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Inside Washington (02/22/2008)

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* WASHINGTON (2/25/08)--The Center for American Progress is urging lawmakers to improve credit card transparency by implementing a credit card safety rating system and mandating a higher level of fairness in credit card terms. The center released a report Thursday indicating that credit card debt grew as the mortgage crisis surged to unprecedented levels in the U.S. and in the global financial marketplace. The problems could be “partially nipped in the bud” by legislation to improve transparency for credit cards, the group stated. The report cited efforts by Rep. Carolyn Maloney (D-N.Y.) and Rep. Barney Frank (D-Mass), who introduced the Credit Cardholders’ Bill of Rights Act. Last December, an average of 7.6% of credit card loans were at least 60 days delinquent or had gone into default, up from 6.4% a year earlier, the report said ... * WASHINGTON (2/25/08)--The Federal Housing Finance Board Wednesday approved an amendment to increase the Federal Home Loan Bank (FHLB) of Seattle’s stock purchase requirement to 6% (American Banker Feb. 22). The increase aims to help the bank with its capital management. FHLB suffered losses when its mortgage program went under ... * WASHINGTON (2/25/08)--The Federal Deposit Insurance Corp. (FDIC) could eliminate a three-month delay placed on creditors collecting bonds from failed banks (American Banker Feb. 22). The delay aims to help the FDIC examine the bank’s assets, but some have argued that it keeps U.S. banks from a fertile market. FDIC Chairman Sheila Bair said if the barrier is removed, it could increase the agency’s costs to resolve failed institutions. Bonds should not be rushed, she added. Bair indicated that she would be open to removing the barrier on a “measured basis” ... * WASHINGTON (2/25/08)—The Small Business Administration (SBA) will host its second national regulatory fairness hearing here on March 12. The event is designed to give leaders from business organizations and trade associations an opportunity to comment on unfair or excessive federal regulatory enforcement that impacts their members and small businesses nationwide. The Small Business Regulatory Enforcement Fairness Act of 1996 created the Office of the National Ombudsman within the SBA and established 10 regional regulatory fairness boards nationwide. Each year a series of public regulatory fairness hearings is held around the country. For more information, parties interested in the hearings may contact Christina Marinos, of the ombudsmen’s office, at christina.marinos@sba.gov , or by phone at 202-401-8254 …

State of the Economy hearing this week

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WASHINGTON (2/25/08)—The House Financial Services Committee will hold a two-day Humphrey-Hawkins Act hearing on monetary policy and the state of the U.S. economy. In announcing the Feb. 26-27 hearings, a committee release noted that on Feb. 20 the Federal Reserve joined other forecasters in predicting slower economic growth, higher unemployment, and an elevated rate of inflation for the U.S. economy. “In light of these forecasts, the hearings will focus on the appropriateness of monetary policy over the past six months and consider what further actions might be taken,” the release said. Fed Chairman Ben Bernanke will be the sole witness at the hearing’s second-day session as he presents his semi-annual report to Congress. A panel of economists will address the issues during the first day of hearings. The 1978 Humphrey-Hawkins, which required the Federal Open Market Committee to report on the economy and monetary policy twice a year, expired in mid-2000, yet the traditional semi-annual forums are still generally referred to by that name.

NCUA alerts CUs to phishing scam

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ALEXANDRIA, Va. (2/25/08)—The National Credit Union Administration (NCUA) continues efforts to inform credit unions and consumers that the agency does not ask for personal account information and that the public should view any such requests as a likely scam. In a recent fraud alert issued to all federally insured credit unions, the NCUA noted a phishing attempt seeking to obtain credit card information. The fraudulent email carries a number to call in the Albany, N.Y. area. The alert advised credit union management to inform employees of the email ploy to garner card numbers and expiration dates so they can be on the front line of detection. The fraudulent emails being sent to credit union members and the general public read: “National Credit Union Administration temporarily suspended your account due to fraud attempts”. It goes on to state “to reactivate your account call the toll free number” provided.

Bank Secrecy Act gets GAO inspection

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WASHINGTON (2/25/08)—The Bank Secrecy Act (BSA) has been under the microscope of the Government Accountablilty Office (GAO) and is the subject of two recently released reports. One of the reports was an attempt by GAO to determine the usefulness to federal, state and local law enforcement officials of currency transaction reports (CTRs) filed by depository institutions and the costs to financial institutions related to those filings. For its report, the GAO studied CTR data from 2004 to 2006 provided by the Financial Crimes Enforcement Network (FinCEN) and surveyed 115 state and local law enforcement agencies, 680 financial institutions, as well as industry trade associations. Also, the Credit Union National Association met last year with the GAO last year to discuss the burdens CTR filing requirements place on credit unions. The resultant determination by the GAO is that the information provided by CTRs is of importance to law enforcement. The report made a number of recommendations to FinCEN in an effort to ease some of the burdens of and misunderstandings concerning CTR filing requirements. The GAO recommended that FinCEN consider publishing "summary information on CTR use,” something similar to the Suspicious Activity Report (SAR) Activity Review it currently issues that analyzes data gathered by those reports. The second recent GAO report on BSA is a 95-page tome entitled “Bank Secrecy Act: Increased Use of Exemption Provisions Could Reduce Currency Transaction Reporting While Maintaining Usefulness to Law Enforcement Efforts.” The GAO study found that, as reasons for not exempting eligible customers, institutions cited uncertainty about the documentation required to demonstrate that some customers are in fact eligible. Financial institutions also noted concerns that federal regulators in charge of compliance examinations, would find fault with the institution's exemption. Institutions also cited as deterrents the need to meet FinCEN's regulatory requirements to:
* File an exemption form, and annually review the supporting data, particularly for hundreds of customers that are specifically exempted by statute; and * Biennially renew eligibility for some customers--a process that as a practical matter duplicates the required annual reviews for those customers.
Institution officials indicated that additional guidance from FinCEN, as well as Web-based material to help train their staff in making exemption determinations, could increase the use of exemptions, the report said. For more on both reports, use the resource link below.