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CUs can offer Advantages starting Feb. 15

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WASHINGTON (2/11/11)—Beating its ETA by a month, the U.S. Small Business Administration (SBA) announced yesterday that its two new “advantage” lending programs will be up an running on Feb. 15. Qualified credit unions and other lenders can approve loans through the agency’s new Small Loan Advantage program starting on that date. Any financial institutions across the country in the SBA’s Preferred Lender Program (PLP), and there are 610 of them, can approve loans under this program. At the same time, the agency will begin accepting applications from community-based, mission-focused lenders who are interested in making SBA-guaranteed loans through the new Community Advantage program. Through Community Advantage, the agency will expand the points of access small business owners have for getting loans by opening SBA’s 7(a) loan program to “mission-focused” financial institutions, including Community Development Financial Institutions, SBA’s Certified Development Companies and SBA’s nonprofit microlending intermediaries. The new programs were announced in December and are part of the agency’s efforts to increase the number of lower-dollar loans being made to small businesses and entrepreneurs in underserved communities. The SBA has said that both the new programs offer a streamlined application process for SBA-guaranteed 7(a) loans up to $250,000. Advantage loans will come with the regular 7(a) government guarantee, 85% for loans up to $150,000 and 7% for those greater than $150,000. In conjunction with the implementation of these two new loan initiatives, SBA will end its Community Express pilot loan program on April 30.

Post-GSE conservatorship legal fees to be studied

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WASHINGTON (2/11/11)—A House Financial Institutions subcommittee will study legal fees paid on behalf of former top executives of Fannie Mae and Freddie Mac. The subcommittee on oversight and investigations, chaired by Rep. Randy Neugebauer (R-Texas), will convene Feb. 15 to examine millions of dollars of fees paid in defense of securities-related lawsuits against the companies and their executives. Announcing the hearing, Neugebauer said, “More than $160 million of the taxpayer’s money has been spent” to defend “the officials who led those organizations prior to, and during the subprime mortgage mess.” He added that the expenditure “raises serious questions about the conservators’ responsibilities to prevent any further losses to the American taxpayer on those legal fees. Since the imposition of the conservatorship, Fannie Mae has paid approximately $24 million in legal fees for former executives, including Franklin Raines ($7.9), Timothy Howard ($4.5), and Leanne Spencer ($11.8) to defend civil suits alleging they failed to meet their duties, the subcommittee hearing notice said. Moreover, an additional $30 million has been spent defending other officers and directors. Witnesses will be announced at a later date.

House Financial Services plans to take up CU priorities

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WASHINGTON (2/11/11)--Credit union priorities such as interchange fee legislation, financial regulatory burdens, and examination of some National Credit Union Administration (NCUA) actions will be among the oversight priorities of the House Financial Services Committee. The panel held a markup session to determine its oversight priorities for the 112th Congress yesterday. The committee in its oversight plan report said that the effectiveness of financial regulations and the difficulties caused by regulatory burdens will be examined, and added that it may require regulators to review their own rules to “identify those which may be unnecessarily burdensome or outdated.” A specific review of the corporate credit union system’s recent issues and possible reforms to the corporate system and the NCUA itself is also planned. The committee also plans to review whether government support of larger financial institutions has harmed credit unions and other small institutions by implying they are “too small to save.” The panel has scheduled a Feb. 17 hearing on interchange fees, and the committee also highlighted interchange fee examination in its oversight plan. Additional hearings had not been scheduled at press time. Regulatory burdens were also discussed during a Thursday House Committee on Government Reform and Oversight hearing Oversight Committee Chairman Darrell Issa (R-Calif.) earlier this year asked for companies, think tanks and trade groups to provide insight on how their respective regulatory situations could be improved. In a letter submitted as committee testimony, the Credit Union National Association told Issa and his fellow committee members that Congress can help credit unions by allowing credit unions to raise supplemental capital, reviewing and potentially amending the Fed's interchange fee proposal, and lifting the cap on credit union member business lending.

30-year mortgages again eclipse 5 threshold

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WASHINGTON (2/11/11)--Thirty-year fixed-rate mortgages averaged 5.05% during the week ended Feb. 10, the highest average mortgage rate recorded since April 2010, Freddie Mac reported on Thursday. Freddie Mac Vice President/Chief Economist Frank Nothaft said that increasing long-term bond yields “placed upward pressure on mortgage rates.” Thirty-year mortgage rates averaged 4.81% last week. Fifteen-year fixed rate mortgages also increased during the week, averaging 4.29%.Fifteen-year mortgage rates averaged 4.08% last week and 4.34% this time last year. Five-year and one-year adjustable rate mortgages (ARM) also crept up during the week, averaging 3.92% and 3.35%, respectively. Five-year ARMs averaged 4.19% this time last year, while one-year ARMs averaged 4.33%.

Interchange rule delay gets Mich. House backing

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LANSING, Mich. (2/11/11)--A resolution backing a delay in the implementation of the Federal Reserve’s proposed interchange regulations is awaiting action in the Michigan State Senate after the Michigan State House approved it on Thursday. The House Banking and Financial Services Committee unanimously approved the resolution earlier this week. The State Senate could act on the resolution as soon as Tuesday, Feb. 15. The resolution was backed by the Michigan Credit Union League and was introduced by Rep. Marty Knollenberg (R-Troy). League CEO David Adams said that the committee’s action was gratifying, and added that the league plans to seek similar action in the state Senate. The Credit Union National Association is working with the League to delay implementation of the Fed’s interchange provisions. The Fed's interchange provisions, which were released just before the end of 2010, could cap debit card interchange fees that are paid by merchants to card issuers at as little as seven cents per transaction. Issuers with under $10 billion in assets would be exempt from the interchange changes. The Fed proposal will remain open for public comment until Feb. 22. Fed officials during their December meeting said that the interchange provisions, if ultimately approved, would likely not become effective until after April. Credit Union National Association (CUNA) President/CEO Bill Cheney recently urged the Fed to stop and study the new Interchange law, rather than forging ahead with new rules, so that everybody wins -- consumers, merchants and financial institutions. Cheney said that the Fed should be given the time needed to consider all interchange related costs, and set a reasonable interchange rate to avoid "unintended consequences" such as the elimination of debit card programs by credit unions. Credit unions may also be forced to impose new fees on members’ debit accounts to keep their card programs afloat, Cheney added. Cheney has also challenged retailer claims that any savings gained from this interchange fee cap would be passed on to consumers.

Inside Washington (02/10/2011)

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* WASHINGTON (2/11/11)--The Obama administration announced two key resignations related to banking and finance on Thursday. Kevin Warsh announced his resignation from the Federal Reserve Board of Governors to be effective March 31. Warsh, a member of the board since February 2006, submitted his letter of resignation to President Obama Thursday. Also, Bruce Witherell, chief operating officer (COO) of Freddie Mac, resigned from the company for “personal reasons.” Witherell, a former managing director at Morgan Stanley, was named COO in September 2009. His resignation is effective immediately (The Wall Street Journal Feb. 10) … * WASHINGTON (2/11/11)--The Federal Deposit Insurance Corp. (FDIC) announced the release of an updated and enhanced version of its instructor-led Money Smart financial education curriculum for young adults. The new curriculum incorporates changes in the law and industry practices that have occurred since Money Smart for Young Adults was launched in 2008. The updated curriculum reflects recent amendments to the rules pertaining to credit cards, the overdraft opt-in rule, and information on financing higher education. The program also includes many enhancements suggested by instructors who use Money Smart, such as expanded pre- and post-tests teachers can use to measure changes in student knowledge or as quiz questions. The program is the FDIC's financial education curriculum designed to help young consumers understand basic financial services, develop money-management skills and learn how to use banking services effectively. For more information, visit the Money Smart page on the FDIC’s website … *
Click to view larger image NCUA Board Member Michael E. Fryzel (sixth from right) at the newest branch of the Polish & Slavic FCU branch in Bridgeview, Ill. From left: Claudette Struzik and Norma Pinion, Bridgeview Village trustees; Irena Marchaj, Polish & Slavic's board treasurer; Agnieszka Poslednik; the credit union’s chief operating officer; Ron Culen, vice president/regional management, Illinois Credit Union League; Frank Spula, president, Polish American Congress; Mary Sandra Anzelmo, president, Polish American Congress, Illinois Division; Father Wac³aw Lech, Saint Camillus Parish; Stanis³aw Zagata, president, Polish Highlanders Alliance of America; Tadeusz Czajkowski, president, Alliance of Polish Clubs; and Magda Kobiela, chair of finance board, Polish Teachers Association in America. (National Credit Union Administration photo)
ALEXANDRIA, Va. (2/11/11)--National Credit Union Administration (NCUA) Board Member Michael E. Fryzel attended and spoke at the ground breaking ceremony of the newest Polish & Slavic FCU branch on Tuesday, Feb 8. The new branch, located in Bridgeview, Ill., is an expansion of the venture the credit union began last year with its branch openings in Mt. Prospect and Norridge, Ill. The credit union has served New York and New Jersey for more than 35 years. “I was pleased to attend the grand opening of the Mt. Prospect and Norridge, Ill. branches last year. The potential for continued success of the Polish & Slavic Federal Credit Union was significant then and it remains significant now,” Fryzel noted. “This new branch will continue to bring quality credit union service and the community involvement for which Polish & Slavic is known to an expanded geographical region. In just one year, the credit union has added over 2,500 Illinois residents to its membership rolls and over $40 million in deposits. I anticipate similar growth with the new Bridgeview location.” Polish & Slavic FCU is a $1.4 billion financial institution with 14 branches. Headquartered in Brooklyn, N.Y., the credit union has a recognized presence across the Polish American community …

NCUA to look at executive compensation next week

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ALEXANDRIA, Va. (2/11/11)--A proposed rule addressing incentive-based compensation arrangements will be one of many items on the NCUA Board’s agenda when it next meets at 10:00 a.m. (ET) on Feb. 17. Though it did not release any details of the compensation-related proposal, the NCUA on Thursday did confirm that it would soon propose agency oversight of the executive compensation awarded by some natural person credit unions. The NCUA last year banned awarding so-called "golden parachute" executive compensation packages to executives of troubled corporates, and introduced new rules that require corporates to disclose their executive compensation packages. The agency will also vote on a final rule addressing corporate federal credit union chartering guidelines. The NCUA late last year proposed rules that would require at least seven natural person credit union representatives to provide detailed business planning and supplemental information alongside a corporate credit union charter application. The NCUA and its Office of Corporate Credit Unions (OCCU) would then judge whether the proposed corporate credit union would uphold the provisions of the Federal Credit Union Act, promote safety and soundness within the credit union industry, and provide quality services to members. Credit ratings and interest rate ceilings are also on the agenda for the NCUA’s February open meeting. The NCUA's monthly report on the status of its insurance funds will also be delivered during the meeting. A closed NCUA session will follow the open meeting. A creditor claim, insurance appeals, and supervisory matters will be discussed during the closed meeting. For the full NCUA meeting agenda, use the resource link.