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Inside Washington (02/13/2009)

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* WASHINGTON (2/16/09)--House Financial Services Chairman Barney Frank (D-Mass.) Friday released a letter received from JP Morgan Chase CEO Jamie Dimon announcing a three-week mortgage foreclosure moratorium. Earlier in the week, Frank had called on all holders and servicers of mortgages to initiate such a moratorium until President Barack Obama announces the administration’s plan to reduce foreclosures. Dimon said his company’s moratorium extends through March 6. Also last week, the Office of Thrift Supervision had urged its institutions to suspend foreclosures. (See News Now Feb. 12 for more) … * WASHINGTON (2/16/09)--Sen. Christopher Dodd (D-Conn.) Thursday re-introduced the Credit Card Accountability, Responsibility and Disclosure Act to protect consumers from predatory credit card practices. The bill would protect consumers from rate increases and account changes, prohibit unfair application of card payments, protect cardholders who pay on time, limit fees and penalties, ensure that cardholders know the terms of their account and protect young consumers from credit card solicitations ... * WASHINGTON (2/16/09)--The Office of the Comptroller of the Currency and the Office of Thrift Supervision are expanding the scope of mortgage performance data gathered from national banks and thrifts to include information on the affordability and sustainability of loan modifications. The new data will indicate how the modifications changed the total amount of borrowers’ monthly principal and interest payments in 2008. The next Mortgage Metrics Report, scheduled for release in March, will review categories for loan modifications that increased borrowers’ monthly principal and interest payments, did not change payments, and reduced payments by 10% or more ... * WASHINGTON (2/16/09)--John Reich, director of the Office of Thrift Supervision (OTS), announced Thursday that he will leave his position Feb. 27. Scott M. Polakoff, senior deputy director and chief operating officer, will serve as acting director until President Barack Obama appoints a successor. Reich joined the OTS in November 2002 after serving as vice chairman of the Federal Deposit Insurance Corp. (FDIC) board and acting chairman of the FDIC from July 2001 to August 2001 ... * WASHINGTON (2/16/09)--National Credit Union Administration (NCUA) Vice Chairman Rodney Hood met with the Louisiana Credit Union League’s Large Asset Roundtable in Baton Rouge, La., on Wed., followed by the Texas Credit Union League’s Small Credit Union Meeting in Houston on Thursday. Hood met with the groups to discuss the NCUA’s recent action to stabilize corporate credit unions. “It is imperative that all natural-person credit unions continue to maintain their deposits in and continue their support of the corporate credit union system,” he said. “We need everyone to work toward a safe and common goal of creating a safe and secure financial industry for the entire nation” ...

Compliance DMPEA covers what

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WASHINGTON (2/16/09)—During these tough economic times, credit unions are trying to reach out to as many people as possible to provide reliable financial services, the Credit Union National Association’s (CUNA’s) Compliance Challenge points out. But in the world of compliance issues, even such good intentions carry with them some potential pitfalls. For instance, the Challenge says, take a look at what the compliance officer of ABC Community FCU found recently. ABC Community wants to run a series of promotions to increase both membership and the credit union’s visibility in the community. One idea is to send postcards to non-member households announcing a prize drawing for anyone who joins the credit union in the month of March. The credit union’s compliance officer reviews the state’s gaming law, but wonders whether there are any federal laws that might impact the contest mailings. After all, the credit union will be sending the postcards via the United States Postal Service. CUNA’s compliance crew says that the compliance officer has good instincts. ABC Community and those like it need to take a look at a federal law that went into effect in 2000: the Deceptive Mail Prevention and Enforcement Act (DMPEA). The law is intended to prevent deceptive practices in sweepstakes and contest mailings sent through the U.S. mail. The DMPEA covers sweepstakes mailings, skill contests, facsimile checks, and mailings made to resemble government documents. For example, the law prohibits:
* Claims that someone is a winner unless he’s actually won a prize; * Requirements that a person buy something to enter the contest or to receive future sweepstakes mailings. (Could this affect ABC’s contest mailer which requires contestants to sign-up for membership in order to enter the contest?); * Mailing fake checks that don’t clearly state that they are non-negotiable and have no cash value; and * Seals, names or terms that imply an affiliation with or endorsement by the federal government.
For skill contests, in which outcome depends on contestant’s skill rather than a game of chance, the law requires the contest’s sponsor to disclose in a clear and conspicuous way the terms, rules and conditions of the contest and an address where the consumer can reach the sponsor to request that his name be removed from the mailing list. But the law is far denser than that, CUNA warns. Credit unions that are contemplating conducting a sweepstakes or other types of contests should consult with an attorney familiar with both state gaming laws and the federal DMPEA.

CUNA Early details of Obama foreclosure plan

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WASHINGTON (2/16/09)—President Barack Obama is widely expected to announce details of his foreclosure prevention plan some time in the next few weeks, even though U.S. Treasury Secretary Timothy Geithner seemed to indicate in a recent speech the plan may still be a work in progress. The Credit Union National Association has compiled details Geithner has revealed may likely be included in the administration plan. They include the following:
* A commitment to driving down overall mortgage rates by expanding, as necessary, the current effort by the Federal Reserve to spend as much as $600 billion to purchase government-sponsored enterprise (GSE) mortgage-backed securities and GSE debt. The lower mortgage rates are intended to free up funds for working families; * A commitment of $50 billion to prevent avoidable foreclosures of owner-occupied middle-class homes by helping to reduce monthly payments in line with prudent underwriting and long-term loan performance; * An effort to bring order and consistency to the various existing efforts to address the foreclosure crisis by establishing loan modification guidelines and standards for government and private programs; * A requirement that all Financial Stability Plan (FSP) recipients participate in foreclosure mitigation plans consistent with Treasury guidance. The FSP is the administration’s revised Troubled Asset Relief Program (TARP) plan; and * Building flexibility into Hope for Homeowners (H4H) and the Federal Housing Administration to enable loan modifications for a greater number of distressed borrowers.
MSNBC has reported that Obama himself may announce the foreclosure prevention plan as early as this week.

Center Valley FCU liquidated

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ALEXANDRIA, Va. (2/16/09)--The National Credit Union Administration (NCUA) placed Center Valley FCU, Wheeling, W.V., into liquidation Friday. The federal regulator decided to liquidate Center Valley and discontinue its independent operation after determining that the credit union was insolvent and had no prospects for restoring viable operations. At the time of liquidation, the credit union served 3,150 members and had deposits of approximately $8 million. This is the second federally insured credit union to close in 2009. The NCUA said its Asset Management and Assistance Center will issue checks to individuals once they have verified the balances in their share accounts. The NCUA’s National Credit Union Share Insurance Fund insures credit union members’ deposits to at least $250,000 on regular accounts and $250,000 on certain retirement accounts. Center Valley FCU was chartered in 1975 to serve employees of the Ohio Valley Medical Center in Wheeling and the underserved area known as South Wheeling.

New 2.9 billion brings CU SIP to almost 8 billion

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ALEXANDRIA, Va. (2/16/09)--The National Credit Union Administration Friday announced it provided $2.9 billion this month to credit unions participating in the Credit Union System Investment Program (CU SIP), an NCUA initiative designed to add liquidity to the corporate credit union system. This follows the initial Jan. 9 issue when the NCUA’s Central Liquidity Facility (CLF) funded approximately $4.9 billion in advances under CU SIP. Under SIP, the CLF makes a secured, one year advance to the natural person credit union. The credit union must concurrently invest the amount of the advance in a fixed-rate, matched term, guaranteed note that is issued by the participating corporate. The SIP notes are guaranteed by the National Credit Union Share Insurance Fund. Corporate credit unions use the funds to retire borrowings from outside the credit union system. The CLF determines which corporates will issue the SIP notes to which credit unions. NCUA Chairman Michael Fryzel said in a release, “Stabilized liquidity is one of the cornerstones of NCUA’s approach to dealing with the difficulties in the corporate system, and I encourage credit unions to utilize this important tool as we move forward together.” The Credit Union National Association’s Corporate Credit Union Task Force has been investigating alternative funding approaches to reduce the costs to credit unions of funding the NCUA's corporate stabilization program. Included among them is a plan to seek modifications to the CU SIP program to make it more attractive to credit unions.

Special NCUA Corporate Plan session added to GAC

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WASHINGTON (2/16/09)--Responding to intense credit union interest in the National Credit Union Administration (NCUA) corporate recapitalization plan, the Credit Union National Association (CUNA) has added a special session on this topic at the front end of the Governmental Affairs Conference (GAC) next week. An update and dialogue session on the NCUA plan led by CUNA President Dan Mica is set for Monday, Feb. 23, from 8:00 a.m. to 9:15 a.m. The program will precede the conference’s opening general session at 9:30 a.m. “We’ve added this special session so we can give the many credit union leaders coming to the GAC the absolute latest information we’ve got on the NCUA plan and afford an opportunity for feedback and discussion,” Mica said. CUNA also has retooled its annual “Hot Exam Issues” GAC breakout session to focus specifically on the NCUA corporate stabilization plan. Moderated by Kathy Thompson, CUNA senior vice president and associate general counsel for regulatory compliance, the Feb. 24 afternoon breakout panel will consist of six key senior staff from NCUA:
* David Marquis, executive director; * Larry Fazio, deputy executive director; * Robert Fenner, general counsel; * Scott Hunt, Office of Corporate Credit Unions acting director; * John Kutchey, Office of Examination and Insurance acting director; and * Owen Cole, Office of Capital Markets and Planning director, and president of the Central Liquidity Fund.
NCUA Chairman Michael Fryzel, Vice Chairman Rodney Hood, and Board Member Gigi Hyland are scheduled to speak during GAC general sessions. They are expected to address the corporate assistance plan in their remarks.