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CUNA urges House to include MBL changes in jobs bill

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WASHINGTON (12/9/09)--The Credit Union National Association (CUNA) has urged House members to include expanded business lending authority for credit unions, as presented in H.R. 3380, in a jobs creation bill that is being drafted by Reps. Nancy Pelosi (D-Calif.) and George Miller (D-Calif.). The jobs bill is titled Promoting Lending for America’s Small Business Act. “Congress turned to credit unions during the Great Depression to give consumers access to financial services because the banks would not serve them,” CUNA President/CEO Dan Mica wrote. “Today, small businesses face the same dilemma – they need access to credit, but it is not available through banks. Credit unions have been providing business loans to their members for over 100 years. In fact, as banks have pulled back credit from small businesses, credit unions have continued to lend and they have the available funds and expertise to do more,” he added. H.R. 3380, which was introduced by Reps. Paul Kanjorski (D-Penn.) and Ed Royce (R-Calif.) earlier this year, would increase the credit union member business lending cap to 25% of a credit union’s total assets, raise the “de minimis” threshold for a loan to be considered a “member business loan” to $250,000, and exempt loans made in qualified underserved areas from the cap. In the letter, Mica repeated CUNA claims that including the credit union business lending provision in the jobs bill would inject more than $10 billion into the economy in the first year, and help create more than 108,000 jobs – at no cost to taxpayers. Further supporting H.R. 3380, CUNA said that the bill “recognizes that credit unions have a track record that demonstrates they can help in a safe and sound manner and that they should be part of the solution to the credit crunch small businesses face.” Kanjorski recently discussed H.R. 3380 with President Barack Obama, and the U.S. Treasury and the Small Business Administration have also mentioned lifting the MBL cap as one of many ways that the Obama administration could assist small businesses. The House is scheduled to begin votes on regulatory reform measures today.

At pre-Hike briefing CUNA CU reps and congressmen connect

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WASHINGTON (12/9/09)--Credit union representatives are using this week's National Hike the Hill as a platform for member business lending cap increase advocacy above all else, as they come to Washington just before key financial regulatory reform votes are set to take place.
Rep. Paul Kanjorski (D-Pa.) speaks at the National Hike the Hill kickoff on Tuesday night. (Photo provided by the Pennsylvania Credit Union Association)
The Credit Union National Association (CUNA) hosted a briefing and reception for the over 600 credit union activists coming to Washington. The reception was also attended by Reps. Paul Kanjorski (D-Penn.), Ed Royce (R-Calif.) and Brad Sherman (D-Calif.), who briefly addressed the crowd. CUNA Senior Vice President of Legislative Affairs John Magill said that CUNA, associated credit unions and state leagues would approve of changes that CUNA ”affected” on legislation addressing systemic risk and the proposed Consumer Financial Protection Agency, but oppose potential legislative action on interchange fees and overdraft protection. CUNA is also opposing a bankruptcy amendment to H.R. 4173, the Wall Street Reform and Consumer Protection Act, which would modify the bankruptcy code to permit judicial mortgage modification. The amendment was submitted by Rep. John Conyers (D-Mich.) on Tuesday. Over 235 amendments to H.R. 4173 have been filed with the Rules Committee, but votes on these amendments have not yet been scheduled.
CUNA President/CEO Dan Mica makes a point as he briefs some of the almost 650 credit union representatives that have come to Washington, D.C. this week to "Hike the Hill" on key credit union issues, such as increased member business lending authority. The credit union reps also heard from Reps. Paul Kanjorski (D-Pa.), Ed Royce (R-Calif.) who have introduced legislation to lift the MBL cap, and Rep. Brad Sherman (D-Calif.), who supports increased member business lending. (CUNA Photo)

Cramdown amendment to HR 4173 opposed by CUNA

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WASHINGTON (12/9/09)--The Credit Union National Association (CUNA) has urged Rules Committee Chairwoman Rep. Louise Slaughter (D-N.Y.) not to allow an amendment to H.R. 4173 that would grant bankruptcy judges power to modify--or "cramdown"--terms of existing mortgages. H.R. 4173 is the comprehensive financial institutions regulatory reform package, the Wall Street Reform and Consumer Protection Act. The House begins discussion of the massive bill today and it has been reported that more than 250 amendments have been filed to the legislation. Rep. John Conyers (D-Mich.) on Tuesday submitted the amendment to H.R. 4173 that would modify the bankruptcy code to permit judicial mortgage modification in Chapter 13 bankruptcy proceedings. The House is scheduled to begin votes on regulatory reform measures today. In a Tuesday letter to Slaughter, CUNA President/CEO Dan Mica noted that cramdown legislation, which was “controversial and bitterly divisive” when it was introduced earlier this year, could force credit unions to strongly oppose the broader regulatory restructuring measure. According to Mica, “the specter of a well underwritten loan to a deserving borrower being adjusted through a judicial process is simply abhorrent to most credit union executives and volunteers.” CUNA said credit unions are sympathetic to the financial needs of their members and “work each day to extend credit on terms which are in the best interest of the borrowing member and the membership at large.” CUNA also said it recognizes the need for Congress to take steps to help keep people in their homes. However, Mica said that CUNA with a cramdown amendment, CUNA oppose the legislation as it “has the potential to do long-term damage to the mortgage market and undermine the safety and soundness of credit unions.” “We have tried in good faith to work with proponents of this proposal on a compromise that would address the foreclosure crisis ignited by the sub-prime lending crisis and perpetuated by the unemployment crisis, without jeopardizing the safety and soundness of credit unions or having other adverse consequences to the mortgage lending market,” Mica wrote. “Unfortunately, that compromise remains elusive.”

Inside Washington (12/08/2009)

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* WASHINGTON (12/9/09)--Roughly 6% of trial mortgage modifications have become permanent or likely will be permanent under the Obama administration’s Making Home Affordable Program (HAMP), according to Treasury Department data scheduled to be released Thursday. About 11% of trial modifications that were extended under HAMP have been cancelled, 49% lack documentation to convert them to permanent loans, and 33% have the required documents but haven’t been converted yet (American Banker Dec. 8). Under HAMP, servicers must finish three months of trial modifications where the loan was reduced to 31% of the debt-income ratio before a workout can be made permanent. So far, 650,000 trial modifications have been extended ... * WASHINGTON (12/9/09)--The Troubled Asset Relief Program (TARP) is slated to recover all but $42 billion from its capital infusions to financial institutions, a Treasury Department official said Monday (American Banker Dec. 8). In August, the department projected it would lose $110 billion on the program. So far, banks have repaid $71 billion. Bank of America Corp., who plans to repay by the end of the year, will bring the figure to $116 billion ... * WASHINGTON (12/9/09)--The Small Business Administration (SBA) needs to improve its lender risk rating system, according to a Government Accountability Office (GAO) study. The study found that the system uses some of the same information that federal financial regulators and selected large lenders use to conduct off-site monitoring, but its usefulness is limited because SBA has not followed common industry standards when validating the system. SBA hasn’t assessed the system’s ability to accurately predict outcomes, the report said. GAO recommends that SBA ensure its contract, consistent with industry standards, follows sound model validation practices, use its own data to assess the lender risk rating system, develop a strategy for targeting lenders for onsite reviews that relies more on its lender risk ratings, and consider revising its on-site review policies and procedures. SBA responded to the report, GAO noted, saying that it agreed with the recommendations and plans to take steps to address them ... * WASHINGTON (12/9/09)--The Federal Reserve Board stands to lose some of its power if financial reform legislation is enacted, observers said. On Monday, Fed Chairman Ben Bernanke told the Economic Club of Washington that he opposes a plan that would subject the central bank to audits by the Government Accountability Office (GAO). He also stressed the importance of the Fed’s role as a supervisor. However, observers said the Fed’s powers will be narrowed (American Banker Dec. 8). The Fed will lose some political battles and will have a tougher time arguing against the proposed measures, said Brian Gardner, Keefe, Bruyette and Woods. Inc. analyst. The House is expected to vote on a bill this week that would reform the financial system and subject the Fed to GAO audits. On the Senate side, Sen. Bernie Sanders (I-Vt.) has just won two co-sponsors, Blanche Lincoln (D-Ark.) and Russ Feingold (D-Wis.), on similar reform legislation. The Fed also opposes legislation by Senate Banking Committee Chairman Christopher Dodd (D-Conn.), which would strip the Fed’s bank supervisory powers completely ...

CUNA Matz alt capital letter invaluable to talks

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WASHINGTON (12/9/09)— As the Credit Union National Association (CUNA) continues to push for change on key credit union issues including alternative capital, clear support for such capital as articulated by the chief federal regulator will be an invaluable addition to that effort, the trade group said Tuesday. CUNA has been aggressively pursuing credit union reforms through meetings with top Obama administration officials and federal legislators. CUNA President/CEO Dan Mica commended National Credit Union Administration Chairman Debbie Matz for her letter Monday to House Financial Services Committee Chairman Barney Frank (D-Mass.). Mica said the letter clearly draws the connection between increased credit union service to the American public and the need for prompt corrective action (PCA)reform and additional sources of capital for credit unions. Regarding PCA changes, the Matz letter informed Frank that in some instances healthy credit unions are finding it necessary to refuse new deposits because the increase is skewing net worth levels under current PCA rules. "In effect, the reward for their success in attracting new shares is the risk of a demotion to a lower net worth category if accepting those shares drives down the credit union's net worth ratio," Matz wrote, adding that the reputational risk of that situation is having a “chilling effect” on some credit union service. She urged changes to PCA that would mitigate that affect. CUNA’s Mica said, “Chairman Matz has precisely and quickly defined the negative impact current capital rules are having on consumers at a time when increased savings is vital. She has also taken a leadership role on alternative capital. CUNA commends her for her timely letter to federal lawmakers as they consider broad financial institution regulatory reforms.”

Presidents SBA fee waiver idea could help CUs CUNA

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WASHINGTON (12/9/09)—President Barack Obama’s Tuesday announcement that he supports waiving or eliminating fees and increasing guarantees associated U.S. Small Business Administration (SBA) lending programs could ease restrictions some credit unions run into when interested in participating in SBA lending programs. The Credit Union National Association (CUNA) has consistently advocated with the SBA and Congress that fees for the agency’s 7 (a) and 504 guaranteed lending programs should be lower and guarantees increased. Although eligible to participate in these programs, some credit unions have found the fees, as well as the complexity of the application process, to be prohibitive to their involvement. CUNA has testified before the U.S. Congress repeatedly that changes to the SBA's 7 (a) guaranteed lending program that would enable more credit unions to participate and could serve as an essential tool for helping credit unions achieve their mission of serving all the credit needs of members. CUNA maintains that the SBA loans could particularly help with serving low- to middle-income individuals and underserved communities.
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