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New SBA leader named

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WASHINGTON (12/22/08)—President-elect Barack Obama is expected to name Karen Gordon Mills as the new chief of the U.S. Small Business Administration (SBA). SBA Acting Administrator Sandy Baruah said in a release that Mills is “ideally suited to lead the agency.” “Mills’ background is a combination of management, venture capital, and public policy, three elements key to leading the agency successfully. In addition, Mills has a record of bi-partisanship which is important to SBA and the small business community the agency serves,” Baruah said. Even before Obama announced the nomination officially, Sen. Olympia Snowe of Maine, the top Republican on the Senate's Small Business and Entrepreneurship Committee, released a statement congratulating Mills. (, Dec. 19) That report noted Mills is president of MMP Group, a private equity investor and adviser based in Brunswick, Maine, and has been part of the Obama SBA transition team . From 1999 to 2007 she was founding partner and managing director of Solera Capital, a New York-based venture capital firm. She is lead director of Scotts Miracle-Gro.

Inside Washington (12/19/2008)

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* WASHINGTON (12/22/08)--President-elect Barack Obama’s pick of Daniel Tarullo--a Georgetown University Law School professor and Clinton administration veteran--to the Federal Reserve Board could help the central bank learn more about the financial services industry’s challenges, observers say (American Banker Dec. 19). The Senate has yet to confirm Tarullo’s position. Tarullo’s academic and policy work on financial regulation has generated ideas to helping solve the financial crisis, Obama said. One of Tarullo’s priorities is Basel II, which began implementation this year. Prior to working as a Georgetown professor, Tarullo served as assistant secretary of state for economic and business fairs, assistant to the president for international economic policy and deputy assistant to the president for economic policy during the Clinton years ... * WASHINGTON (12/22/08)--Maxxam Inc., a Texas conglomerate, has settled with the Federal Deposit Insurance Corp. (FDIC). The FDIC has paid Maxxam $10 mllion over a dispute involving a failed thrift and redwood trees (American Banker Dec. 19). The FDIC argued that Maxxam’s CEO, Charles Hurwitz, was at fault for the collapse of United Savings Association of Texas in 1989. Hurwitz was a partial owner of the thrift ... * ALEXANDRIA, Va. (12/22/08)-- National Credit Union Administration (NCUA) Chairman Michael E. Fryzel met with Pennsylvania Credit Union Association (PCUA) President/CEO Jim McCormack before the December NCUA board meeting Thursday, said the PCUA. From left are Fryzel, McCormack and PCUA General Counsel Rick Wargo. (Photo provided by the Pennsylvania Credit Union Association) ... * WASHINGTON (12/22/08)--The Federal Reserve Board Thursday published its annual notice of the asset-size exemption threshold for depository institutions under Regulation C, which implements the Home Mortgage Disclosure Act. The asset-size exemption for depository institutions will increase from $37 million to $39 million based on the annual percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers for the twelve-month period ending November 2008. Depository institutions with assets of $39 million or less as of Dec. 31 are exempt from collecting data. The adjustment is effective Jan. 1 ... * WASHINGTON (12/22/08)--The Federal Deposit Insurance Corp. released its third quarter state banking profiles. The profiles detail economic conditions for each state, including employment growth rates, banking trends, loan concentrations and other data ...

CUNA Compliance What is e-Verify

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WASHINGTON (12/22/08)--Anyone who frequents the human resource or employment law blogs can tell you that a major topic of discussion these days is the federal government's E-Verify system. So, what exactly is E-Verify? The E-Verify program is operated by the Department of Homeland Security (DHS) in partnership with the Social Security Administration (SSA). It enables employers to verify the employment eligibility of new hires online by comparing information from an employee's I-9 form against SSA and DHS databases. The program is free and, according to DHS, “the best means available for determining employment eligibility of new hires and the validity of their Social Security numbers.” Participation in E-verify is voluntary for most employers. But that is not the case with certain federal contractors and subcontractors, who will be required to begin using the E-Verify mid-January. How can you tell if a federal contract requires compliance with E-Verify? Credit Union National Association Director of Compliance Information Valerie Moss notes that federal procurement contracts that are awarded after Jan. 15 will include a clause committing government contractors to use E-Verify. So, she says, the answer to this question lies in the body of the federal contract. A credit union might wonder, Moss said, whether those that sell or redeem U.S. Savings Bonds are federal contractors. They are federal contractors for purposes of affirmative action (equal employment opportunity) but, Moss notes, that fact alone doesn’t make a credit union a federal contractor for purposes of complying with E-Verify. In fact, she says, according to the supplemental information to the E-Verify regulations, “agreements or activities performed by financial institutions that are not subject to the Federal Acquisition Regulations (FAR) are not required to comply with the E-Verify provisions and clauses of the FAR.” Moss says further, “contracts for purchase of goods by companies from the federal government are not subject to the FAR and therefore are not required to comply with the E-Verify provisions and clauses in the FAR.” The Department of Defense, General Service Administration, and the National Aeronautics and Space Administration jointly issue the FAR for use by executive agencies in acquiring goods and services. These regulations do not apply to financial institutions’ agreements with the Treasury Department for the sale or redemption of U.S. Savings Bonds. Moss notes that her comments on this issue in no way constitute legal advice. “Credit unions should always consult the appropriate human resource professional regarding the application of any federal or state employment law to their credit unions’ operations,” Moss advises. Use the resource link below to visit the DHS e-Verify Web page.

Fed action continues CU multi-featured open-end lending

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WASHINGTON (12/22/08)—Changes adopted last week by the Federal Reserve Board to its Regulation Z will permit credit unions to continue offering multi-featured open-end lending, such as under LoanLiner. Credit union members have used multi-featured open-end lending for the last 25 years as a convenient and efficient means of accessing credit from their credit union. The Fed plan as proposed may have put that authority in jeopardy and the Credit Union National Association (CUNA) and CUNA Mutual Group launched a substantial effort to inform the Fed of the possible problems credit unions might face under the Reg Z plan as proposed. The proposal would have required "closed-end" disclosures for certain types of loans provided under these types of programs, instead of the "open-end" disclosures that are currently used. The goal of CUNA and CUNA Mutual was to preserve the ability to use the current disclosures. The groups told reminded the Fed that have been no problems or concerns raised by credit union members that have used these programs. “Working with CUNA Mutual, we met several times with the Fed to ensure that this approach would essentially be preserved in these much-anticipated rules, and we appreciate the Fed’s consideration of our views,” said CUNA President/CEO Dan Mica after the Fed action. “However,” he added, “some changes may be necessary by credit unions to fully comply with the new regulation. We will be carefully reviewing the details and providing guidance to leagues and credit unions regarding these changes, including verifying creditworthiness and other issues.” The final rule approved by the Fed last Thursday made fairly 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. It is unclear the extent to which disclosures provided with open-ended lending under LoanLiner may need to be revised. As mentioned, the rule did not change timing requirements for making advances under an open-end lending plan. The Fed won’t require that each subaccount under a plan have a self-replenishing credit limit. Also, credit unions are permitted to verify continuing creditworthiness, but may not conduct additional underwriting. Credit unions and other lenders must comply with the new rules by July 1, 2010. Until then, current lending processes and disclosures may be used. CUNA's Regulatory Advocacy will be providing analysis of the final rule and its implications for LoanLiner and other issues on its website.