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Fed to clarify final rules under Regs E DD

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WASHINGTON (2/22/10)--The Federal Reserve on Friday released a series of proposals that would clarify the portions of Regulation E, Electronic Fund Transfers, and Regulation DD, Truth in Savings, that address overdraft services. The proposals are meant to “provide further guidance regarding compliance with certain aspects of the final overdraft rules,” with a particular emphasis on portions that prohibit financial institutions from “assessing overdraft fees without the consumer's affirmative consent.” The proposal seeks to affirm that this prohibition “applies to all institutions, including those with a policy and practice of declining ATM and one-time debit card transactions when an account has insufficient funds.” According to the Fed, the Reg E proposal would clarify that the prohibition on assessing overdraft fees without the consumer's affirmative consent applies to all institutions that charge such fees for ATM and one-time debit card overdrafts. Credit unions that do not have formal overdraft programs are also covered by this opt-in requirement if they charge any fees for ATM and one-time debit card overdrafts. The Fed also clarifies that the fee prohibition applies if a credit union falls under the regulation's exception for institutions that have a policy and practice of declining ATM and one-time debit card transactions when an account has insufficient funds. The Reg E proposal also addresses sustained overdraft, negative balance, or similar fees associated with paying overdrafts and clarifies that an institution is not prohibited from assessing a fee when a negative balance is attributable in whole or in part to a transaction that is not subject to the fee prohibition. The Fed’s proposed amendments to Reg DD clarify the application of the rule to retail sweep programs and the required use of the term “total overdraft fees” for overdraft fee disclosures. The Fed has also added references to the Reg E amendments into Reg DD. The proposals, which will be open for comment for 30 days after they are published in the Federal Register, would also make certain technical corrections and conforming amendments, the Fed added. For more on the proposals, use the resource link.

Inside Washington (02/19/2010)

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* WASHINGTON (2/22/10)--The Office of the Comptroller of the Currency (OCC) has released a consumer advisory, “Consumer Alternatives for Receiving Income Tax Refunds,” and a policy statement on tax refund related-products. The advisory provides details on alternatives that taxpayers have for receiving their income tax refunds, while the policy statement sets forth the OCC’s expectations for financial institutions that provide tax refund-related products, including refund anticipation loans (RALs). Many credit unions offer Volunteer Income Tax Assistance (VITA) programs, which provide free tax preparation services and RALs to low-income individuals as an alternative to high-priced tax preparation services and refund loan products ... * WASHINGTON (2/22/10)--Federal Deposit Insurance Corp. (FDIC) Chairman Sheila Bair said Thursday the agency is creating a principal-reduction program as part of loss-sharing agreements. Bair spoke to attendees of a Sustainable Homeownership for All conference. Including a principal-forgiveness option in loans covered in the agreements can reduce defaults and enhance the performance of modified loans, Bair said (American Banker Feb. 19). The FDIC has long supported the idea of principal reductions, although Bair said they are costly and create a moral hazard. But they maximize the loans’ value and reduce the potential of defaults, she added ... * WASHINGTON (2/22/10)--The Federal Housing Finance Agency (FHFA) expressed confidence that private investors would fill the void when the Federal Reserve Board finalizes plans to end its purchases of debt and mortgage-backed securities (MBS) from Fannie Mae and Freddie Mac, which FHFA regulates. The purchases of MBS have been credited with stabilizing the housing market, said American Banker (Feb. 19). The Fed said it would end the purchases in March, but financial observers have said they are concerned investors would not be willing to work with Fannie or Freddie. If investors don’t work with the enterprises, mortgage rates could increase. In congressional testimony two weeks ago, Fed Chairman Ben Bernanke said securities sales would be gradual. The Fed will sell the MBS when the economy’s recovery has “sufficiently advanced” ... * WASHINGTON (2/22/10)--Defense credit unions are ready to participate in Military Saves Week, which begins today and ends Friday, according to a National Credit Union Administration media advisory. The program encourages active duty, National Guard, and reserve leadership to save their money by developing a savings plan, establishing an emergency fund, or enrolling in a savings deposit program. This year’s campaign aims to help service members and their families avoid common financial pitfalls, like relying too much on credit, spending beyond one’s means, and retiring without adequate finances. Military Saves Week is a part of the America Saves Campaign. (SEE RELATED: America Saves Week helps consumers build wealth in Consumer News) ...

CUNA blog to offer constant coverage of 2010 GAC

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WASHINGTON (2/22/10)--Up-to-the-minute coverage of the latest news and notes from the Credit Union National Association's (CUNA) 2010 Governmental Affairs Conference (GAC) will be available on the GAC Blog from today until the conference closes on Thursday. More than 4,000 credit union representatives are in town for CUNA's premier conference featuring addresses by top policymakers, and more. CUNA Editorial Communication Vice President Lisa McCue, Web Assistant Editor Tiffany Stronghart, and Communications Specialist Darryl Tait will provide frequent convention updates. Also, for full coverage, read CUNA's daily online news service News Now. The CUNA GAC Daily will be distributed to conference attendees and News Now readers will have access to its electronic version. Use the resource link below to access the GAC Blog.

2010 edition of CUNAs GAC kicks off today

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WASHINGTON (2/22/10)—As the new rules imposed by the Credit Card Accountability, Responsibility and Disclosure Act of 2009 come into effect, the Credit Union National Association (CUNA) today will also kick off the 2010 edition of its Government Affairs Conference (GAC) in Washington, D.C. Former Federal Reserve Chairman Alan Greenspan will address the GAC, and former Vermont governor and Democratic National Committee Chairman Howard Dean will take part in a lively "point-counterpoint" discussion on national issues with former Republican congressman and media personality Joe Scarborough. Also this week, National Credit Union Administration (NCUA) Chairman Debbie Matz, NCUA Vice Chair Gigi Hyland, NCUA Board Member Michael Fryzel and Small Business Administrator Karen Mills are scheduled to speak during GAC general sessions. Several key lawmakers will also address the GAC, including:
* Senate Banking Committee Chairman Christopher Dodd (D-Conn.); * House Financial Services Committee Chairman Barney Frank (D-Mass.); * Ranking Republican member of the House Financial Services Committee, Rep. Spencer Bachus of Alabama; * Rep. Brad Sherman (D-Calif.); * House Minority Whip Rep. Eric Cantor (R-Va.); * Reps. Paul Kanjorski (D-Pa.), Ed Royce (R-Calif.), and Sen. Mark Udall (D-Colo.), key sponsors of legislation that would increase the member business lending cap for credit unions; and many more.
The GAC also willfeature breakout sessions on the NCUA’s recent corporate credit union proposal, compliance issues, social media, alternative capital, and credit union advocacy, and CUNA will present a live edition of its Home & Family Finance Radio during the conference. The 2010 GAC will be the third straight GAC to take place in the Washington Convention Center. Use the resource link below for more GAC information.

CUNA compiles FAQ on CARD Act queries

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WASHINGTON (2/22/10)--As promised, the Credit Union National Association (CUNA) on Friday posted a list of frequently asked questions (FAQ) related to the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009, which becomes fully effective today. The questions are culled from the many questions that were received after CUNA’s recent audio conference calls, which took place on Feb. 2 and 11. Following the conference call, attorneys in CUNA’s regulatory affairs department attempted to answer more than 100 e-mailed queries. However, the answers provided below are solely the efforts of CUNA's compliance attorneys and have not been provided to the Fed for its interpretation. Topics covered by the FAQ include questions on floor rates, change-in-terms notices, increases in variable rates, limitations on increasing annual percentage rates and fees, changes in credit terms, renewal or annual fees, business credit accounts, and expedited payments. The FAQ also seeks to answer concerns on the central changes imposed by the CARD Act. They include regulations that prohibit rate increases in the first year that a credit card account is active, require co-signors for credit card accounts taken out by an individual under 21 years of age, require that creditors obtain the consent of the cardholder before charging over-the-limit fees, and limit many of the fees associated with so-called "subprime" credit cards. CUNA will submit some of the questions to the Fed for its interpretation and will continue to update or add additional answers as they come up.