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CU access to TARP survey CUNA urges comment

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WASHINGTON (2/13/09)--The Credit Union National Association (CUNA) is urging member credit unions to answer a new survey about whether or not credit unions should seek access to funds from the federal government's Trouble Asset Relief Program (TARP), a highly controversial issue among credit unions. The legislation that set up TARP last year included credit unions as eligible institutions, but as implemented by the U.S. Treasury Department to date, credit unions have not been included. CUNA Chief Economist Bill Hampel indicated that CUNA has heard from a number of credit unions with very strong opinions on both sides of this issue. “The recent deepening of the economic and financial crisis along with the costs of the National Credit Union Administration's Corporate Stabilization Program has added urgency to the question of credit unions and TARP," he said. “CUNA is considering a number of options, but before making any final decisions we would very much like to hear from as many member credit unions as possible on this issue. Therefore, we are conducting a quick, non-scientific survey," Hampel said. In the survey, CUNA first describes some of the arguments it has heard for and against credit unions gaining greater access to TARP. Credit unions should read the information, consider the arguments and their own views on the subject, and then complete the very brief survey, Hampel instructed. Readers can find out more about the NCUA Corporate Stabilization program and also can access the CUNA TARP survey on the CUNA web site at the links below. For questions regarding the survey, contact Paul Ledin, senior data analyst, at pledin@cuna.com or 800-356-9655, ext. 4389.

Corporate CU Task Force backs CUNA alternatives

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WASHINGTON (2/13/09)--The Credit Union National Association (CUNA) Corporate)
Click to view larger imageCUNA President/CEO Dan Mica (left)and CUNA Board Chairman Tom Dorety engage in the group's Corporate CU Task Force discussion about the National Credit Union Administration's corporate stabilization plan and what lies ahead for credit unions. Dorety is /CEO of Suncoast Schools FCU, Tampa, Fla., and a member of the task force , which is headed by Terry West of Vystar CU in Jacksonville. (CUNA Photo)
Credit Union Task Force Thursday reaffirmed strong support for using the Central Liquidity Facility (CLF) and TARP funds as a back up to help fund corporate credit union liquidity. Under CUNA’s plan, the CLF or Treasury’s TARP could be used as a back up to the National Credit Union Share Insurance Fund (NCUSIF) to help support the cost of the deposit guarantee for corporate credit unions announced by National Credit Union Administration (NCUA) last month. The task force first identified the use of the CLF and TARP funds to lessen credit unions' costs associated with the corporate assistance in its inaugural meeting Jan. 29. The group noted that use of the CLF to provide liquidity or capital directly to the corporates would require an amendment to the Federal Credit Union Act. It endorsed CUNA'S efforts to work with NCUA and the National Association of Federal Credit Unions to seek the statutory change. While backing the CLF and TARP as key priorities, the task force encouraged CUNA to continue working on other alternatives, particularly in the accounting area. Other CUNA alternatives to help mitigate the costs of the deposit guarantee for the corporates include:
* Continued efforts to seek improvements in the accounting treatment of assets that are other-than-temporarily-impaired (OTTI); * Pursuing accounting issues that could allow the NCUSIF to recognize its insurance costs over time, thus giving credit unions some flexibility on when they must fund the costs and reflect them on their books; * Long-term deposits from CUs into corporates; and * Expanding NCUA's Credit Union System Investment Program (CU SIP) to make it more attractive to credit unions.
The task force also discussed plans to have a dialogue in coming weeks with NAFCU on issues surrounding the corporate stabilization plan.

New CUNA audio conference Corporates and what lies ahead

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WASHINGTON (2/13/09)—The Credit Union National Association (CUNA) will offer an in-depth look at the corporate credit union stabilization plan and what lies ahead for the credit union movement, in an upcoming second audio conference on the issues. The free Feb. 18 information session, for CUNA-affiliated credit unions, will provide an overview of recent developments, CUNA’s assessment of each, and the group’s estimation of what is ahead for credit unions. Program speakers will focus particularly on how credit unions can play a role in mitigating costs to their operations of the National Credit Union Administration’s stabilization program. Scheduled speakers include:
* CUNA Chief Economist Bill Hampel; * CUNA General Counsel Eric Richard; * CUNA Senior Vice President for Regulatory Advocacy Mary Dunn; * CUNA Senior Vice President for Legislative Affairs John Magill; * CUNA Vice President for Legislative Affairs Ryan Donovan; and * CUNA Senior Vice President for Political Affairs Richard Gose.
The one-hour audio conference is scheduled for noon (ET), 11 a.m. (CST), 10 a.m. (MST) and 9 a.m. (PST). CUNA asks, as a measure to control cost, please only one credit union per line. Using a “theater style” approach with speaker phones to maximize the audience is encouraged. Use the resource link below to register.

Webcast NCUA assesses impact of corporate plan

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ALEXANDRIA, Va. (2/13/09)—During a 90-minute webcast Thursday, National Credit Union Administration (NCUA) Chairman Michael Fryzel underscored that the agency continues to examine alternate approaches to funding the corporate stabilization program the agency announced last month. The program provided $1 billion in capital to U.S. Central FCU and a guarantee for all corporate deposits through this month; the guarantee will be provided through December 2010 for corporates that sign an agreement with NCUA. In announcing the program in January, NCUA said it would fund it through an insurance premium to federally insured credit unions and a partial replenishment of their 1% National Credit Union Share Insurance Fund deposit. In introductory remarks, Fryzel said the agency is working with stakeholders to determine if there are other approaches that are “responsible and realistic” and meet statutory requirements. The NCUA’s formal presentation focused largely on accounting issues and its insurance fund reserving methodology, with most of the session reserved for questions. Not surprisingly, the regulator’s session on one of the credit union system’s hottest current topics drew broad interest. At the end NCUA Executive Director Dave Marquis noted the agency had received 1200 questions from webcast listeners. The program’s participants were allowed to submit questions during the webcast via the Internet. Speakers, including Marquis, Acting Examination and Insurance Director John Kutchey, and Loss/Risk Analysis Officer Steve Farrar, discussed the accounting and reserve issues related to stabilization. Marquis said that after considering the available options, the NCUA elected the stabilization program it believed would be least expensive for credit unions while offering the most flexibility for a future dividend. The NCUA, he said, evaluated the impact of the corporate stabilization plan on the net worth of the credit union system. With an average net worth of 11.1%, the NCUA estimates that less than 175 credit unions will be “significantly impacted” by the impairment to the NCUSIF. The Credit Union National Association (CUNA) continues to urge the NCUA to consider alternate funding options. CUNA has maintained that there is no "silver bullet" approach—no single answer—to the challenge of providing adequate money for the agency’s corporate liquidity program. CUNA has warned that the current plan to assess a 2009 share insurance premium on credit unions could put too much pressure on a system that is already coping with tough economic conditions. (See related story: Corporate CU Task Force backs CUNA alternatives) For the webcast’s Q-and-A session, Central Liquidity Facility President Owen Cole, Deputy Executive Director Larry Fazio, and Office of Corporate Credit Union Director Scott Hunt joined in to help address listeners’ concerns. Use the resource links below for the NCUA’s document related to its corporate CU plan and to access CUNA’s resources.

Regulators to offer info on new credit card rule

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WASHINGTON (2/13/09)—Credit unions, banks and thrifts are invited to sign up for regulators’ free audio briefing on new unfair credit card practices rule. The joint National Credit Union Administration (NCUA), Office of Thrift Supervision (OTS), and Federal Reserve Board event will take a look at the Fed rule intended to crack down on abusive or deceptive card practices. The rule established such things as certain restrictions on increasing interest rates, allocations of payments to balances with different interest rates, timeframe for cardholders’ payments, and also banned double-cycle billing and limited the fees charged for opening an account. The OTS is hosting the two-hour Feb. 24 briefing and call-in, and the NCUA and Fed are participating. Speakers will respond live to participants’ questions. Speakers are scheduled to include:
* Moisette (Tonya) Green, NCUA; * Benjamin Olson, the Fed; and * April Breslaw, OTS.
Submit early questions to consumer.regulations@ots.treas.gov. Use the resource link below to register for the session.

SBA eases some line-of-credit refinancings

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WASHINGTON (2/13/09)—The U.S. Small Business Administration (SBA) has revised its procedures to make it easier for its lenders to refinance existing lines of credit. The SBA Thursday released the first revision to its procedural guidance governing lender participation and loan processing for its two major loan guarantee programs: 7(a) and 504. The revisions to the Standard Operating Procedure (SOP), the agency release said, reflect suggestions made by participating lenders and include a modification to SBA’s policy on refinancing existing lines of credit. The change is intended to make it easier for lenders to use the 7(a) loan guarantee program to refinance an existing line of credit, especially as a part of a complete refinancing of a small business borrower’s debt. Last August, the SBA implemented its the first major SOP (SOP 50 10)overhaul in ten years. It included streamlining from 1,000 pages to 400 and making it more logically organized and user friendly. The SBA also has made a commitment to update the document semi-annually.

Inside Washington (02/12/2009)

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* WASHINGTON (2/13/09)--Lisa J. McCue has been named the new vice president of editorial communications at the Credit Union National Association (CUNA), where she will head CUNA’s News Now and NewsWatch, as well as develop other projects. McCue joined CUNA as a communication specialist in 2005. Her responsibilities included writing, editing and producing News Now and NewsWatch, and working on other special projects such as CUNA’s Power of Association brochure. McCue replaces Dave Klavitter, who now serves as senior vice president of marketing and public relations at Dupaco Community CU, Dubuque, Iowa. McCue previously worked as a writer and editor for the National Council of Savings Institutions, a reporter for American Banker and a writer for newsletters on issues of international finance, as well as general circulation publications ... * WASHINGTON (2/13/09)—U.S. Treasury Secretary Timothy Geithner rejected criticism that the Obama administration’s new post-Troubled Asset Relief Program Financial Stability Plan lacks sufficient detail at this point. He told lawmakers (The New York Times Feb. 12) at a hearing Wednesday he understood Wall Street’s appetite for detail. But he argued that it would be far more costly, as well as less effective, to rush a plan that might need expensive revisions at a later date. Geithner has been in office just two weeks, and administration officials and lawmakers have said he wants to avoid repeated course changes that ultimately challenged the credibility of his predecessor’s actions under the Bush administration … * WASHINGTON (2/13/09)--A seven-hour hearing on Wednesday with eight CEOs of large banking institutions and members of the House Financial Services Committee focused on how bankers were using Troubled Asset Relief Funds (TARP) and how quickly they planned to repay them. Lawmakers asked the CEOs if they were charging the government appropriate fees for their help. Bank of America and Citigroup CEOs appeared baffled when asked that question (American Banker Feb. 12). House Financial Services Committee Chairman Barney Frank (D-Mass.) also asked bankers to show that they are on taxpayers’ sides. Bankers must be willing to cooperate or make sacrifices, Frank told the CEOs. The bankers said they supported Frank’s efforts to create a systemic risk regulator and streamline supervision ... * WASHINGTON (2/13/09)--The second half of the Troubled Asset Relief Program (TARP) will not be enough to revive the financial sector, lawmakers said after a hearing Wednesday. Treasury will need another $500 billion on top of the $350 billion from TARP, Senate Budget Committee Chairman Kent Conrad (D-N.D.) said. Conrad said he encouraged Treasury Secretary Timothy Geithner to ask for more money. The Treasury has said it plans to inject more capital into banks, use $50 billion to create a foreclosure mitigation plan, and use up to $80 billion to expand the Federal Reserve Board’s Term Asset-Backed Securities Loan Facility ... * WASHINGTON (2/13/09)--Bank regulators’ roles may expand as hundreds of examiners are beginning to stress-test JPMorgan Chase, Bank of America and Citigroup and other large financial institutions to assess their financial health. The new test, which also could be applied to small and mid-sized banks, likely contains tougher requirements than previous standards used by regulators to decide which banks could receive money under the Troubled Asset Relief Program (TARP). Regulators are expected to assess the losses a bank could incur during the next two years instead of one year. They also will analyze banks’ exposure to assets and derivatives, check for capital cushions, and require institutions to raise more capital if they fail the tests. The exams could nationalize banks that fail the tests, analysts say. Companies may not want to get involved with a government-run bank, said Jaret Seiberg, policy analyst, Stanford Group ...