in the House Financial Services Committee, and while the Senate is expected to begin its debate on regulatory reform soon, the schedule for that debate is unknown at this time. A main goal of the legislation is the creation of the proposed Consumer Financial Protection Agency, which would seek to protect consumers of financial products through the creation of a powerful independent agency with extensive rulemaking, oversight, and enforcement tools. The bill also creates an interagency Financial Stability Council to identify and regulate firms that pose a significant risk to the overall financial system and would establish an “orderly process” for dissolving so-called too big to fail financial entities. Investors would be further protected by a strengthened, reformed Securities and Exchange Commission, and investors would be further supported by new rules that would grant them a “an advisory vote on pay practices including executive compensation and golden parachutes.” Potentially harmful compensation practices would also be banned, and firms would be forced to disclose any incentive-based compensation arrangements. The legislation also takes “strong steps to reduce conflicts of interest” regarding credit rating agencies and would also require hedge fund, private equity, and private pool of capital advisors, who currently operate in an essentially regulation-free manner due to a regulatory loophole, to register with the Securities and Exchange Commission. These funds and their advisors would also fall under new systemic risk regulations. Over-the-counter derivatives would also be regulated for the first time ever. The bill also increases oversight of the insurance industry via a Federal Insurance Office and would increase oversight of the mortgage industry as well. Under this portion of the bill, lenders would be required to ensure that the terms of a mortgage benefit the borrower. The lenders must also be certain that their borrowers can repay the mortgage loan that they have been sold.

Congress approves funding for CU programs

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WASHINGTON (12/15/09)--The U.S. Senate on Sunday passed H.R. 3288, an appropriations bill that will, among other things, remove the borrowing cap on the National Credit Union Administration’s Central Liquidity Facility (CLF) funds and increase the amount of funding available to the NCUA’s Community Development Revolving Loan Fund (CDRLF). The House approved the same appropriations package by a very narrow 219-208 vote in July of this year. Under the legislation, the CLF will be given $43.8 billion in contingent liquidity to lend to eligible credit unions. These funds will be available until Sept. 30, 2010. The amount of funding given to the CDRLF tops off at $1.25 million for the 2010 fiscal year, a $250,000 increase from the amount of funding provided in fiscal 2009. The CDRLF, which was established by Congress in 1979, makes non member deposits and loans at a rate of 1% for five-year terms. Responding to the developments, National Credit Union Administration Chairman Debbie Matz said the passage of the appropriations bill was “a continuing sign that Congress is committed to working with NCUA to mitigate the effects of the economy on credit unions and their 90 million members." Matz also commended Congress “for lifting the CLF cap and authorizing NCUA to fulfill the essential role of providing additional liquidity for the credit union system, and was "pleased” by the increased CDRLF funding.