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Matz to testify at todays Sen. Banking CU hearing

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WASHINGTON (12/9/10)--National Credit Union Administration (NCUA) Chairman Debbie Matz will be the sole witness at a credit union-specific Senate Banking Committee hearing later today. The hearing, which is entitled "The State of the Credit Union Industry," will likely address the general health of natural-person credit unions, as well as the state of corporate credit unions and the NCUA's actions to restore liquidity. Matz in her testimony is expected to provide legislators with an overview of the financial condition of the industry and NCUA's regulatory and supervisory efforts to keep credit unions safe, sound and continuing to serve consumers. The hearing was originally scheduled to take place at 2:30 p.m. ET on Tuesday, but was moved due to scheduling conflicts. Representatives from the Credit Union National Association (CUNA) are not testifying during the hearing, but CUNA has submitted a statement for the record. (See related story: CUNA to Sen. Comm.: CUs serve as ‘shining example’) Discussion of Joseph Smith’s nomination to serve as Federal Housing Finance Agency (FHFA) director will follow the credit union hearing.

Bachus brings CU knowledge as Fin. Svcs. chair

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WASHINGTON (12/9/10)--Credit Union National Association (CUNA) President/CEO Bill Cheney this week congratulated incoming House Financial Services Committee Chairman Rep. Spencer Bachus (R-Ala.), and CUNA has noted Bachus’s frequent support of credit unions. Bachus joined the House of Representatives in 1993, and has served as the ranking Republican on the committee for the past four years. Bachus has called credit unions “an integral part of our financial system,” and has praised credit unions for their pro-consumer work and their straightforward credit practices. He also sought CUNA's input to ensure that the "shared goals of charter preservation and credit union independence” were achieved as the Republican’s alternative regulatory reform legislation package was developed earlier this year, and worked to keep the recently enacted financial reforms from unjustly punishing credit unions. He has met with Alabama credit union representatives and members of the Southeastern League of Credit Unions several times, and is a frequent guest speaker at CUNA’s yearly Governmental Affairs Conference. Bachus was also a sponsor of 2008 legislation that would have eased field of membership and member business lending (MBL) restrictions in underserved areas for credit unions. However, that legislation did not become law. Generally, Bachus has fought against predatory lending practices, and authored legislation that lifted the federal deposit insurance level for credit unions and banks to $250,000. Bachus has indicated that he will put review of government-sponsored enterprises (GSEs) and the Dodd-Frank regulatory reform bill among the issues at the top of his agenda when he takes over early next year.

Fed 75 of noncash payments are made electronically

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WASHINGTON (12/9/10)—More than 75% of all U.S. noncash payments made during 2009 were made electronically, a 9.3% increase over 2006’s numbers, the Federal Reserve revealed in a study released on Wednesday. The study found that Americans made nearly 38 billion debit card transactions during 2009, a 12.8 billion payment increase over 2006’s numbers, and the largest increase by any payment type during the survey period.
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“Debit card usage now exceeds all other forms of noncash payments and, by number of payments, represents approximately 35 % of total noncash payments,” the survey said. The number of debit card transactions eclipsed the number of check transactions. The Fed reported a 14.8% increase in the number of debit transactions and a 7.2% decrease in checks paid between 2006 and 2009. The Federal Reserve Bank of Atlanta’s Richard Oliver said that the results of the study “clearly underscore this nation's efforts to move toward a more efficient electronic clearing system for all types of retail payments," and may also “reflect changing consumer behavior during difficult economic times." Credit unions paid 8.6% of all checks cashed nationwide during 2009, and those checks represented 2.3% of the total value of all checks cashed during that time period. The total number of checks paid by credit unions decreased by just over 8% in between 2006 and 2009, but the average value of those checks increased slightly from $326 in 2006 to $352 in 2009, the study found. The total number of checks paid by credit unions dipped to 2.1 billion in 2009, down from the total of 2.7 billion reported in 2006, the study added. The study noted that credit unions had higher numbers of debit card-carrying members, due to their emphasis on consumer service when compared to commercial banks. All types of electronic payments, barring credit cards, increased between 2006 and 2009, according to the study. For the full study, use the resource link.

CUNA to Sen. Comm. CUs serve as shining example

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WASHINGTON (12/9/10)--In a statement submitted to the Senate Banking Committee ahead of today’s hearing on the state of the credit union industry, Credit Union National Administration (CUNA) President/CEO Bill Cheney notes that while the credit union system still “faces significant challenges as a result of the worldwide financial crisis,” credit unions “have continued to lend when other creditors abandoned consumers and small businesses.” “Considering the considerable stresses that the financial sector has experienced over the last several years and the activities that caused and perpetuated the crisis, credit unions serving consumers should be viewed as a shining example of what generally went right when so much else went wrong,” Cheney adds. The Senate Banking Committee later today will hold a hearing on the status of the credit union industry, the first hearing of its kind in many years. National Credit Union Administration Chairman Debbie Matz will be the sole witness at the hearing. (See related story: Matz to testify at today's Sen. Banking CU hearing.) Credit unions are “eager to do more to serve their members, support their communities, and help the economy recover,” but, for the most part, cannot act without further aid from Congress and regulators, Cheney adds. The CUNA statement urges legislators to continue supporting credit unions’ tax exempt status. Credit unions “provide significant financial benefits” by saving their 92 million members nearly $7.5 billion per year, and those members would pay the price if credit unions lost their tax exemption, according to CUNA’s statement. CUNA in the statement also calls on Congress to act on increasing small business lending authority for credit unions, to allow credit unions to raise alternative sources of capital, and to ensure that interchange statutory provisions are implemented to protect small issuers. CUNA also encouraged legislators to “be mindful of the needs of credit unions” when they consider potential reforms of government sponsored enterprises Fannie Mae and Freddie Mac. The statement also notes the NCUA’s role in aiding credit unions, adding that the NCUA should ensure that “regulations do not overwhelm institutions with counterproductive requirements that frustrate rather than fulfill congressional directives.” The NCUA’s recently released budget increases were also noted, with CUNA saying that greater attention needs to be given “to holding down agency costs, allowing financial institution boards to exercise their sound business judgments, and ensuring institutions are allowed to innovate and respond to the changing needs of their members/consumers.”

Inside Washington (12/08/2010)

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* WASHINGTON (12/9/10)--Tax cuts could expire for more than 2,300 Subchapter S corporate banks if President Barack Obama is unable to gain support for his deal to extend Bush-era tax cuts for two years (American Banker Dec. 8). Banks electing Subchapter S status are taxed at the individual income rate level. If the cuts end, tax rates for those banks would increase by more than four percentage points to 39.6%, according to Paul Merski, a senior vice president and chief economist for the Independent Community Bankers of North America. Merski said the sole reason banks elect Subchapter S status is for the tax benefit. He estimated that community banks could save $500 billion in the next decade if tax breaks--including relief on capital gains and dividends--were extended …