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Interchange ads launches by CUNA and partners

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WASHINGTON (2/14/11)—The fight against the Federal Reserve’s proposed interchange changes will take to the airwaves this week in the nation’s capital as a 30-second television spot airs in the Washington, DC, television market. The Credit Union National Association (CUNA) is one main sponsor of the ad, which was developed by the Electronic Payments Coalition (EPC). Fellow EPC members the Independent Community Bankers of America, the National Association of Federal Credit Unions, and the American Bankers Association have also sponsored the ad. The ad buy continues through March 4 in Washington, D.C. – which includes the week of the CUNA Governmental Affairs Conference. Interchange will be a key issue during the conference. The Fed's interchange provisions 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, and, if approved, could come into effect after April of this year. The House Financial Services Committee’s Financial Institutions and Consumer Credit Subcommittee has scheduled an interchange hearing for Feb. 17, and several legislators have called for additional time to consider the impact interchange changes could have on financial markets and consumers. Frank Michael, President/CEO of Stockton, California's Allied CU, will appear on CUNA's behalf during that interchange hearing. (See related story: CUNA witness slated for interchange hearing) Credit Union National Association (CUNA) President/CEO Bill Cheney recently urged the Fed to take 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.

NCUA reminds CUs HMDA deadline approaching

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ALEXANDRIA, Va. (2/14/11)—Credit unions that are subject to Home Mortgage Disclosure Act (HMDA) requirements for any 2010 activities must report their loan data to the Federal Reserve by March 1, the National Credit Union Administration (NCUA) said in a Friday release. The NCUA in its regulatory alert no. 11-RA-01 also reminded credit unions that credit unions that have not submitted their filings by the required deadline may be subject to civil financial penalty assessments. Under HMDA, credit unions with total assets of more than $39 million that have home or branch offices in defined metropolitan statistical areas must collect their loan data and report it to the Fed. Credit unions that have processed 26 or more mortgages are required to submit their applications in an automated, machine-readable form. The rest may use paper applications. The government will then use the data to analyze whether they are complying with fair lending laws. The Fed has considered whether certain data elements of HMDA should be added, modified, or deleted, and the Credit Union National Association (CUNA) last year recommended that the Fed take a "bright line" approach to HMDA reporting, limiting the need for HMDA reports to situations in which there is a lien on a given home. CUNA also suggested that HMDA requirements only be applied to the largest mortgage lenders that make the vast majority of mortgage loans. For the full NCUA regulatory alert, use the resource link.

CUNA working to assess GSE plans impact on CUs

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WASHINGTON (2/14/11)—The Credit Union National Association (CUNA) on Friday said it will examine the Obama administration’s proposed changes to the current mortgage finance system to identify any potential difficulties for credit unions. The Obama administration’s proposal for the future of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac was released on Friday and suggests a trio of potential outcomes. One proposal would almost completely privatize the housing finance system, limiting the government’s role to assisting low-income and veteran homebuyers. The report notes that smaller lenders could have a difficult time competing under such a system. Another proposal would create a system through which the government would back mortgages only in times of financial distress. Low-income individuals and military veterans would still be offered assistance under this structure. The government could also use a system of reinsurance to backstop private mortgage guarantors to a targeted range of mortgages. The report notes that this option provides the lowest cost mortgages, and would likely benefit smaller lenders. The document does not propose specific legislative solutions. The administration noted that changes such as reducing conforming loan limits, increasing guarantee fees, and requiring higher down payments from potential homeowners could be handled through internal regulatory changes. House Financial Services Committee Chairman Rep. Spencer Bachus (R-Ala.) and Senate Banking Committee Chairman Tim Johnson (D-S.D.) in separate Friday statements said that they would soon begin working with the Administration to further develop new housing finance policies. CUNA will be following this issue closely as developments unfold in Congress and with other policymakers. CUNA's GSE Reform Task Force in previous comments said that equal access to the secondary market is critical for credit unions. A breakout session on GSE reform will be held March 1, in conjunction with CUNA’s Governmental Affairs Conference, which begins on Feb. 27 in Washington, D.C.

CUNA witness slated for interchange hearing

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WASHINGTON (2/14/11)—Frank Michael, President/CEO of Stockton, Calif.-based Allied CU, will testify on behalf of the Credit Union National Association and his credit union during a Feb. 17 hearing on the economic impact of interchange fees. The hearing will take place before the House Financial Services Committee’s Financial Institutions and Consumer Credit Subcommittee, which is chaired by Rep. Shelley Moore Capito (R-W. Va.). Michael has testified before the Senate in recent years, and is also a member of CUNA's Corporate Credit Union Next Steps Working Group. Federal Reserve Governor Sarah Raskin and representatives from various financial institutions are set to speak before the subcommittee. Representatives from a small business and from nationwide corner store chain 7-11 will also testify. The Fed's interchange plan, which seeks to implement provisions enacted by the Dodd-Frank financial regulatory reform package, offers a dual framework for determining what the law calls "reasonable" interchange fees. One plan would provide issuers with a safe harbor of seven cents per transaction, and set a maximum interchange fee cap of 12 cents per transaction. An alternative framework would simply cap the maximum interchange fee at 12 cents per transaction. These safe harbors and/or caps would be reevaluated by the Fed every two years. The Fed is accepting comment on the interchange provisions until Feb. 22, but does not expect the changes to be implemented until after April. CUNA has called for a delay in implementation. Such a delay would give the Fed and legislators more time 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. CUNA and its Electronic Payments Coalition partners have sponsored a 30-second television ad to spread the word about potential interchange changes. (See related story: Interchange ads launches by CUNA and partners) House Financial Services Committee Chairman Spencer Bachus (R-Ala.) and fellow Reps. Jeb Hensarling (R-Texas), Barney Frank (D-Mass.) and Gary Peters (D-Mich.) have all commented on the potential impact that interchange changes could have on consumers and financial institutions alike. Finance committees in both the House and Senate have stated that review of interchange fee changes would be a priority in the 112th Congress.

NCUA compensation plan must address CU concerns CUNA

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WASHINGTON (2/14/11)--As the National Credit Union Administration (NCUA) prepares to look at executive compensation rules later this week, the Credit Union National Association (CUNA) is urging the agency to consider credit unions’ significant concerns before issuing any proposal. CUNA acknowledged that inaccurate early reports of what is covered by the rule may have added confusion to the debate. However, the trade group underscored that there are a series of legitimate issues to be addressed prior to the agency finalizing a draft, which is expected to be considered at this Thursday’s open meeting. As background, the Dodd-Frank Wall Street Reform law requires the federal financial regulators to issue a joint rule or guideline on incentive-based compensation arrangements. The rule or guideline is not meant to address general compensation like salaries, but rather targets such things as commissions paid to certain employees or officials for undertaking investments, making loans or other activities that expose the institution to high risk. The Federal Deposit Insurance Corp. (FDIC) led the pack last week by issuing its version of the joint rule. In a communication to NCUA Chairman Debbie Matz, CUNA highlighted the following concerns:
* Credit unions generally have not been engaged in the kinds of abusive arrangements addressed under Dodd-Frank, and the NCUA’s rule should distinguish credit unions from other types of institutions such as banks and others that have provided such arrangements to their employees and others officials. For example, the Board should fully consider whether guidelines could be issued for credit unions, even if the other regulators issued a regulation for the entities they regulate. * The FDIC proposal would apply certain prohibitions regarding incentive-based compensation to banks with $50 billion or more in assets. The proposal indicates credit unions with assets of $1 billion and more would be covered by these prohibitions. The NCUA should correct this and not have a rule that would potentially subject relatively smaller credit unions to standards that only apply to the largest banks. * The definition of “incentive-based compensation” should not be so broad that it could be misconstrued in implementation or possible enforcement.
CUNA asked for Matz’s leadership to make the limited nature of the proposal clear and to minimize its impact since credit unions generally have not been engaging in the types of practices the law and proposal seek to address.

Repeal of 1099-MISC Form expansion needed says CUNA

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WASHINGTON (2/14/11)--The Credit Union National Association (CUNA) backs an effort to repeal a tax provision that would force companies to send 1099-MISC forms to any entity that has provided $600-worth of goods. For many years, credit unions and other businesses have been required to report to the Internal Revenue Service on Form 1099-MISC certain payments of $600 or more that will be considered income by the IRS. As a “pay-go” effort to offset the cost to taxpayers of the new healthcare reform law, Congress extended the 1099-MISC reporting provisions to cover payments for goods valued over $600. “This is an extremely burdensome reporting concept that will require businesses to gather tax identification numbers and to generate many millions of new tax forms that will have questionable value in actually increasing federal revenue,” CUNA Senior Vice President for Compliance Kathy Thompson explains. The provision is scheduled to go into effect in 2012. Sen. Debbie Stabenow (D-Mich.) earlier this month successfully added a repeal provision to a pending Senate bill when she and 80 of her colleagues voted in favor of her amendment to S. 223. That bill is expected to pass the Senate this week. In the House, a repeal bill sports 271 cosponsors, representing enough backing to pass the measure when it come to a full House vote. In fact, the chairman of tax-rule-writing panel, House Ways and Means, said he intends to get a repeal bill through the House in the next few weeks. The Obama administration also favors repeal. In a 2010 comment letter to the Internal Revenue Service (IRS) CUNA argued that an exact reading of section 9006 of the healthcare law that amends the 1099-MISC reporting rules should exempt tax-exempt organizations completely from this new 1099 reporting rule. However, the IRS proposed rule to implement the provisions attempts to address what it viewed as a congressional drafting error and would subject credit unions along with all businesses to the expanded 1099-MISC reporting requirements. In a related event, CUNA intends today to sign onto a letter sponsored by the American Society of Association Executives that calls for repeal of the 1099-MISC requirement on goods. The letter features 31 pages of signatures of association executives calling for repeal.

Inside Washington (02/11/2011)

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* WASHINGTON (2/14/11)--The House Financial Services Committee will hold a hearing to review the reports issued by the Financial Crisis Inquiry Commission at 10 a.m. ET on Wednesday. In 2009, Congress established the Financial Crisis Inquiry Commission, comprising six Democrats and four Republicans, to investigate the causes of the financial crisis and report its findings to Congress on Dec 15, 2010. The commission missed its deadline and failed to reach consensus on the causes of the crisis. More than a month after its deadline, the commission published three reports: one written by the Democratic commissioners, a second written by three of the Republican commissioners, and a third by the fourth Republican commissioner. The statute creating the commission requires the Financial Services Committee to hold a hearing on the commission’s findings no later than 120 days after the final report is issued …