Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive
150x172_CUEffect.jpg
Contacts
LISA MCCUEVICE PRESIDENT OF COMMUNICATIONS
EDITOR-IN-CHIEF
MICHELLE WILLITSManaging Editor
RON JOOSSASSISTANT EDITOR
ALEX MCVEIGHSTAFF NEWSWRITER
TOM SAKASHSTAFF NEWSWRITER

Washington Archive

Washington

Funding continuance has deep cuts for CDRLF CDFI

 Permanent link
WASHINGTON (2/15/11)--House Republicans late last week introduced a continuing resolution to fund the government through the end of the fiscal year. H.R. 1 includes dramatic cuts for such programs as the Community Development Revolving Loan Fund (CDRLF) for credit unions and the U.S. Treasury Department’s Community Development Financial Institutions (CDFI) Fund. A current funding extension expires March 4, and H.R. 1 would approve government spending from March 5 to Sept. 30. The proposal carries a $750,000 reduction from FY 2010 for the National Credit Union Administration’s CDRLF. It would appropriate $500,000 for that program, which is a whopping $1.5 million less than the $2 million requested by the Obama administration. The CDRLF provides loans and technical assistance to federal and state credit unions that are designated as a low-income credit union, as defined by NCUA regulations. H.R. 1 also proposes $50 million for the CDFI Fund, which is a cut of about $197 million from the FY2010 level of just less than $247 million. The administration sought $250 million in CDFI funding for FY 2011. The Treasury's CDFI Fund helps locally based financial institutions offer small business, consumer and home loans in communities and populations that lack access to affordable credit. According to the Treasury Department in January, credit unions represent 13% of the total applicant pool for the 2011 round of the CDFI Fund program. It is important to note that the House resolution addresses FY 2011 funding and is separate from the FY 2012 budget proposal released Monday by the President. While providing a good blueprint for Republican spending priorities, compromise will likely be the necessary path for a version of H.R. 1 to be accepted by the Senate, with its Democratic majority, and signed by the President. It is unlikely that the House and Senate would be able to come to agreement on these spending priorities by March 4, so it is likely that Congress will adopt another short-term extension of current funding levels.

Witnesses for House private-mortgage-market hearing announced

 Permanent link
WASHINGTON (2/15/11)--Rep. Judy Biggert (R-Ill.), leader of the House Financial Services Committee’s subcommittee on insurance, housing, and community development, announced the lineup for the subcommittee’s Feb. 16 hearing on ways to facilitate private sector participation in the mortgage market. Biggert in a Monday release said that the hearing will “explore how the government may be driving private capital away from housing while impeding market recovery.” The subcommittee will also examine options for promoting long-term stability and removing barriers to private investment in the housing market, she added. The first panel will be comprised of:
*U.S. Department of Housing and Urban Development Assistant Secretary for Housing David Stevens; *Ginnie Mae President Theodore Tozer; and *U.S. Treasury Homeownership Preservation Office Chief Phyllis Caldwell.
Former Congressional Budget Office Director Douglas Holtz-Eakin, Annaly Capital Management, Inc. President/CEO Michael Farrell, HOPE Now Director Faith Schwartz, and Center for Responsible Lending Senior Policy Counsel Julia Gordon will sit on the second panel. The Obama administration on Friday proposed nearly eliminating the government’s role in the mortgage market as one of several solutions to the current predicament caused by the government’s 2008 conservatorship of Fannie Mae and Freddie Mac. The administration has also proposed limiting the government’s intervention in the mortgage market to times of financial distress and using a system of reinsurance to backstop private mortgage guarantors to a targeted range of mortgages. (See related coverage: Fannie/Freddie portfolios down amid GSE debate)

FannieFreddie portfolios down amid GSE debate

 Permanent link
WASHINGTON (2/15/11)—The size and amount of guaranteed loans and the size of investment portfolios held by government-sponsored entities (GSEs) Fannie Mae and Freddie Mac will be reduced under the Obama administration’s fiscal 2012 budget. The budget also notes that the government conservatorship of these entities, which began in 2008 and has cost taxpayers $150 billion so far, will be gradually ended. The budget also addresses the Small Business Administration, 7(a) loans, and the Community Development Financial Institutions Fund, all topics of interest to credit unions. (See related story: $3.7 trillion budget brings deficit to record $1.6 trillion) Similar ideas on treatment of the GSEs were proposed in the Obama administration's Friday release on the GSEs. That release set forth a trio of potential outcomes, including almost completely privatizing the housing finance system, limiting the government’s intervention in the mortgage market to times of financial distress, and using a system of reinsurance to backstop private mortgage guarantors to a targeted range of mortgages. The document does not propose specific legislative solutions, and notes that reducing conforming loan limits, increasing guarantee fees, and requiring higher down payments from potential homeowners could be handled through internal regulatory changes. The White House and legislators will soon begin work on the future of the GSEs, and CUNA will watch closely for any future developments. 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. For a CUNA summary of the GSE proposal, use the resource link.

NCUA clarifies its guidance on third-party investment sales

 Permanent link
ALEXANDRIA, Va. (2/15/11)—The National Credit Union Administration (NCUA) has clarified that its letter to credit unions 10-FCU-03, which advised federal credit unions to carefully review the financial statements and capital adequacy of eligible third party brokers and perform needed background checks on brokers, does not require credit unions to back specific financial instruments. The NCUA issued its clarification in the form of a letter to the National Association of Credit Union Service Organization's (NACUSO). NACUSO had recently written to the NCUA out of concern that the letter “represented a set of new requirements that would extend potentially far beyond what the previous guidance encompassed in this arena and create the possibility of unreasonable compliance burden and liability for credit unions.” The group said that while credit unions are able to examine the track records of brokers, requiring credit unions to select individual investment products “is a risk that NCUA should not compel credit unions to take.” NCUA General Counsel Bob Fenner in the NCUA’s response said that said that letter No. 10-FCU-03 “is not intended to require [federal credit unions] to select, authorize, or restrict each specific investment product that will be offered to its members. However, Fenner said, a credit union’s policies should reflect a prudent analysis of the types of products that brokers may offer to that credit union’s members. In addition to performing due diligence reviews, the NCUA guidance, which was issued in December, recommended that directors of federal credit unions adopt written policies and procedures concerning third party brokerage arrangements to ensure compliance with applicable law and regulation and to ensure consistency with these guidelines. Credit unions should consider engaging legal counsel to evaluate their policies, procedures, and contractual agreements, the NCUA added. Federal credit unions should also outline, in writing, the duties and responsibilities of each party in a third party brokerage arrangement, according to the NCUA. NACUSO encouraged credit unions to take the NCUA’s guidance, alongside other advice, “into consideration to implement polices that will protect the credit union from liability in offering investing services in affiliation with a broker/dealer.” For the NACUSO and NCUA releases, use the resource links.

Inside Washington (02/14/2011)

 Permanent link
* WASHINGTON (2/15/11)--Federal Reserve Gov. Sarah Bloom Raskin said Friday that the mortgage servicing issues plaguing the housing market remain unaddressed, and must be overhauled before the market will rebound. Deficiencies in how loans are serviced are impairing the mortgage markets and diminishing “overall accountability to homeowners,” she said. Late last year, the federal banking agencies began a targeted review of loan servicing practices at large financial institutions that had significant market concentrations in mortgage servicing, Bloom Raskin told a Utah housing conference. “The preliminary results from this review indicate that widespread weaknesses exist in the servicing industry,” she said, adding that bank holding companies should be accountable for the actions of their servicing units. “For those servicers who are subsidiaries or affiliates of a broader parent financial institution, the responsibility for change and further investment absolutely extends up to that parent company, many of which have enjoyed substantial profits while their servicing arms have been run on the cheap,” Bloom Raskin said. She also called for strong corporate governance procedures for servicers, and a stronger effort by regulators in policing servicers … * WASHINGTON (2/15/11)--The Federal Deposit Insurance Corp. (FDIC) announced the hiring of additional leadership staff for the Office of Complex Financial Institutions (CFI) and the Division of Depositor and Consumer Protection (DCP). The FDIC Board of Directors approved establishing the two new organizations in August to carry out its responsibilities as outlined in the Dodd-Frank Wall Street Reform and Consumer Protection Act. CFI will monitor and address risks in the largest, systemically important financial institutions. DCP will oversee depositor and consumer protection programs. Two appointments were named in the large-firm division. Jason Cave, currently a deputy to FDIC Chairman Sheila Bair, will be services deputy director for the CFI. Mary Patricia Azevedo, an international affairs expert and associate general counsel at The Western Union Co., will become deputy director for international coordination. Three positions were announced in DCP. Sylvia Plunkett, who has 32 years’ of experience with FDIC, will become senior deputy director for compliance and Community Reinvestment Act examinations. Jonathan Miller, a senior staffer for the Senate Banking Committee, will become deputy director for policy and research. Keith Ernst, a research director at the Center for Responsible Lending, will serve as associate director for consumer research and examination support …

Congress Interchange discussion leads the week for CUs

 Permanent link
WASHINGTON (2/15/11)—Thursday’s House Financial Services Committee Financial Institutions and Consumer Credit Subcommittee hearing on the economic impact of interchange fees will surely be the main Washington concern for credit unions this week. The hearing, which will be led by subcommittee chair Rep. Shelley Moore Capito (R-W. Va.), will address the Federal Reserve’s recently released proposal to cap the amount of interchange fees that are charged on a given transaction. 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 the Feb. 17 hearing. There will be other hearings of note during the week, with the full House Financial Services committee holding a hearing on the regulatory, economic and market implications of the Dodd-Frank Act’s treatment of derivatives on Tuesday. Dodd-Frank legislation will also be addressed on Thursday as the Senate Banking Committee discusses oversight of that legislations implementation. Federal Reserve Chairman Ben Bernanke, Federal Deposit Insurance Corporation Chairman Sheila Bair, chairman of the Securities and Exchange Commission and other federal financial authorities are set to testify. National Credit Union Administration (NCUA) Chairman Debbie Matz was not on the witness list at press time. The House Financial Services Committee’s oversight and investigation subcommittee will cover the post-conservatorship legal expenses of Fannie Mae and Freddie Mac on Tuesday, and housing-related issues will also be discussed during a Wednesday House insurance and housing subcommittee hearing on possible governmental impediments to a potential housing market recovery. Hearings on the Financial Crisis Inquiry Commission’s report and the small business economy will also be held on Wednesday. Those hearings will take place before the full House Financial Services Committee and the House Small Business Committee, respectively. A number of committee hearings on President Barack Obama’s 2011 budget are also expected. Both the House and Senate are expected to have full sessions during the week, ahead of next week’s constituent work period that will last through Feb. 25. H.R. 1, a full-year continuing appropriations bill, will be discussed during the week.