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Salt Lake Citys Beehive liquidated

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ALEXANDRIA, VA. (12/15/10)—Beehive CU of Salt Lake City, Utah, was closed yesterday after the state credit union regulator appointed the National Credit Union Administration the liquidating agent. Beehive’s assets, liabilities and members were immediately purchased or assumed by and Security Service FCU of San Antonio, Texas. At its closure, Beehive had approximately $145 million in assets and served 18,000 members. Established in 1954 to serve employees of Utah state government, Beehive becomes the 18th federally insured credit union liquidation in 2010. The acquiring credit union, Security Service, will provide uninterrupted service for former Beehive members. Security Service is a full-service credit union and has $5.9 billion in assets and 785,000 members. Beehive was in the news early in 2009 when it announced it had abandoned plans to convert to a thrift charter because the credit union “sensed” that the country’s economic turmoil would make federal regulators reluctant to approve a new bank charter.

Cheney CUs back interchange caution

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WASHINGTON (12/15/10)—Credit Union National Association (CUNA) President/CEO Bill Cheney in a dailycaller.com blog post said that America’s credit unions stand with the 13 senators that recently urged the Federal Reserve to allow greater time for consideration of a pending interchange fee proposal. 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 a letter that encouraged 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. The Fed is set to consider proposed rules on debit interchange fees during a Thursday open board meeting. That meeting will take place at 2:30 p.m. ET. 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. Cheney also underwscored the senators’ point that the rule change would result in additional bank fees for consumers, and noted that while the interchange fee amendment exempts financial institutions with under $10 billion in assets from the terms of the rule, smaller institutions would still need to adjust their card programs to remain competitive. Cheney in his post said that these lower prices “won’t pay the freight for credit unions of offering their members debit cards,” adding that the cost will likely fall on “the wallets and pockets of the nation’s consumers, including the 92 million who are members of credit unions.” The Daily Caller is an online news and opinion site co-founded by 20 year print and broadcast journalist Tucker Carlson. For the full post, use the resource link.

NCUA guides CUs on nondeposit investment sales

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ALEXANDRIA, Va. (12/15/10)—The National Credit Union Administration (NCUA) in a letter to credit unions has advised federal credit unions to carefully review the financial statements and capital adequacy of eligible third party brokers. The NCUA in letter No. 10-FCU-03 specifically encouraged credit unions to determine if a given broker can provide the necessary services and adequately supervise its sales representatives at the given credit union’s location. Credit unions should also perform background checks via direct references and Financial Industry Regulatory Authority (FINRA) checks, the NCUA added. Directors of federal credit unions should adopt written policies and procedures concerning third party brokerage arrangements to ensure compliance with applicable law and regulation and to ensure consistency with these guidelines, and credit unions should consider engaging legal counsel to evaluate their policies, procedures, and contractual agreements, the NCUA added. Federal credit unions should also outline, in writing, the duties and responsibilities of each party in a third party brokerage arrangement, according to the NCUA. The guidelines also address sales by CUSOs that are wholly or partly owned by federal credit unions, sales by so-called “dual employees” of both credit unions and third party brokers, and sales resulting from a federal credit union bringing a registered third party broker to its members through a networking agreement or other means. For the full guidance, use the resource link.

Inside Washington (12/14/2010)

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* WASHINGTON (12/15/10)--Mike Brosnan has been named the Office of the Comptroller of Currency’s (OCC) senior deputy comptroller for large bank supervision. He replaces Doug Roeder, who announced his retirement in October (The American Banker Dec. 14). Brosnan returned to the OCC in 2008 as deputy comptroller for large bank supervision after spending four years as a senior executive with MBNA and then Bank of America, after its purchase of MBNA. Also joining the OCC leadership team are Vance Price and Sally Belshaw, who will assume the duties of portfolio managers for large banks as deputy comptrollers for large bank supervision. Most recently Belshaw served as examiner-in-charge of HSBC’s national banks, and Price served as examiner-in-charge of Capital One Financial … * WASHINGTON (12/15/10)--Joe Smith, the Obama administration’s nominee for Federal Housing Finance Agency director, said there are advantages to having government play a continued role in mortgage markets, but the ultimate decision should be left to Congress (The American Banker Dec. 14). Smith, who is commissioner of banks in North Carolina, was responding in writing to more than two dozen questions from Sen. David Vitter (R-La.). Smith said the government could make a positive difference in mortgage market segments such as multifamily rental housing and first-time homebuyers. He did not offer details on the Obama administration’s plan for developing for the housing market … * WASHINGTON (12/15/10)--The Federal Reserve Board yesterday approved a proposed rule that requires that capital requirements for insured banks to serve as a floor for other capital requirements. The proposed rule, part of Section 171 of the Dodd-Frank Act known as the Collins Amendment, replaces transitional floors in the advanced approaches rule with permanent risk-based capital floors equal to the capital requirements computed using the agencies’ general risk-based capital rules. The Basel II recommendations on banking laws and regulations allow reductions in risk-based capital requirements below those for insured banks, and require modification to be in compliance with Section 171. The proposal also modifies the agencies’ general capital requirements so the Federal Reserve has additional flexibility to craft capital requirements for nonbanks it supervises as a result of determinations by the Financial Stability Oversight Council. Other provisions of the Collins Amendment will be addressed in subsequent rulemakings, the Fed said. Comments are due 60 days from publication in the Federal Register. For The Notice of Proposed Rulemaking PDF, use the link ...

FinCEN reports mortgage related SARs climb 7

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WASHINGTON (12/15/10)--The Financial Crimes Enforcement Network (FinCEN) has reported that suspicious activity reports (SARs) filed during the first six months of 2010 show that reported cases of mortgage loan fraud increased by 7% during that time period. Around half of all SARs were filed by borrowers. FinCEN reported a total of 35,135 mortgage fraud-related SARs during the first half of 2010, and noted that the increase “can be attributed to increased attention to older loans spurred by repurchase demands.” FinCEN Director James Freis in a release said that “SARs are one of the most important sources of lead information for mortgage fraud investigations available to law enforcement.” The FinCEN reports, which cover the first and second quarters of 2010, also noted increases in bankruptcy references in SARs. A total of 7% of mortgage fraud-related SARs filed in 2010 mentioned bankruptcy, while 1% of SARs filed in 2006 and 2007 mentioned bankruptcy. References to “short sale(s)” and “broker price opinion(s)” appeared 827 times and 41 times, respectively, in SARs filed during the first quarter of 2010. FinCEN said that these terms can relate to a financial crime known as “flopping,” a crime in which foreclosed properties are sold at artificially low prices to nonexistent buyers. These false buyers will then sell these properties at a higher price and keep the profit, FinCEN said. The FinCEN reports also break down SAR filings by metropolitan area and county. For the full FinCEN reports, use the resource links.

Aranjo is one of two blocked from CU work

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ALEXANDRIA, Va. (12/15/10)--The National Credit Union Administration (NCUA) has prohibited former D. Edward Wells FCU employee Carol Aranjo from participating in the affairs of any federally insured financial institution. Aranjo formerly served as the CEO of the Springfield, Mass.-based community development credit union which was closed by the NCUA in 2003 after recognizing $3 million in losses. NCUA examiners uncovered evidence of money laundering during a 2003 examination, which led to the closure of the credit union. Aranjo was convicted of Conspiracy, Embezzlement, False Tax Return, Bank Fraud, False Entries and Obstruction of Examination, and was sentenced to 54 months imprisonment. Aranjo earlier this year asked a federal appeals court to overturn her 2008 fraud conviction, but her challenge was ultimately unsuccessful. Aranjo will pay $1.4 million in restitution, according to the NCUA. Her husband, Alphonse Smith, was convicted on 10 charges and served one year in prison. The NCUA this week also announced that Donna Kay Gainer, a former employee of Oklahoma City, Oklahoma-based Tinker FC, would be banned from participating in the affairs of any federally insured financial institution. Gainer, who was convicted of embezzlement, will serve five years of supervised release and will pay $32,789.71 in restitution, according to the NCUA. Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million. Use the resource link below to view NCUA enforcement orders online.