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Inside Washington (12/04/2009)

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* WASHINGTON (12/7/09)--National Credit Union Administration (NCUA) Board Member Michael Fryzel met with Andrews FCU President/CEO Chris McDonald and Defense Credit Union Council President/CEO Arty Arteaga at the credit union’s headquarters in Suitland, Md. They discussed member services, real estate trends and potential concerns for credit unions in the future. “Credit unions continue to listen to the concerns of their members and work to meet their needs regarding certain products and services, a task that during these challenging economic times remains a focus for credit unions across the country,” Fryzel said. Andrews FCU has $860.6 million in assets. From left are McDonald and Fryzel. (Photo provided by the National Credit Union Administration) ... * WASHINGTON (12/7/09)--After Bank of America Corp. announced it will pay back the funds it received in the government bailout by year-end, financial observers predict that its rivals will follow suit. BoA may have set a new benchmark for leaving the Troubled Asset Relief Program (TARP), they added. BoA has projected a Tier 1 common capital ratio of 8.5%, something that rival Citigroup could match, observers said. Citigroup posted Tier 1 capital at 9.1% at the end of the third quarter (American Banker Dec. 4). Ethan Heisler, managing director at Hexagon Securities, said that every bank will repay its funds--but many haven’t been approved to do so yet. Heisler noted that BoA’s plan to repay the funds doesn’t mean the company is healthier than its counterparts ... * WASHINGTON (12/7/09)--Bank of America Corp.’s plan to repay its Troubled Asset Relief Program (TARP) debt by the end of the year seems like a safe move, but analysts said the move places a “big bet on the economy.” Alois Pirker, research director at Aite Group LLC, said there are benefits to repaying the funds, but questioned if the benefits outweigh the risks because nobody is sure what the markets will do next year (American Banker Dec. 4). William Fitzpatrick, analyst at Optique Capital Management, was stunned at BoA’s move to leave TARP, he said. He questioned whether BoA would need the government’s help again if the economy tanked. However, the Fed felt that BoA is in a good position to repay its TARP money, said Federal Reserve Board Chairman Ben Bernanke. Robert Stickler, BoA spokesman, noted the company can survive regardless of the economy, and has never made secret its desire to leave TARP ... * WASHINGTON (12/7/09)--Some lawmakers are working to block Federal Reserve Board Chairman Ben Bernanke’s reconfirmation as Fed chief (American Banker Dec. 4). Sen. Jim Bunning (R-Ky.) said he’d do everything to drag out the reconfirmation process, while Sen. Bernie Sanders (D-Vt.) put a hold on the nomination, forcing Senate leaders to get 60 votes before moving forward. The question is whether Bernanke is the best one to lead the nation out of financial crisis, said Sen. Richard Shelby (R-Ala.). Sen. Kay Bailey Hutchison (R-Texas) indicated she would wait on deciding how to vote o the matter, while Sen. Jim DeMint (R-S.C.) said he would “probably” vote for Bernanke. However, Senate Banking Committee Chairman Christopher Dodd (D-Conn.) said Bernanke is the right leader “for this moment in our nation’s economic history” ... * WASHINGTON (12/7/09)--The Federal Deposit Insurance Corp. (FDIC) said it will release more information about failed bank bids (American Banker Dec. 4). However, the cover bid, or second-best offer, will be withheld for one year. The names of losing bidders will be public after the failure of the bank, but it will be unclear which bidder belongs to each bank. Dan Bass, managing director of Carson Medlin Co.’s Houston office, said the changes the FDIC has made are a “good compromise” because they provide information about what is taking place ... * WASHINGTON (12/7/09)--Competition regarding 529 college-savings plan management fees is intensifying, financial observers said. Fidelity Investments, Vanguard Group and TIAA-CREF have been lowering fees (American Banker Dec. 4). Fidelity cut its program management fees by a third to a half for its five state-sponsored plans on Tuesday. The cuts are good for consumers because they will encourage investment in the plans said, Mark Kantrowitz, founder and publisher of Many credit unions offer private student lending programs. CU Student Choice, a credit union service organization that offers lending services, has more than 80 credit unions in its network (News Now Aug. 21) ... * WASHINGTON (12/7/09)--The Internal Revenue Service (IRS) Friday issued the 2010 optional standard mileage rates to calculate the deductible costs to operate an automobile for business purposes. The standard mileage rates for the user of a car (including vans, pickups or panel trucks) will be 50 cents per mile for business miles driven, 16.5 cents per mile driven for medical or moving purposes, and 14 cents per mile driven in service or charitable organizations. The rates for 2010 reflect lower transportation costs than a year ago, the IRS said ...

BSA e-filers have new SAR validations process

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WASHINGTON (12/7/09)—As of Dec. 12, the Financial Crimes Enforcement Network (FinCEN) will launch the second phase of its Bank Secrecy Act (BSA) E-Filing Suspicious Activity Report (SAR) Acknowledgements and Validation process. Phase I was implemented in September and provided BSA E-Filers with an acknowledgement of receipt for a submitted SAR. This second phase, according to FinCEN, applies data quality checks and will provide filers with information on the quality of their submissions for electronically filed SARs of all types: Suspicious Activity Report by Depository Institutions (SAR-DI), Suspicious Activity Report by the Securities and Futures Industries (SAR-SF), Suspicious Activity Report by Casinos and Card Clubs (SAR-C), and Suspicious Activity Report by Money Services Businesses (SAR-MSB). The BSA E-Filing system offers filers a self-enrollment feature. There is no enrollment deadline at this time; however, FinCEN strongly encourages filers to enroll to receive critical error feedback through this feature.

Mica responds to banker criticisms of CUs

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WASHINGTON (12/7/09)--Credit Union National Association President/CEO Dan Mica on Friday responded to banking organizations attempt to dissuade legislators from supporting lifting the member business lending cap for credit unions, saying that their doing so does “a grave disservice not just to America’s credit unions, but to the nation’s small business owners that are the key to our nation’s economic recovery.” The American Bankers Association (ABA) and affiliated state bank associations on Friday attempted to discredit credit union claims in a letter sent to House Speaker Rep. Nancy Pelosi (D-Calif.) and Rep. George Miller (D-Calif.). The ABA letter came in response to Rep. Paul Kanjorski’s (D-Penn.) recent letter which urged the two legislators to consider including his H.R. 3380, the “Promoting Lending to America's Small Businesses Act of 2009,” in their forthcoming jobs bill. While bankers attack credit unions throughout their letter, they say “not a word” on what they would do to help small businesses, Mica said. By objecting to credit union efforts to meet members' increased loan demand, Mica said the bankers, “as they have too often throughout the nation’s financial crisis… are thinking only of themselves at a time when small businesses are in dire need of access to credit.” “Rather than stepping forward to meet the demand, banks have curtailed their lending, a sad fact acknowledged by policymakers, regulators and business leaders alike,” Mica said. “Simply put: lifting the cap is good public policy, especially now. Congress should not be dissuaded by the bankers’ narrow self interest,” Mica concluded.

House sets 2010 schedule

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WASHINGTON (12/7/09)--The House will begin 2010 by reconvening for votes at 6:30 p.m. ET on Jan. 12, according to the 2010 legislative calendar, which was released on Friday by House Majority Leader Steny Hoyer (D-Md.). The first major work period will begin on Feb. 15, President’s Day, and will last through the end of that week. The Passover/Easter district work period will begin on March 29 and last until April 9, and the lengthy summer district work period will take place between Aug. 9 and Sept. 10. With 2010 elections looming, the voting session for next ear is set to end on Oct. 8. The Senate has not yet released its 2010 voting calendar.

National Hike the Hill greets active Congress

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WASHINGTON (12/7/09)--With House votes on a bevy of financial regulatory reforms drawing close, the Credit Union National Association and the state leagues will bring over 600 credit union activists to Washington on Dec. 8, 9 and 10 for a “National Hike the Hill.” A main goal of this round of CUNA’s “Hike the Hill” campaign is to urge legislators to give credit unions more capacity to help the economy by giving them more capacity to make business loans to their members. Congressional action on H.R. 3380, the Promoting Lending to America's Small Businesses Act of 2009, is pending. The bill would increase the MBL cap to 25% of a credit union's total assets, would raise the "de minimis" threshold for MBL loans to $250,000, and would exempt loans made to non-profit religious organizations as well as loans made in qualified underserved areas from the cap. CUNA has estimated that credit unions would generate up to $10 billion in business loans in the first year that the MBL cap is lifted, creating about 108,000 jobs in the process. Rep. Paul Kanjorski (D-Pa.) last week asked Reps. Nancy Pelosi (D-Calif.) and George Miller (D-Calif.) to help credit unions assist small businesses by including portions of H.R. 3380 addressing MBL in their upcoming job creation legislation. Other recent grassroots advocacy initiatives by CUNA and the Leagues include individual state League “Hike the Hill” events and a postcard campaign addressing interchange fees.

CDFI Fund requests nearly double for fiscal 2010

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WASHINGTON (12/7/09)--The U.S. Treasury's Community Development Financial Institutions Fund (CDFI Fund) on Friday announced that it has received applications from a total of 408 financial institutions requesting a total of $467 million in funds for the 2010 fiscal year round of the program. A total of 51 of the financial institutions that applied for the CDFI funds are credit unions. According to the NCUA, credit unions that are certified to take part in the CDFI program may apply for as much as $2 million in funding that will help maintain their credit union's presence in the community. The CDFI Fund received requests for just over $237 million in funds during the 2009 fiscal year. CDFI Fund Director Donna Gambrell said that the “extraordinary demand” for CDFI Program funds “shows the great need in distressed communities for capital to provide affordable financial products and services.” "Today’s economy is creating a need for CDFIs to expand their impact as low-income people and communities across the nation continue to bear a disproportionate burden and rely on CDFIs to provide critically needed support,” she added. The Treasury's CDFI Fund helps locally based financial institutions offer small business, consumer and home loans in communities and populations that lack access to affordable credit. The CDFI Fund is currently evaluating applications, and awards will be announced in the summer of 2010.

CUNA MBL plan noted to Obama and in report

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WASHINGTON (12/7/09)--The U.S. Treasury and the Small Business Administration (SBA) have incorporated the Credit Union National Association’s (CUNA) recommendation that the government lift the current credit union member business lending (MBL) cap of 12.25% of total assets into their report to the President following the recent Small Business Financing Forum. The report recommendation is included among a long list of recommendations made to Treasury by participants of a recent Obama administration meeting on small business intiatives. CUNA has long advocated lifting the member business lending cap for credit unions, a move which CUNA estimates could provide $10 billion in new small business loans once it is completed. Also, Rep. Paul Kanjorski (D-Pa.) advocated for lifting the MBL cap on Friday, discussing his pending bill, H.R. 3380, the Promoting Lending to America's Small Businesses Act of 2009, directly with President Obama aboard Air Force One. H.R. 3380 would increase the MBL cap to 25% of a credit union's total assets, would raise the "de minimis" threshold for a loan to be considered a "member business loan" to $250,000, and would exempt loans made to non-profit religious organizations as well as loans made in qualified underserved areas from the cap. Commenting on the MBL developments, CUNA President/CEO Dan Mica said that credit unions were “clearly” gaining traction “on the issue of raising the capacity of credit unions to make business loans." The joint Treasury/SBA report, which was submitted following President Obama’s recently completed White House jobs summit, also suggested expanding eligibility for the Emergency Economic Stabilization Act’s (EESA) Troubled Asset Relief Program funds to all credit unions. Some eligible credit unions currently access government-based funding through the Treasury’s Community Development Financial Institution fund. The report also provided recommendations on expanding and improving Small Business Administration programs, tax policy changes that could benefit small businesses, and supporting small business in underserved markets, expanding rural access to credit. The forum, which was held at the White House last week, included a guest list of over 100 academics, CEOs, small business leaders, and union leaders. In an interview following the summit, Google CEO Eric Schmidt told CNBC that the government could do more to "solve the loan problem" facing small- and medium-sized businesses. "They used to get loans from banks, the banks aren’t really lending to them anymore, for lots of reasons, and anything that they can do to accelerate that needs to be done right now." CUNA's Senior Vice President of Legislative Affairs John Magill and National Credit Union Administraion Chairman Debbie Matz were also present at the forum. President Obama addressed the forum, saying that his administration is “looking for fresh perspectives and new ideas” as it seeks ways to reinvigorate the job markets and economy. Vice President Joe Biden, Treasury Secretary Tim Geithner, SBA Administrator Karen Mills, Labor Secretary Hilda Solis, and Federal Deposit Insurance Corporation Chairman Sheila Bair also spoke prior to the forum. House Small Business Committee Chairman Nydia Velazquez (D-N.Y.) also remarked that credit unions and small financial institutions “are facing unprecedented challenges,” adding that the government must “look for ways to channel more resources to help smaller institutions.”