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Washington Archive

Washington

Regulatory change blueprint to be released later

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NEW YORK (02/08/08)—The Bush Administration expects to release during this year's first quarter its blueprint to improve the U.S. financial regulatory structure, according Under Secretary for Domestic Finance Robert K. Steel. He spoke yesterday in New York City. The report will follow the agency's request for comments in October on the restructuring of the regulation of the financial services sector. The Credit Union National Association (CUNA) filed a comment letter urging no changes in National Credit Union Administration’s (NCUA) structure. The blueprint will propose some broad ideas for "optimal regulatory structure to match the ever changing nature of the financial services industry," said Steel. This will be a "newly designed model" focusing on key aspects of regulating financial institutions; prudential regulation for safety and soundness; consumer and investor protection and overall market stability. "You should not be surprised to hear that this optimal structure will be different form our current structure," he said. The report will also recommend some less conceptual ideas that will serve as an "intermediate step" toward an improved structure of financial services, according to Steel. CUNA will provide an analysis as soon as the report is available, said CUNA Deputy General Counsel Mary Dunn.

CUNA Card reforms a high priority in 08

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WASHINGTON (2/11/08)—Rep. Carolyn Maloney (D-N.Y.), who chairs the House Financial Services subcommittee on financial institutions, last week introduced a package of credit card reforms that is being billed as the Credit Cardholder’s Bill of Rights (H.R. 5244). The bill was introduced with 40 co-sponsors and is intended to curb abusive credit card practices, such as some interest-rate increases and late fees. In part, the bill would require card issuers to provide a 45-day notice period for consumers before an interest rate could be executed. Cardholders would then have the right to cancel their card and pay off their existing balance at the existing rate and repayment schedule. H.R. 5244 would also prohibit a practice known as “double-cycle billing,” in which card companies charge interest on payments made on time during a grace period. It would also ban arbitrary changes in the credit card contract. Ryan Donovan, vice president of legislative affairs for the Credit Union National Association (CUNA), said Friday that he would expect credit card reforms to be a top priority of the Financial Services Committee this year. Noting that both that panel and the Senate Banking Committee held hearings on the issues in 2007, Donovan said, “There will be a real push in 2008 to get this bill through the legislative process.” CUNA’s legislative affairs department is studying all aspects of the legislation.

Inside Washington (02/08/2008)

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* WASHINGTON (2/11/08)—The economic stimulus package approved by the House and Senate Thursday contained provisions addressing the Federal Housing Authority (FHA) and government-sponsored enterprises (GSEs), both set to expire on Dec. 31 unless Congress makes the changes permanent. For FHA, the stimulus measure raises FHA's loan limit for its single-family program from 87% of the conforming loan amount to as high as 175% (effectively $362,790 to $729,750) of the conforming loan limit in certain geographic regions where the cost of housing is very high and from 48% to 65% (effectively $200,160 to $271,050) of the conforming loan limit in less expensive markets. FHA would also have the authority to raise those loan limits by up to an additional $100,000 if market conditions warrant such increases. For the GSEs, the bill increases the loan limits for single-family homes from Fannie Mae and Freddie Mac from $417,000 up to $729,750 and covers loans made between July 31, 2007, and December 31, 2008. * WASHINGTON (2/11/08)--The Federal Reserve Board announced that it will cut prices for its electronic payment services, including image clearing and automated clearing house transactions, and drop some services for handling paper items. The price cut aims to encourage banks to adopt check imaging (American Banker Feb. 8). The Fed also plans to increase fees for processing paper checks this year and stop accepting cash letters containing paper checks. Last December, the Fed estimated that 60% of its presentments were arriving as check images instead of paper checks, said Fred Herr, senior vice president in the Retail Payments Office ... * WASHINGTON (2/11/08)--The Federal Deposit Insurance Corp.’s (FDIC) morale issues can be traced back to an “outdated organizational culture,” according to a consulting firm hired to investigate complaints made by agency workers (American Banker Feb. 7). The group said the agency’s culture is “paternalistic, risk-averse and hierarchical,” leading to distrust and slow employee growth. The report recommended that the FDIC improve communication between management and lower level employees. FDIC Chairman Sheila Bair said the agency would make changes to address the report’s results. Last year, the National Credit Union Administration (NCUA) was highly ranked in an Office of Personnel Management (OPM) survey of employees’ perceptions of their agency’s success. NCUA received a No. 2 ranking in a “talent management index” and a No. 5 ranking in a “results-oriented performance culture index” ...

NCUA activates disaster response for southeastern tornado victims

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ALEXANDRIA (2/11/08)— The National Credit Union Administration (NCUA) has activated its disaster relief policy to assist credit unions and their members affected by the severe storms, tornadoes, winds, and flooding in Arkansas and Tennessee. President George W. Bush has declared an emergency exists in those states. He has ordered federal aid to supplement state and local response efforts. Under its disaster assistance policy, NCUA encourages credit unions to make loans with special terms and reduced documentation to affected members. Also, as necessary, the agency will:
* Reschedule routine examinations of affected credit unions; * Guarantee lines of credit for credit unions through the National Credit Union Share Insurance Fund; and * Make loans to meet the liquidity needs of member credit unions through the Central Liquidity Facility.
NCUA works with individual state league organizations and state regulators to ensure all federally insured credit unions are aware of NCUA’s available assistance, the agency said in a release. Region III and Region IV examiners are in close contact with affected credit unions to offer advice and assistance. During disaster conditions, NCUA personnel are instructed to operate under three priorities. They are asked to: determine the safety of credit union staff and the operational condition of credit unions; provide needed material and technical assistance to affected credit unions; and. return credit unions to normal operations as quickly as possible. Member accounts in all federally insured credit unions affected by the storms are insured by the National Credit Union Share Insurance Fund, a federal fund backed by the full faith and credit of the U.S. government.

Fryzel among delayed nominees

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WASHINGTON (2/11/08)—Michael Fryzel, President George W. Bush’s pick to be the next chairman of the National Credit Union Administration (NCUA), was named among the nominees for whom the President urged prompt action from the Senate. Last week Bush called on the Senate to start immediate work on its confirmation process for a long list of pending nominations, including Fryzel and three nominees to the Federal Reserve Board. Bush said in his statement that of 180 nominees awaiting “a fair vote in the Senate,” 30 have been waiting more than a year for action, about half have been waiting 100 days or longer, and nine have been waiting more than two years. Fryzel is a relative newcomer to the list. Bush nominated him in December to replace current NCUA Chairman JoAnn Johnson, whose term expired in August. Johnson has indicated she will likely remain as chairman until her successor makes it through the confirmation process. Fryzel was with the Illinois Department of Financial Institutions from 1977 to 1989 and headed the agency from 1982 to 1989. Integral to that job, according to his resume, was the licensing and regulation of more than 700 state-chartered credit unions with assets exceeding $4.3 billion. Regarding the pending Fed nominations, three of the seven members of the Federal Reserve Board of Governors are awaiting Senate confirmation. The President's confirmation push came a day after Senate Majority Leader Harry Reid (D-Nev.) said the administration was stonewalling the appointments process, according to American Banker (Feb. 8). The White House had been criticized by Democrats for not discussing nominations with them in advance.