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Hill veteran Harper is new PACA director at NCUA

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ALEXANDRIA, Va. (2/9/11)--Leaving 14 years of Capitol Hill experience, much of it dealing with credit union issues, Todd Harper will become the new director of Public and Congressional Affairs (PACA) at the National Credit Union Administration (NCUA) on Feb. 14. Harper was a long-time senior aide to former Rep. Paul Kanjorski (D-Pa.), as well as staff director for the House Financial Services subcommittee on capital markets, insurance and government-sponsored enterprises. In addition to assuming the responsibilities of PACA director, Harper also will serve as chief policy advisor to the NCUA Chairman Debbie Matz. He replaces outgoing PACA Director John McKechnie, who will leave NCUA in early March to pursue a private sector opportunity. "I am very pleased that Todd is joining our team," Matz said when announcing his appointment Monday. "His knowledge, experience and demonstrated capabilities as a legislative practitioner are well established and have placed him in the front-rank of Washington policy professionals. I am confident that Todd Harper will be of immediate benefit to NCUA; he knows and understands credit unions, and he knows and understands the issues that affect them." Credit Union National Association Senior Vice President of Legislative Affairs John Magill noted that Harper, like Kanjorski, has been a long-time friend of the credit union movement. Magill added that Harper is “well connected” on the Hill, with ample knowledge of both credit union issues and the inner workings of Congress. Kanjorski sponsored and promoted numerous pieces of pro-credit union legislation during his time in Congress. The longtime congressman, who was defeated in a general election last year, most recently introduced H.R. 3380, a bi-partisan bill that proposed increasing the credit union member business lending cap.

Federation working on 1B CDFI bond program

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NEW YORK (2/9/11)--The National Federation of Community Development Credit Unions has joined efforts to develop a new program that could mean billions of dollars in government-guaranteed bonds issued by Community Development Financial Institutions (CDFIs). The product of legislation developed by the Opportunity Finance Network (OFN) and championed by U.S. Sen. Robert Menendez (D-N.J.), the CDFI bond program was established under the Small Business Jobs Act of 2010. It authorizes federal guarantees for bonds and notes for community and economic development purposes. Under the new legislation, the U.S. Treasury Department may issue up to $1 billion a year in bond authority through Sept. 30, 2014. Minimum increments of bonds are $100 million. The bonds are taxable, and guarantees may be as long as 30 years. The program will be restricted to certified CDFIs. The federation represents credit unions in a group of CDFIs organized by OFN, which is formulating guiding principles for the new bond program. There are about 200 CDFI credit unions, an all-time high, said the federation. Dozens of credit unions received their certification in 2010 with assistance from the Federation, which continues to offer consulting services and training to credit unions seeking the designation, and to those previously certified. In looking at potential uses of the funds, the federation is exploring a bond to provide equity-like secondary capital to credit unions for terms longer than ever previously available. In 2010, the Federation helped 48 credit unions obtain $69.9 million in secondary capital under the Treasury Department’s Community Development Capital Initiative (CDCI). Cliff Rosenthal, federation president/CEO, said a potential appeal of the bond program is that “it would not carry the onerous restrictions that discouraged many credit unions from participating in that program.” OFN President/CEO Mark Pinsky emphasized it is important “that CDCUs have access to the bond program, because they serve a market that is critically important and sorely underserved.”

MBLs NCUA oversight part of Senate Banking agenda

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WASHINGTON (2/9/11)—Member business lending (MBL), interchange fees, and oversight of some National Credit Union Administration (NCUA) actions will be a few of the many issues discussed as the Senate Banking Committee progresses through its work in the 112th Congress. Committee Chairman Sen. Tim Johnson (D-S.D.) laid out these and other priorities in a recent memo to his committee colleagues. The MBL cap, which currently stands at 12.25% of total assets, could be raised as high as 27.5% if legislation that was offered by Sen. Mark Udall (D-Colo.) is reintroduced this year. Lifting the MBL cap would inject over $10 billion into the economy, creating over 108,000 new jobs at no cost to taxpayers, the Credit Union National Association (CUNA) has estimated. CUNA has called for a comprehensive examination of interchange regulations, which are slated to come into effect later this year. The Federal Reserve's interchange proposal would place an arbitrary cap, perhaps as low as 7 cents, on interchange fees, and CUNA has warned that this arbitrary cap could result in credit unions having to eliminate their debit card programs altogether. Credit unions may also be forced to introduce new fees in an effort to keep their vital debit card programs alive. According to the memo, the committee will also focus on the NCUA’s ongoing efforts to deal with the effects of the corporate credit union crisis. Prompt corrective action and net worth standards for credit unions will also be discussed, as will insuring interest on lawyers’ trust accounts at credit unions. Johnson in the Senate Banking memo said that some of these pressing credit union issues could be addressed through oversight hearings, while others could require legislative intervention. More general financial priorities for the committee include oversight of Dodd-Frank Act implementation and possible housing finance reform. The committee had not released a schedule of upcoming hearings at press time.

Housing issues will see committee scrutiny this week

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WASHINGTON (2/9/11)—Housing related financial issues are on the agenda of the House Financial Services Committee and its capital markets subcommittee this week, with a Thursday oversight plan hearing featuring discussion of the Obama administration’s Home Affordable Modification Program (HAMP) and government-sponsored enterprises (GSEs) Freddie Mac and Fannie Mae being examined. The GSE hearing, which will take place at 2 p.m. (ET) later today, will focus on actions needed to transition the GSEs 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. Republican House members and other GSE critics have taken issue with taxpayer costs associated with the government takeover of Fannie Mae and Freddie Mac. Many have also criticized the Obama administration’s HAMP program, which aims to help struggling homeowners by modifying their mortgages. House Financial Services Chairman Spencer Bachus (R-Ala.) in a Tuesday release labeled the HAMP program a failure. The chairman said that ending HAMP, which the committee is expected to propose during its Thursday hearing, would save $50 billion in taxpayer funds. The Thursday hearing will begin at 10 a.m. (ET). Despite record levels of new foreclosures--2.9 million in 2010 and a projected 3 million in 2011—only 522,000 homes were undergoing permanent modification as of Dec. 21, 2010. However, the Obama administration earlier this month reported that 4.1 million modification arrangements started between April 2009 and the end of 2010, resulting in 1.4 million HAMP trial modification starts and more than 650,000 loss mitigation and early delinquency interventions. The administration also noted that 85% of homeowners with HAMP modified loans remained in their homes. The administration last year claimed that the HAMP program was on course to modify as many as 4 million mortgages by 2012. The Credit Union National Association (CUNA) has also formed its own GSE Reform Task Force to examine GSE-related issues.

Inside Washington (02/08/2011)

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* WASHINGTON (2/9/11)--Credit Union National Association (CUNA) Chief Economist Bill Hampel shared CUNA’s assessment of credit unions’ 2010 performance at a meeting of Washington, D.C. metro-area credit unions Monday night. Hampel predicted that--that after two years of “abysmal” earnings during the depths of the country’s recession--final year-end numbers will show that credit unions finished 2010 with return on assets (ROA) of about 45 to 50 basis points. That positive ROA is after the impact of National Credit Union Share Insurance Fund (NCUSIF) premiums and corporate stabilization assessments is factored in. Although that level of earnings is still below the 1% average ROA more typically experienced by credit unions, it is “at least a step in the right direction” coming out the previous two years, when credit union ROA averaged closer to 0 (7 bp), Hampel underscored. He said he expects ROA in 2011 to run at about 70 to 75 bp, not counting the impact of premiums and assessments. He also expects credit unions will be helped by improvement in allowance for loan losses, a somewhat steeper yield curve, and a pickup in loan demand (which declined last year for the first time since the early 1980s). A drag against earnings in the year ahead will be the potential effects of coming rules on debit interchange, and continued National Credit Union Administration assessments. Hampel expects premiums of 5 to 10 bp this year for NCUSIF and about 9 bp in assessments for the cost of corporate stabilization. Hampel was on a panel with National Association of Federal Credit Unions Chief Economist Tun Wei, moderated by Credit Union Times Editor Sarah Snell Cooke … * WASHINGTON (2/9/11)--Fannie Mae and Freddie Mac's mortgage portfolios have “significant unrealized gains” that should be sold off to protect taxpayers, the new chairman of the House Financial Services subcommittee on capital markets and government-sponsored enterprises (GSE) said on Monday. Rep. Scott Garrett (R-N.J.), speaking at an American Securitization Forum conference, said that under the current conservatorship agreement, the $1.5 trillion mortgage portfolios of the GSEs are set to decrease by a small percentage each year until they reach a certain set level. Garrett advocates speeding up this process by selling off some of the assets to minimize interest-rate risk and achieve unrealized gains. “Some of the assets can be sold off more quickly; others cannot because they are less liquid,” he said. “The GSEs own different assets and there are specific markets for each of these assets. We need to more closely look at each of the portfolio components and figure out how to wind them down sooner to protect taxpayers” … * WASHINGTON (2/9/11)--The Federal Housing Finance Agency has proposed a rule to limit Fannie Mae, Freddie Mac, and the Federal Home Loan Banks from dealing in mortgages on properties encumbered by certain types of private transfer fee covenants and in some related securities. The proposed rule would exclude private transfer fees paid to homeowner associations, condominiums, cooperatives, and certain tax-exempt organizations that use private transfer fee proceeds to benefit the property. Fees that do not directly benefit the property would be barred. With limited exceptions, the rule would apply only prospectively to private transfer fee covenants created on or after the date of publication of the proposed rule. Written comments must be received on or before April 11. The proposal can be viewed online.

NEW Hill-veteran Harper is new PACA director at NCUA

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Arlington, Va. (UPDATE 2/8/11, 9:45 a.m. ET)--Todd Harper, a 14-year veteran of Capitol Hill as senior aide to former Rep. Paul Kanjorski (D-Pa.) and as staff director for the House Financial Services subcommittee on capital markets, insurance and government-sponsored enterprises, is the new director of Public and Congressional Affairs (PACA) at the National Credit Union Administration (NCUA). Harper will assume his duties at NCUA on Feb. 14. In addition to becoming PACA director, Harper will also serve as chief policy advisor to the NCUA Chairman Debbie Matz. He replaces outgoing PACA Director John McKechnie, who will leave NCUA in early March to pursue a private sector opportunity. “I am very pleased that Todd is joining our team,” Matz said in her announcement. “His knowledge, experience and demonstrated capabilities as a legislative practitioner are well established and have placed him in the front-rank of Washington policy professionals. I am confident that Todd Harper will be of immediate benefit to NCUA; he knows and understands credit unions, and he knows and understands the issues that affect them.” Read more in tomorrow’s News Now.