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Treasury offers webinar on electronic benefit payments

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WASHINGTON (2/3/11)—The U.S. Treasury’s Go Direct program on Wednesday announced a pair of February webinars to better educate financial institutions and other Go Direct campaign partners on a recent rule change that will require all federal benefit payments to be paid electronically. The webinars will take place on Feb. 16 and 17. The Treasury last year announced that all federal benefits that are filed on or after March 1, 2011 will be paid electronically via either direct deposit or the Direct Express Debit MasterCard card. Individuals that are currently receiving their benefit payments via paper check will be asked to accept their benefits electronically by March of 2013. The change will save over $125 million annually, according to the Treasury. The Treasury has also again selected February as Go Direct month in a bid to encourage consumers to take advantage of the safety benefits of direct deposit for Social Security payments and other federal benefits. February has been Go Direct month since 2006. The Credit Union National Association (CUNA) is a Go Direct national partner and supports the check-safety and cost-savings goals for the program. For more on the coming Go Direct webinars, use the resource link.

Judge could decide CU claims against Fannie Mae

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WASHINGTON (2/3/11)--A potential ruling in a credit union suit brought against Fannie Mae could come within the next few months after the government-sponsored mortgage giant and a credit union each this week filed briefs regarding possible summary judgment. The credit union which filed the brief is New Jersey-based Picatinny FCU. Three other credit unions, New York-based Suffolk FCU and Sperry Associates FCU, and Proponent FCU, also of New Jersey, are involved in related litigation against Fannie Mae for up to $60 million in damages. The Picatinny FCU case alone involves over $14 million in disputed mortgage notes. The credit unions have alleged that Fannie Mae became responsible for these damages when it purchased bundled credit union mortgages from the now defunct U.S. Mortgage Corp. Michael J. McGrath, the former president/CEO of U.S. Mortgage who pleaded guilty last year to the fraud of $139.6 million from 28 credit unions, Fannie Mae, and others, sold the mortgages to Fannie Mae on behalf of these and other credit unions. McGrath was not authorized to perform such transactions on behalf of the credit unions. The fraudulent transactions took place between 2004 and 2009. McGrath’s former company, U.S. Mortgage, and its subsidiary Credit Union National Mortgage listed over $200 million in debts to Fannie Mae and 28 credit unions when they filed for bankruptcy in early 2009. Each side has alleged that the other did not properly screen McGrath before the mortgage transactions were made. While a recent Picatinny FCU filing claims that Fannie Mae failed to follow its own loan certification standards when it purchased loans from McGrath, Fannie Mae has alleged that the credit unions should have warned Fannie Mae that McGrath was acting without credit union authority. Fannie Mae and Picatinny FCU are each seeking a full judgment in their favor, but the case could go to trial. That case and the other three credit unions’ cases against Fannie Mae are pending in the U.S. District Court for the District of New Jersey.

Fed policy GSE reform arise on subcommittee agendas

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WASHINGTON (2/3/11)—The Federal Reserve’s impact on unemployment and job creation will be examined during a Feb. 9 hearing before the House domestic monetary policy and technology subcommittee, announced that panel's new chairman, Ron Paul (R-Texas). Paul in a Wednesday statement noted that “the nation’s unemployment picture remains bleak” in spite of “enormous amounts of monetary and credit expansion by the Federal Reserve in recent years.” The subcommittee hearing follows the Fed’s November purchase of $600 billion in long-term Treasury bonds. The purchase, which is known as "quantitative easing," is meant to stimulate the economy. Potential reform of government-sponsored mortgage backers Fannie Mae and Freddie Mac will also be discussed during a separate Feb. 9 hearing before the House capital markets subcommittee. That hearing, announced by House subcommittee Chairman Scott Garrett (R-N.J.) Wednesday, will focus on actions needed to transition government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac out of the federal conservatorship that they have been under since 2008. The subcommittee will also consider ways that the bailout of the GSEs, which has currently cost $150 billion in taxpayer funds, can be ended. GSE critics—including some Republican House members--have taken issue with the taxpayer costs associated with the government takeover of Fannie Mae and Freddie Mac, and Garret in a statement said that his committee would “continue to seek alternative solutions to housing finance in the United States that decrease the government’s exposure and get private capital off the sidelines.” Credit Union National Association (CUNA) President/CEO Bill Cheney in a 2010 letter to the Treasury said that the needs of credit unions and other small mortgage lenders should continue to be considered as the government develops its plans for the future of the secondary home mortgage market. CUNA has also formed its own GSE Reform Task Force to examine and opine on GSE-related issues. Witnesses for the two hearings have not yet been announced.

Inside Washington (02/02/2011)

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* ALEXANDRIA, Va. (2/3/11)—The National Credit Union Administration (NCUA) will soon offer an additional $1.253 billion in its NCUA Guaranteed Notes (NGNs), The Wall Street Journal reported on Wednesday. The latest NGN offering will be comprised of mortgage-backed securities. A price for the NGNs will likely be released later this week, and price guidance is currently around 40 to 45 basis points. The NCUA last week completed its first NGN sale of 2011, gaining $1.5 billion in proceeds. The agency has completed 65% of the securitization designed to fund deposits assumed by the bridge corporate credit unions, and has gained a total of $19 billion in revenue from its NGN sales. The remainder of the NGNs will be sold in the coming months, according to the NCUA… * WASHINGTON (2/3/11)--The Government Accountability Office (GAO), which is the investigative arm of the U.S. Congress that studies how taxpayer dollars are used, released a study titled ”Payday Lending: Federal Law Enforcement Uses a Multilayered Approach to Identify Employees in Financial Distress”. The GAO report estimated that there are about $40 billion worth of payday loans written annually, usually for amounts between $100 to $500 and with a quick payoff times of about two weeks. The GAO report addressed concerns raised about payday lending to federal employees in law enforcement and national security positions. As part of its information collecting and to identify alternatives to payday lending that are available for consumers, GAO noted it spoke with a number of credit unions and banks, including some federal- and state-employee credit unions, offering small-dollar loan products. The report also features an Appendix IV with comments from the National Credit Union Administration… * WASHINGTON (2/3/11)--Starting Friday, women-owned small businesses can participate in a new federal contracting program offered by the U.S. Small Business Administration (SBA). In an announcement this week, SBA said women-owned businesses are one of the fastest growing sectors of the economy. “As we continue to look to small businesses to grow, create jobs and lead America into the future, women-owned businesses will play a key role,” SBA Administrator Karen Mills said. The new Women-Owned Small Business (WOSB) Federal Contract Program will be fully implemented over the next several months, with the first contracts expected to be awarded by the fourth quarter of fiscal year 2011…