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CUs among Hills top 10 lobbying triumphs

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WASHINGTON (12/21/09)--The Credit Union National Association's (CUNA) and credit unions' political advocacy efforts are listed among The Hill's 2009 "Top 10 lobbying triumphs." They even topped Google and AARP on the list. The Washington, D.C.-based publication noted that in a year of corporate belt-tightening and lobbyists being "shamed month after month by an administration determined to limit their access," that doors opened for some groups especially in healthcare, energy and financial regulation. "Some companies and trade groups emerged as clear winners," said The Hill (Dec. 18). No. 3 on the list is credit unions. CUNA "scored a slew of wins this year on financial reform," said the publication, adding, "With thousands of grassroots members, the credit unions mobilized throughout the year to press lawmakers against new restrictions on the industry." The Hill also cited other credit union efforts. They also "played a central role, alongside financial firms large and small, in stopping a proposal to give bankruptcy judges greater power to rewrite the terms of primary home mortgages. The House in March had passed the proposal, derided in the industry as "cramdown," but it failed in the Senate. Then it failed again in the House, with members citing small banks and credit unions as presenting persuasive arguments against the legislation," said The Hill. Others on the list were:
* The Pharmaceutical Research and Manufacturers of America; * Independent Community Bankers of America; * Edison Electric Institute; * Google; * General Electric/Rolls-Royce; * AARP; * Auto dealers; * Clean-tech; and * Boeing.

Filene to CUs Focus on consumer-friendly cards

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WASHINGTON (12/21/09)--As larger financial institutions find ways to get around the new rules imposed by the Credit Card Accountability, Responsibility and Disclosure (CARD) Act, a Filene Research Institute report has recommended that “credit unions should re-focus on their traditional consumer-friendly cards as a differentiator to for-profit entities.” The Filene Research Institute also recommended that credit unions focus their efforts on “simplicity and transparency” and improving their “collaborative credit card efforts to improve efficiencies” in order to “pick off the current and future malcontents fleeing boorish bank behavior.” The CARD Act will “limit” some of the “tricks and traps” that many credit card issuers use, “but it will also incentivize large issuers to come up with new ones,” Levitin said. While credit card accounts are not “core to most credit union lending practices,” as they only represent 5% of total credit union lending, the report found that credit union members that carry credit cards “carry higher balances and have fewer dormant accounts than bank card users.” “Credit unions are at a disadvantage when they attempt to compete with large institutions on business models that require economies of scale and are centered around backloaded, behaviorally contingent pricing,” according to Levitin, but the CARD Act “scrambles the credit card industry’s backloaded pricing model” by “constraining introductory credit terms and making it difficult for issuers to change borrowing terms.”

30- 15-year mortgages up for second straight week

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WASHINGTON (12/21/09)--Freddie Mac this week reported an average 30-year mortgage rate of 4.94%, slightly up from the 4.81% average recorded last week. Thirty-year mortgages averaged 5.19% during the same week of 2008. Fifteen year fixed rates averaged 4.38% during the week ended Dec. 17, a .06% increase from the 4.32% rate reported last week and a .54% decrease from the 4.92% rate reported during the same week of 2008. “Interest rates on 30-year fixed-rate mortgages have remained below 5% over the past seven weeks and are contributing to a wave of refinance activity,” and “mortgage rates followed bond yields higher once again this week amid signs of an improving economy,” Frank Nothaft, Freddie Mac vice president and chief economist, said. Five-year and one-year Treasury-indexed hybrid adjustable-rate mortgages averaged 4.37% and 4.34%, respectively, during the week. Both rates represent slight increases from the numbers reported during the previous week, and significant decreases from the rates reported during the corresponding period of 2008.

Obama honors CUNA s 75th CUs member service

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WASHINGTON (12/21/09)--Sending “greetings” to the Credit Union National Association in recognition of its 75th year of service, President Barack Obama congratulated credit union employees “for their dedication to excellence in their work.” Obama in a letter sent late last week also congratulated credit unions for “serving individuals and families in their communities,” adding that credit unions would “help grow and strengthen local economies across America” as the nation confronts the challenges set before it. CUNA earlier this year commemorated its founding, which took place on Aug. 10, 1934, with a series of meetings and commemorations in Estes Park, Colorado. In the letter, Obama urged credit union personnel and CUNA to “take pride” in the accomplishments of the last 75 years as they “mark this important milestone and look to the future.”

Inside Washington (12/18/2009)

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* WASHINGTON (12/21/09)--The mortgage market is stable but may be carrying some risk, financial observers said. Fannie Mae and Freddie Mac are still buying loans and subprime borrowers can still find financing. The Federal Housing Administration has taken over Fannie and Freddie’s more “perilous” lending, and by transferring the risk to the government, the market has avoided trouble. However, observers wonder if the future will bring new complications or an excess of old problems. Robert Pozen, chairman of MFS Investment Management and senior lecturer at Harvard Business School, said important lessons from the crisis are being ignored, he told American Banker (Dec. 18). He is leery about the extension of an $8,000 tax credit to first-time homebuyers. However, there are some positive signs. In the case of Fannie and Freddie, both are doing their job, so there hasn’t been pressure to fix them, said James Lockhart, former director of the Federal Housing Finance Agency. But although fixing Fannie and Freddie is on the “backburner” because they don’t pose a problem, they still have to be addressed, he said ... * WASHINGTON (12/21/09)--The Senate Banking Committee approved the renomination of Federal Reserve Board Chairman Ben Bernanke Thursday, but there likely will be a heated debate in the Senate over his nomination. Analysts expect him to win, but he faces opposition from legislators including Sens. Bernie Sanders (I-Vt.) and John McCain (R-Ariz.). Sen. Richard Shelby (R-Ala.), the committee’s ranking member, voted against Bernanke. Senate Banking Committee Chairman Chris Dodd (D-Conn.) told reporters that lawmakers will “no choice” but to approve his nomination. Dodd also stumped for his reform bill, which would eliminate the Fed’s banking supervisory power. The House passed a bill that would make the Fed a systemic risk regulator but without consumer protection functions (American Banker Dec. 18) ... * WASHINGTON (12/21/09)--The Federal Deposit Insurance Corp. (FDIC) warned against interest rate risk (IRR) in its Winter 2009 Supervisory Insights report. IRR is the potential for changes in interest rates to reduce a bank’s earnings or economic value. Financial institutions should be vigilant in their oversight and control of IRR exposures, FDIC said. Given the current low interest rate environment, it is important that financial institutions plan for increases in interest rates and prepare for the associated risks, the agency said. Financial institutions should be prepared to manage the risk of declining yield spreads between longer-term investments, loans and other assets and shorter-term deposits and other liabilities. FDIC advised institutions to reduce their IRR exposure and increase capital if their capital and earnings are insufficient against changes in interest rates ...