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Inside Washington (12/04/2007)

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* WASHINGTON (12/5/07)--Federal Housing Finance Board Chairman Ronald Rosenfeld has responded to a letter written by Sen. Charles Schumer (D-N.Y.) regarding concerns with Countrywide Financial Corp.’s advances from the Federal Home Loan Bank of Atlanta. Relationships between the banks and their members are supervised, Rosenfeld said. He declined to agree with Schumer’s request that the board prohibit banks from accepting collateral that is out of line with non traditional mortgage guidance (American Banker Dec. 4) … * WASHINGTON (12/5/07)--The Small Business Administration (SBA) and Nationwide Mutual Insurance Company launched a disaster planning guide for small business owners. The guide was announced Tuesday during an event at the National Press Club in Washington, D.C. The guide provides strategies to help small businesses identify hazards, create plans to remain in operation if the office is unusable and understand the limitations of insurance coverage. Hard copies of the guide will be distributed by the SBA field offices. An electronic guide will be made available …

Latest round filed in Pa. FOM lawsuit

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WASHINGTON (12/5/07)—Credit union parties involved in a bankers’ lawsuit against the National Credit Union Administration (NCUA) filed a court document Tuesday that outlined the regulator’s process in a contested field-of-membership decision to show it was methodical and well-considered. The document argued against a recent motion by banking plaintiffs that seeks a summary judgment against the NCUA. That action would invalidate the agency’s decision to grant community charters to the following Pennsylvania credit unions: Members 1st FCU, New Cumberland FCU, and Americhoice FCU. The bankers' case was brought earlier this year in the name of the American Bankers Association and a group calling itself the Credit Union Task Force of Pennsylvania. The litigation challenges NCUA's determination that a six-county area in south central Pennsylvania constitutes a "well-defined local community" under the Federal Credit Union Act. Citing the years-long Members 1st pursuit of approval for a community charter, CUNA argued that many modifications and revisions were made to the credit union’s original request. The deliberate process, CUNA argued, shows that the NCUA’s decision was careful and studied and therefore refutes the bankers’ charges of arbitrary action. The CUNA court document was filed in cooperation with the Pennsylvania Credit Union Association, the affected credit unions, and the National Association of Federal Credit Unions. The credit union document also criticized what it called an attempt by the banker plaintiffs to “make their weak case appear stronger” by improperly submitting new material after the court had announced it would rule based on the administrative record associated with the NCUA’s actions. The case is before the U.S. District Court for the Middle District of Pennsylvania.

BSA focus of meetings with regulators lawmakers

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WASHINGTON (12/5/07)--The Credit Union National Association’s Bank Secrecy Act (BSA) Task Force met for over an hour Tuesday with Director James Freis of the Financial Crimes Enforcement Network (FinCEN) to discuss BSA issues. Freis reiterated to the credit union group the importance of information gleaned from Suspicious Activity Reports (SAR) and Currency Transaction Reports (CTR).
Click to view larger image NCUA Director of Examination Dave Marquis (left) and CUNA Deputy General Counsel Mary Dunn before CUNA's BSA Task Force meeting Tuesday with NCUA Board Member Gigi Hyland at the agency's Alexandria, Va., headquarters. (Photo provided by CUNA)
Click to view larger image NCUA Board Member Gigi Hyland (right) and Senior Policy Advisory Gary Kohn discuss compliance issues Tuesday with CUNA's Bank Secrecy Act Task Force. (Photo provided by CUNA)
Click to view larger image From left, Watt Prichard, president/CEO of River City FCU in San Antonio, Texas; Edwin Collins, CEO of Lockheed Georgia Employees FCU, Marietta, Ga.; Lilly Thomas, CUNA Regulatory Affairs Assistant General Counsel; and BSA Task Force Chairman Eugene Foley (right), president/CEO of Harvard University Employees CU, Cambridge, Mass. The group was part of a meeting held Tuesday with NCUA Board Member Gigi Hyland and her senior policy advisory, Gary Kohn. (Photo provided by CUNA)
“We got a credible explanation of where SARs information is going and how important it is to (file the reports),” Task Force Chair Eugene Foley said, describing the meeting. He said an FBI official attending noted that 42% of all terrorism cases currently being investigated by U.S. law enforcement have associated SAR or CTR filings. Foley said the FinCEN leader expressed his appreciation for credit union cooperation in the law enforcement efforts through BSA information gleaned from Suspicious Activity Reports (SAR) and Currency Transaction Reports (CTR). compliance. The task force also met with a staff member of House Financial Services Committee Chairman Barney Frank (D-Mass.) to request a hearing on BSA compliance issues. Foley said his group requested an examination of such BSA-related issues as duplicative filings and risk assessments through a full committee hearing. Foley said the group met also with National Credit Union Administration board member Gigi Hyland, who underscored that her agency believes BSA compliance should be a cooperative effort between financial institutions and their regulators. She also told the group that she favored a “simple, streamlined” approach to compliance. The task force also discussed technical aspects of BSA compliance with NCUA Director of Supervision Joy Lee and Judy Graham, a program officer with the agency’s office of examination and insurance. The task force is comprised of Foley of Massachusetts, Shelley Clarke of Utah (not able to attend), Watt Prichard of Texas, Dale Dalbey of Alabama, Ed Collins of Georgia, and Mary Ann Clancy also of Massachusetts.

CUNA on subprime woes Washingtons three views

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WASHINGTON (12/5/07)—Credit Union National Association (CUNA) President/CEO Dan Mica told a national television audience Tuesday that a Treasury plan to provide foreclosure relief to some subprime mortgage borrowers has promise, but warned that no action can be a “silver bullet.”
Click to view larger image CUNA President/CEO Dan Mica appears during a live Bloomberg broadcast shown on the Verizon Center's Jumbotron in downtown Washington, D.C. (Photo provided by CUNA)
During a live interview on Bloomberg TV, Mica advised that Congress needs to act carefully when considering actions to ease the country’s subprime mortgage woes. But, he added, action is necessary because no one would benefit from mass foreclosures—neither homeowners nor investors nor the economy in general. Mica also noted that the recent willingness of federal policymakers to publicly consider action to mitigate foreclosures when they were reticent just a few months ago to do so is an indication of the severity” of the problems in the subprime mortgage market. In fact, amid a tumult of disturbing subprime mortgage headlines, Washington appears to be investigating three types of approaches to the challenges threatened by looming foreclosures. Ryan Donovan, the CUNA vice president of legislative affairs, advises that most of what is being discussed can be broken into three categories: retrospective—looking back at all that has occurred and what can be done to keep people in their homes; prospective—looking into the future and how to prevent anything similar occurrences in the future; or they are seeking ways to restore sources of consumer credit. Falling into that final category is one of the most recent pronouncements relating to mortgage relief. On Monday, Reuters reported that Treasury Secretary Henry Paulson said he hoped to have such a plan ready by the end of the week. Paulson said federal lawmakers should give local governments more borrowing power to stave off the flood of impending foreclosures. Reuters also noted that the Bush administration is pushing for an agreement with the mortgage industry to freeze resets of interest rates on subprime loans whose rates are headed for a sharp jump up. The administration is also encouraging Congress to consider other measures to ease the strains in the housing market. The retrospective approach to the subprime problem can be represented by efforts in the House and Senate to investigate whether changes to the U.S. Bankruptcy Code might be an effective way to keep more people in their homes purchased through subprime hybrid ARM loans. While the House Financial Services Committee and the Senate Banking Committee are involved in examining “retrospective” proposals, the chairmen of those panels have also expressed keen interest in avoiding any similar problems in the future with “prospective” actions.