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Washington Archive

Washington

Inside Washington (02/21/2008)

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* WASHINGTON (2/22/08)--The Office of Thrift Supervision (OTS) proposed a plan that would help troubled homeowners who owe more than their home is worth by reducing their mortgage balances to match the current market value of their homes. After reducing their balances, lenders would then write a negative amortization certificate to make up for the difference. If the home is sold, lenders can claim the profits (CNNMoney.com Feb. 21). Thrifts’ adoption of the rule would be voluntary. The OTS estimated that the savings and loan industry lost $5.24 billion in the fourth quarter last year due to troubled mortgages ... * WASHINGTON (2/22/08)--Senate and House Judiciary Committees are working on legislation to limit interchange fees, which generate about $36 billion in revenue annually for the credit card industry (American Banker Feb. 21). Rep. John Conyers (D-Mich.), House Judiciary Committee chairman, could propose a bill with U.S. Rep. Chris Cannon (R-Utah) that would allow the Justice Department and the Federal Trade Commission to appoint three lawyers to regulate fees. Similar legislation could be offered in the Senate. The push to limit fees is the result of the Merchant Payment Coalition, a lobbying group, whose members argue that interchange fees are too high--three times higher than fees charged in Europe ... * WASHINGTON (2/22/08)--The House Financial Services Committee has scheduled two days of hearings Tuesday and Wednesday to examine the conduct of monetary policy and the state of the U.S. economy, Chairman Barney Frank (D-Mass.) said. A panel of economists will address the issues during the first day of the hearings, and Federal Reserve Board Chairman Ben Bernanke will testify on the second. Witnesses include Alice Rivlin, senior fellow, Brookings Institution; Mark Zandi, chief ecomonist, Moody’s Economy.com; Nouriel Roubini, professor, New York University, and chairman, RGE Monitor; Carmen Reinhart, professor, University of Maryland; and John Taylor, professor, Stanford University ...

Credit union loans shares grew in 2007

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ALEXANDRIA, Va. (2/22/08)—Federally insured credit unions reported 6.6% loan growth, 5.2% share growth, and a 1.3% increase in membership to slightly more than 86.8 million for 2007, according to National Credit Union Administration (NCUA) figures. The agency’s data on lending showed an increase in real estate loans delinquent 2 months or more, up from 0.34% a year earlier to 0.67% during 2007. Foreclosed real estate increased a startling 102.2% to $331.9 million, but continued to represent a very small 0 .12% of total real estate loans, according to the NCUA. Also, credit card delinquencies were a reported to be 1.33% of total credit card loans at year-end 2007. The total loan delinquency ratio for federally insured credit unions increased 25 basis points to 0.93% from 0.68%. Chief Economist Bill Hampel of the Credit Union National l Association (CUNA) offered this perspective Thursday: “Although the end of 2007 saw rising loan losses and falling net income for credit unions, they remain very well capitalized.” Other major balance sheet categories reported by the NCUA for federally insured credit unions from Dec. 31, 2006, to Dec. 31, 2007, included:
* Assets increased 6.1% to $753.5 billion from $710.0 billion; * Loans increased 6.6% to $526.9 billion from $494.4 billion; * Investments increased 6% to $142.5 billion from $134.5 billion; *Shares increased 5.2% to $632.4 billion from $601.2 billion; and * Net worth increased 5.3% to $86.2 billion from $81.9 billion.
As the result of lending growth in most categories in 2007, the loan-to-share ratio increased to 83.3% for the year. CUNA’s Hampel said that, looking forward, the economic slowdown will retard loan growth and stimulate savings growth, with net income likely to come in well below historical norms. For the complete economic and credit union forecast from CUNA's economists, information and advice on how to respond to the effects of credit crisis, or more on the call report data submitted by the nation’s 8,100 federally insured credit unions, use the resource links below.

NCUSIF report final debt collection rule from NCUA

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ALEXANDRIA, Va. (2/22/08)—During a brief open board meeting Thursday, the National Credit Union Administration (NCUA) approved its quarterly share insurance fund report and a final rule on collection procedures for debts owed to the agency by its employees. In its quarterly National Credit Union Share Insurance Fund (NCUSIF) report, the NCUA reported its highest loss expense in the history of the fund for December 2007. Staff said the high expense was anticipated because of losses by a few large credit unions. As a result of this and deteriorating market conditions, the NCUA said it shifted to a more conservative methodology to manage reserves. Prior to her report on the NCUSIF, the three-member NCUA board welcomed the agency’s new chief financial officer, Mary Ann Woodson. Woodson reported on the Fund's equity ratio. The amount in the Fund in relation to the amount of total federally insured shares, for year-end 2007, is projected to be 1.29%. Under this projection, a dividend would not be paid to federally insured credit unions. A dividend can only be paid when at the end of the calendar year the equity level exceeds the Fund's normal operating level, which is currently set at 1.3%. The NCUSIF report also noted 211 credit unions had CAMEL ratings of 4 or 5 as of December 2007. Regarding the debt collection rule covers all present and former NCUA employees. It sets out the steps for collecting debts owed to the federal government, through such means as administration offset or, for current employees, salary offset. While this situation has occurred only rarely at NCUA, the rule is required by the Debt Collection Improvement Act of 1996 and follows standards that have been previously issued by the Department of Justice and the Department of the Treasury.

CUNA to partner in servicemember housing effort

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WASHINGTON (2/22/08)—The Credit Union National Association (CUNA) Thursday announced its participation in an upcoming event that will provide specially adapted homes for two severely wounded members of the American armed forces and their families. In an effort known as a “leave-behind,” CUNA will participate in the 2008 Democratic National Convention (DNCC) in Denver Aug. 25-28 and the Republican National Convention (RNC) in St. Paul, Minn., Sept. 1-4. CUNA will partner with the RNC and DNCC, as well as the National Journal Group, and the non-partisan, non-profit group “Homes for Our Troops,” to build the servicemembers’ homes. In the months leading up to the presidential nominations at the national conventions, Homes for Our Troops and its partners will construct a house in both the Colorado and Minnesota host cities with help from both political parties. According to CUNA President/CEO Dan Mica: “This project is unique in that both national political parties felt it was important enough to participate in both host cities for their conventions. CUNA is proud to be in partnership with all of these groups for such a worthy cause that is truly helping to bring our country together.” Mica added, “Credit unions are gratified to support our troops every day, and join with the National Conventions, as part of this special effort in helping two deserving servicemembers and their families.” The ground-breaking for the homes in Denver and Minneapolis will be in March or early April and National Journal Group representatives, credit union members, and the staffs of both the Democratic and Republican National Conventions have pledged their time to complete the construction in the following months. The homes, which will be uniquely outfitted for the special needs of each servicemember, will be presented to the new owners during the respective convention. Homes for Our Troops builds homes across the United States for armed services members who have been seriously wounded in action. The homes are provided at no cost to the veteran.