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Washington Archive

Washington

New GAC venue same stellar lineup

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WASHINGTON (3/3/08)—It’s a new conference venue, new hotels, but the same stellar quality lineup of speakers and breakout sessions at the Credit Union National Association's (CUNA's) 2008 Governmental Affairs Conference (GAC) March 2-6. After more than 30 years at the Washington Hilton, CUNA brings its GAC—and a record-breaking crowd—to the Washington Convention Center this year. CUNA expects a new high of 4,500 participants this year, including a record 580 first-time attendees. The conference dates coincide with a scheduled March 6 House Financial Services Committee hearing on the need for credit union regulatory relief and improvement, at which CUNA Vice Chairman Tom Dorety, CEO of Suncoast Schools FCU, Tampa, Fla., will testify. The 2008 GAC program features key members of the House and Senate, as well as all three members of the National Credit Union Administration (NCUA) board. It kicks off on Tuesday with such speakers as retired Gen. Colin Powell, and NCUA Chairman JoAnn Johnson and Vice Chairman Rodney Hood. During Wednesday’s general session, a record 4,500 participants will hear from House Ways and Mean Committee Chairman Charles Rangel (D-N.Y.), House Financial Services Committee Chairman Barney Frank (D-Mass.), as well as that panel’s ranking minority member, Rep. Spencer Bachus (R-Ala.), House Republican Whip Roy Blunt (R-Mo.), and Rep. Carolyn Maloney (D-N.Y.), who chairs the House Subcommittee on Financial Institutions and Consumer Credit. Also, on Wednesday and Thursday respectively, Senate Minority Leader Mitch McConnell (R-Ky.) and Senate Finance Committee Chairman Max Baucus (D-Mt.) will address the GAC attendees. For the first time, the GAC was launched with a free Sunday evening concert, which featured “America,” the folk-rock duo well-known for their hits including “Horse with No Name” and “Sister Golden Hair.” And rounding out the program will be such notables as "Hardball" host Chris Matthews, singer Marie Osmond, known for her work with Children’s Miracle Network, and funnymen Robert Klein and Dave Barry. And as always, a prime feature and focus of the conference attendees will be to participate in Capitol Hill visits to talk to their representatives and senators about key issues of interest to the credit union movement. This year's GAC theme is "Red, White and You," featuring a patriotic design that emphasizes personal involvement in political action on behalf of the credit union movement and its 90 million members.

Inside Washington (02/29/2008)

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* WASHINGTON (3/3/08)--The Federal Reserve Board plans to target credit cards in its proposal to stop unfair and deceptive practices in the financial industry, Chairman Ben Bernanke said Thursday during testimony before the Senate Banking Committee (American Banker Feb. 29). The proposal could be released next month. It would crack down on double-cycle billing, guide payment allocation and allow cardholders to opt out of interest-rate increases. In addition to the proposal, the Fed also proposed changes to Regulation Z to direct disclosures for credit cards. The Regulation Z proposal could be finalized when the deceptive practices proposal is opened to comments ... * WASHINGTON (3/3/08)--The Bush administration and Treasury Secretary Henry Paulson have strongly opposed taxpayer-funded lender bailouts to ease the housing crisis, but industry representatives are speculating that the administration could move toward a compromise (American Banker Feb. 29). Though the administration would like to avoid a bailout, it is being pressured, said Brian Gardner, KBW Inc. analyst. H. Rodgin Cohen, Sullivan and Cromwell LLP partner, said Paulson’s opposition to a bailout leaves “wiggle room” to help those in danger of losing their homes. Arthur Wilmarth, George Washington University Law School professor, said he predicted that some government help will be needed. A bailout will happen eventually, and it’s more politically pleasing for the administration to support homeowners instead of financial institutions, he said ... * WASHINGTON (3/3/08)--Federal Trade Commission (FTC) Chairman Deborah Platt Majoras announced Wednesday that she will leave the FTC later this month. She was appointed by President George W. Bush in August 2004. During her time with the agency, Majoras focused on data security and consumer fraud, including identity theft, spyware and deceptive spam ...

Corporate governance comment period extended

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ALEXANDRIA, Va. (2/29/08)-- The National Credit Union Administration (NCUA) has extended the comment period to April 30 from March 31 as it considers amending its rules to more clearly define a credit union board's fiduciary duties in the face of major decisions, such as mergers or conversions to mutual thrifts. The agency approved an advanced noticed of proposed rulemaking (ANPR) on the subject at its January open board meeting. The Credit Union National Association (CUNA), as well as other concerned groups, requested the comment period extension so credit unions can carefully consider the important ANPR before commenting. In its ANPR, the NCUA asks for comment in the following areas:
* Credit union conversion into a financial institution other than an MSB. The agency said it is considering establishing an administrative framework and procedures rather than continue its case-by-case approach, and asks for comment on such things as whether such conversions are beneficial to credit union members; * Issues that affect member interests in restructuring transactions; * Is there a need for a regulation to address the fiduciary obligations a credit union director owes members and/or a need for additional regulatory provisions to guard against insider enrichment? * Communications to members. The NCUA is considering, for instance, a need to specifically state a prohibition against credit union officials stating or implying that the NCUA has endorsed the charter change or accompanying credit union materials; and * Member voting rights, such as the right to request a recount and the use of interim tallies.
CUNA will be reviewing the ANPR with several of its subcommittees during its Governmental Affairs Conference in Washington, D.C. next week.

Mica in iHilli Lobbying sunshine is here

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WASHINGTON (2/29/08)—No matter who is in the White House this time next year, there will be a closer look at campaign dollars and what those dollars represent, according to Credit Union National Association (CUNA) President/CEO Dan Mica in his most recent regular guest column in The Hill. Mica said one point is clear: Change really is coming. “And for K Street, there is no way to sugarcoat it. For some lobbyists, this change will be quite dramatic, possibly even the end of the road,” he wrote. Associations and interest groups with questionable agendas—such as a defender of pollution—will be under more direct public scrutiny and will have greater difficulty gaining access to lawmakers, Mica said. “The Jack Abramoffs of the world cannot survive in the new environment, nor can those perceived to be playing along the dark gray edges,” he warned, referring to a disgraced Washington lobbyist. But Mica also called on those groups who work hard to make their voices heard “loudly but fairly” to think even harder about “doing business the right way.” Citing CUNA’s political action committee (CULAC) as a good example, Mica noted that it is one of the largest in Washington, on track this cycle to reach $4 million in contributions. And yet, he underscored, the average donation is around $10, showing the grassroots nature of the effort. Mica appears regularly in the Capitol Hill publication The Hill's as a guest columnist for its K Street Insiders feature. "K Street" refers to an area in Washington, D.C. known as a base for influential lobbyists, think tanks and advocacy groups stationed in the nation's capital.

Inside Washington (02/28/2008)

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* WASHINGTON (2/29/08)--The Office of the Comptroller of the Currency (OCC) Thursday outlined steps aiming to help investors who suffered losses from “super senior” tranches of collateralized debt obligations (CDOs) backed by subprime mortgages. The agency recommended stronger underwriting and less reliance on credit rankings of rating agencies. Packagers of CDOs should not retain large concentrations of the tranches on their balance sheets, said Comptroller John Dugan. Regulators also should raise risk profiles of the CDOs under Basel II capital rules, Dugan said. CDO tranches appealed to many investors when they held triple A ratings but were affected by problems in the subprime mortgage market ...

Co-sponsors hit 145 before CURIA hearing

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WASHINGTON (2/29/08)—One week before a scheduled hearing on the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537), two more first-time co-sponsors signed on in support of the bill. Rep. Kathy Castor (D-Fla.) and Rep. Allyson Schwartz (D-Pa.) drove the number of official backers of the bill to 145. That number includes prime sponsor Rep. Paul Kanjorski (D-Pa.), who with Rep. Ed Royce (R-Calif.) introduced the bill March 25 in the 110th Congress. The House Financial Services Committee has set a hearing for March 6 on the need for credit union regulatory relief and improvements. Major discussion is expected to be devoted to CURIA provisions. CUNA Vice Chairman Tom Dorety, CEO of Suncoast Schools FCU, Tampa, Fla., will testify for CUNA. Other groups expected to testify include the National Credit Union Administration, the National Association of State CU Supervisors, the National Association of Federal Credit Unions and the American Bankers Association. The hearing is scheduled to take place on the final day of CUNA's 2008 Governmental Affairs Conference in Washington. Both CURIA chief sponsors Royce and Kanjorski will be addressing the GAC. CUNA VP of Legislative Affairs Ryan Donovan said the regulatory improvements likely to be discussed at the hearing will not be limited to those in CURIA. "We expect to discuss additional ways Congress can provide regulatory relief to credit unions," he said. "New ideas will be put on the table and we look forward to having that discussion with committee members."

Under veto threat Senate stalls on mortgage bankruptcy

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WASHINGTON (2/29/08)--With banker opposition and a threat of a Presidential veto, the Senate Thursday was unable to proceed to consider a housing stimulus bill that included mortgage bankruptcy language supported by the Credit Union National Association (CUNA). The Senate voted 48 to 46 on a motion to proceed to consideration of S. 2636, the Foreclosure Prevention Act of 2008. Sixty yes votes were needed to proceed to consideration. The bill, introduced by Senate Majority Leader Harry Reid (D-Nev.) earlier this month, would provide $200 million for housing counselors to help families about to lose their homes to foreclosure. It would also raise the cap on mortgage revenue bonds, permit Community Development Block Grants to be used on foreclosed properties, and require improved disclosures to mortgage borrowers. The bill included mortgage bankruptcy provisions modeled on language drafted by Senate Majority Whip Richard Durbin (D-Ill.) in his bill called the Helping Families Save Their Homes in Bankruptcy Act (S. 2136). After months of negotiations with Senate lawmakers, CUNA had thrown its support behind the proposed substitute amendment language to the mortgage bankruptcy title of the bill. In a letter to Senate Leadership, CUNA said credit unions recognize the need to be responsive to the current crisis in the subprime mortgage market and appreciated the effort that Durbin and his staff made over the last several weeks to address many credit union concerns. The mortgage bankruptcy substitute language would allow a bankruptcy court to adjust the terms of certain mortgage loans made before the enactment of the law. The proposal covered subprime and nontraditional mortgages and excluded all other mortgage loans, including interest-only loans originated with proper underwriting to a fully-indexed rate. Under the plan, a subprime mortgage loan would be one that has an annual percentage rate greater than 3% over the yield on a comparable security issued by the Treasury Department. If it is subordinate loan, subprime would be defined as a loan greater than 5% plus the equivalent Treasury security. The bill also includes a "means test" to qualify for the special relief and the bankruptcy court would have the authority to reduce the claim to an amount no lower than the current market value of the property. Last December, the House Judiciary Committee passed H.R. 3609, a similar although not identical bill to S. 2636. On Tuesday, President George W. Bush threatened to veto the package if passed by the House and Senate, according to Feb. 28 American Banker.

CUNA-AACUL spotlight regulatory concerns

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WASHINGTON (2/28/08)--The Credit Union National Association (CUNA) and the American Association of Credit Union Leagues (AACUL) have been meeting with federal regulators on subjects of growing concern to credit unions, such as mergers, field of membership (FOM), and examination issues. “Our attempt is to begin a dialogue on these issues between credit unions and the National Credit Union Administration (NCUA) in a cooperative way,” CUNA Deputy General Counsel Mary Dunn explained Tuesday. CUNA President/CEO Dan Mica and AACUL Chairman Rosie Holub backed up the meetings with a letter to the three members of the NCUA board, which emphasized credit unions’ concerns. In their joint letter, CUNA and AACUL discussed the roles of credit unions and examiners during the current climate of widespread mortgage and economic problems facing the country, as well the other key issues. Regarding the country’s mortgage market problems, the letter said credit unions should be encouraged to develop and participate in lending programs that allow them to work with their members, as they have in the past, and consistent with their purpose and mission, to modify mortgage loans as a means of avoiding the higher cost of foreclosure. “In addition, and in a measured and prudent way, credit unions should also be able to provide loans to others eligible to join the credit union who may have obtained problematic loans elsewhere,” Mica and Holub wrote to the NCUA board. They said examiners play a determinative role in facilitating or limiting such service at any time, but particularly during this economic downturn. The credit union leaders added that credit unions should have reasonable flexibility to develop workout plans for eligible members, as well as others in the field of membership who want to join as long as the credit union’s safety and soundness are not jeopardized in the process. In addition to Holub, of Missouri, and CUNA representatives, five additional state league presidents participated in the meetings with NCUA: John Dill of Colorado, Bill Cheney of California, Dick Ensweiler of Texas, Paul Mercer of Ohio, and Dave Adams of Michigan.

House Hearing on CU Reg Relief Set for March 6

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WASHINGTON (2/28/08)--The Credit Union National Association (CUNA) will be among those testifying at a hearing on regulatory relief options for credit unions that the House Financial Services Committee has planned for March 6. The full-committee hearing’s focus will be on the need for credit union regulatory relief and improvements. Major discussion is expected to be devoted to the provisions in the Credit Union Regulatory Improvements Act, H.R. 1537, introduced by Reps. Paul Kanjorski (D-Pa.) and Ed Royce (R-Calif.). CUNA President/CEO Dan Mica said Wednesday that the scheduling of a hearing during a heated election year in which major issues are being discussed nationally shows how credit unions have become front and center in the minds of Congress. “While we have the attention, we will take the opportunity to make our cases for greater regulatory relief for credit unions, particularly in the areas of expanding business lending to members, granting more flexibility in net worth requirements and allowing all types of credit unions to serve underserved areas,” Mica said in announcing the hearing. He added, “While we realize there are no guarantees, a hearing does serve to build further support in Congress for our legislative goals and enhances the likelihood Congress will take action on credit union legislation.” CUNA Vice Chairman Tom Dorety, CEO of Suncoast Schools FCU, Tampa, Fla., will testify for CUNA. Other groups expected to testify include the National Credit Union Administration, the National Association of State CU Supervisors, the National Association of Federal Credit Unions and a banking industry representative. “This is a very positive development,” said Ryan Donovan, CUNA vice president, legislative affairs. “It is the first time in nearly five years the House Financial Services Committee has focused exclusively on ways to provide credit unions with regulatory relief, giving our issues great visibility before this key committee and positioning us well for future action.” Donovan said the steady momentum behind CURIA, which now has 143 cosponsors as the result of the CU system’s grassroots lobbying efforts, created impetus for the hearing, which takes place on the final day of CUNA’s 2008 Governmental Affairs Conference. Both CURIA chief sponsors Royce and Kanjorski will be speaking at the GAC. Donovan also said the regulatory improvements likely to be discussed at the hearing will not be limited to those in CURIA. “We expect to discuss additional ways Congress can provide regulatory relief to credit unions,” he said. “New ideas will be put on the table and we look forward to having that discussion with committee members.”

Mica urges NCUA on with its FOM policy plan

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WASHINGTON (2/28/08)--The Credit Union National Association (CUNA) is urging the National Credit Union Administration to move forward with field of membership improvements for community credit unions. The NCUA’s objectives to change chartering and field of membership (FOM) policies regarding community chartered credit unions are positive, but the current proposal needs some changes, the group said in a recent letter. The comment period ended in August and CUNA is encouraging NCUA not to let the goal of an improved process for community charters falter. The CUNA letter was a follow up to meetings with federal regulators on subjects of growing concern to credit unions, such as proposed field of membership (FOM) changes, as well as mergers and examination issues. (See related story, “CUNA-AACUL spotlight regulatory concerns") CUNA President/CEO Dan Mica wrote to the NCUA reiterating CUNA’s strong support of the agency’s June 2007 FOM proposal, while offering suggested improvements. CUNA supported proposed continuation of the NCUA's treatment of single political jurisdictions. CUNA said the process allows a community federal credit union (FCU) to apply for a single city, county or portion of either, under a streamlined procedure. It presupposes the area constitutes a well-defined local area. The letter also reiterated support of the NCUA's intent to establish a parallel presumption for multiple jurisdiction federal credit unions seeking community charters. The proposal would use a standard statistical definition of a "well-defined community" based on the "Core Based Statistical Area" (CBSA) as defined by the Office of Management and Budget. Among problems with the agency plan, the letter noted that credit unions would like to see modifications in a notice and comment process proposed by the agency, and streamlined documentation requirements to add underserved areas. Also, the letter suggested that the NCUA's plan to request comment on issues relating to mergers involving community credit unions should be broken out of the field of membership proposal and looked at separately.

Inside Washington (02/27/2008)

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* WASHINGTON (2/28/08)--A hearing scheduled for today regarding compensation packages for executives from Countrywide Financial Inc., Citigroup and Merrill Lynch and Co. has been postponed to accommodate the schedules of witnesses (American Banker Feb. 27). A House committee is investigating the executives’ salary and retirement packages after the companies lost money in the housing crisis ... * WASHINGTON (2/28/08)--The Federal Deposit Insurance Corp. (FDIC) plans to beef up its staff in the Division of Resolutions and Receiverships as problems continue to arise in the housing market (Dow Jones Feb. 27). The FDIC is planning to bring 25 retirees back, many of whom worked for the agency during the savings and loans crisis in the late 1980s. The FDIC currently has 223 employees in the department, based in Dallas ...

Credit unions back mortgage bankruptcy compromise

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WASHINGTON (2/27/08)—After months of negotiations with Senate lawmakers, the Credit Union National Association (CUNA) has thrown its support behind an economic stimulus bill with modified language on allowing mortgage modifications in bankruptcy proceedings. The bill, introduced by Senate Majority Leader Harry Reid (D-Nev.) earlier this month, would provide $200 million for housing counselors to help families about to lose their homes to foreclosure. It would also raise the cap on mortgage revenue bonds, permit Community Development Block Grants to be used on foreclosed properties, and require improved disclosures to mortgage borrowers. The bankruptcy provisions in the legislation are modeled on a bill drafted by Senate Majority Whip Richard Durbin (D-Ill.) called the Helping Families Save Their Homes in Bankruptcy Act (S. 2136). In a letter to Reid and Senate Minority Leader Mitch McConnell (R-Ky.) Tuesday, CUNA reiterated its concern with “any legislation that would open the Bankruptcy Code” so soon after major revisions were enacted, referring to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. However, said the letter from CUNA President/CEO Dan Mica, credit unions recognize the need to be responsive to the current crisis in the subprime mortgage market. “We appreciate the effort that Sen. Durbin and his staff have made over the last several weeks to address many of our concerns,” Mica wrote. One important improvement noted in the letter concerns Durbin’s new definition of non-subprime loan. Mica said the change showed the senator’s recognition that some lenders, credit unions in particular, made suitable interest-only loans that legitimately factored in a borrower’s ability to repay the loan. The Senate is expected to act this week on the Reid stimulus package, with the Durbin amendment allowing bankruptcy judges to adjust the terms of certain loans made before the enactment of the law which are secured by the debtor’s principal residence, or secured by subprime mortgages, as well as some nontraditional mortgages. Under the plan, if a loan is secured by a first mortgage, a subprime loan would be one that has an annual percentage rate greater than 3% over the yield on a comparable security issued by the Treasury Department. If it is subordinate loan, subprime would be defined as a loan greater than 5% plus the equivalent Treasury security. The amendment also includes a “means test” to qualify for the special relief and a bankruptcy judge would have the authority to reduce the “allowed secured claim” to an amount no lower than the current value of the house. Last December, the House Judiciary Committee passed a similar although not identical, bill that would allow judges to cram down mortgage debt in bankruptcy, and also allow restructuring. Minority Leader McConnell is scheduled to address a record crowd of about 4,500 credit union representatives at CUNA Governmental Affairs Conference next week in Washington.

Inside Washington (02/26/2008)

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* WASHINGTON (2/27/08)--Sen. Ron Wyden (D-Ore.) yesterday proposed legislation to rate credit cards on a five-star scale based on the cards’ consumer protections (CongressDailyPM Feb. 25). His rating system is based on a National Highway Traffic Safety Administration crash ratings system. The system would provide a one-star rating to card issuers who change terms without notice. Issuers who give 90 days notice could earn more stars. Sen. Barack Obama (D-Ill.) is co-sponsoring the bill. There could be difficulty in determining the card ratings, asserted Leonard Chanin, associate director of consumer affairs at the Federal Reserve... * WASHINGTON (2/27/08)--Peer average ratios for December 2007 are available for single charter Financial Performance Reports (FPRs) on the National Credit Union Administration (NCUA) website. Users can receive FPRs for a single credit union or aggregate data for multiple credit unions. They also can request a two-page FPR summary for one credit union online. The ratios on aggregate FPRs are consolidated ratios for the group of credit unions and do not represent peer averages for that group, the NCUA said ... * ARLINGTON, Va. (2/27/08)--Expanded regulation on consumer lending to the military could affect the availability of credit to military members and their families, said the National Association of State Credit Union Supervisors (NASCUS) in a response letter to the Department of Defense (DoD) filed Feb. 25. The DoD requested comments for a report to Congress on the treatment of additional financial products and guidance on enforcing the consumer lending regulations to the military. NASCUS said it encourages financial education and a “robust complaint process” to curb abuses. Potential problems can be controlled by working with regulators, the association said ...

Mica Bank profits high despite mortgage crisis

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WASHINGTON (2/27/08)--Credit Union National Association (CUNA) President/CEO Dan Mica noted Tuesday that as the impact of mortgage-related losses continues and grows—and millions of homeowners are threatened with foreclosures on their homes--banks continue to post considerable profits. “Even in today's mortgage market, the bankers manage to post significant profits. It shows once again their cries of unfair competition from credit unions are nothing but hype and rhetoric," Mica said. "It makes it all the more objectionable that bankers are working to obstruct credit union efforts to help ease the country’s current credit crunch through modernizing the cap on member business lending (MBL),” Mica said. CUNA has recommended that provisions to increase the MBL cap to 20%, up from the current 12.25%, could be broken out of the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537) and passed independently to help increase credit availability in communities. The Federal Deposit Insurance Corporation (FDIC) Tuesday reported net income of $105.5 billion for banks in 2007, a decline of 27.4% and yet marking the sixth consecutive year income was still above the $100 billion mark. Higher provisions for loan losses, mostly due to weakness in residential mortgage and construction loans , and sharply lower trading revenue were primarily responsible for the drop in full-year earnings, according to the FDIC. The bulk of the earnings decline was attributed by the agency to a few large institutions, but fewer than half of all insured institutions were reported to have increased net income in 2007. "Weakness in the housing sector and the credit squeeze in financial markets made it a very challenging time for many institutions. And we can expect these problems to continue in 2008," said FDIC Chairman Sheila Bair in the release. She also said that "most institutions are so far successfully coping with the challenges they face. Perhaps, said CUNA’s Mica, it is these drops in profit predictions that bankers are most worried about when they seek to restrict credit union lending. “Certainly, their obstructionist efforts against credit unions show no concern with good public policy and what is best for the American consumer,” Mica added.

12 recommendations from NCUA Outreach Task Force

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ALEXANDRIA, Va. (2/27/08)—-The National Credit Union Administration’s (NCUA) Outreach Task Force provided to the NCUA board twelve recommendations yesterday: Membership Profile and Financial Services
* Collect membership profile data through the AIRES examination process; * Collect financial services data on the 5300 Call Report; * Publish aggregate data on membership profile and financial services in the NCUA Annual Report or other publication(s); and * Develop a means for each FCU to obtain its proprietary membership profile data from NCUA.
Senior Executive Officer Compensation
* Collect FCU and federal corporate credit union senior executive officer compensation during the examination, and then use AIRES and the Corporate Examination Database to capture the information; * Publish aggregate data on senior executive officer compensation in the Annual Report or other NCUA publication(s); and * Promulgate a regulation requiring federal credit unions and federal corporate credit unions to annually disclose individual senior executive officer compensation to their members.
Low-Income Definition
* Revise NCUA Rules and Regulations to replace MHI with MFI as one of the standards for qualifying a credit union as low income; and * Include a grandfather provision of five years to allow adequate transition time for any low-income credit union failing to qualify under the MFI standard.
Outreach
* Expand its outreach program(s) to include a broader spectrum of credit unions serving, or having the ability to serve, members of low or moderate income; * Emphasize increased regional involvement in the implementation of outreach policies; and * Improve its oversight of Community Development Revolving Loan Fund programs.

NCUA report wants data on membership compensation

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ALEXANDRIA, Va. (2/27/08)--Credit unions would be required to collect and report membership profile data under recommendations released yesterday by the National Credit Union Administration’s (NCUA) Outreach Task Force. The group also recommended increased disclosure of senior management compensation at federal and corporate credit unions. The proposals were among the 12 allocated to four areas:
* Membership profile and financial services; * Senior executive officer compensation; * Low-income definition; and * NCUA outreach.
(Click here to see the complete list of 12 recommendations.) NCUA Board Member Gigi Hyland chairs the task force, which was created in November 2006 to review recommendations from the Member Service Assessment Pilot Program (MSAP) on credit unions’ mission. NCUA staff members comprise the task force. During 2007, the task force conducted six town meetings across the United States to collect credit union input. The 85-page report concludes that membership profile information should be collected via NCUA’s Automated Integrated Regulatory Examination Software (AIRES) and reported aggregately. Federal credit unions could access their own reports, said the task force. The group also concluded that financial services data should be collected through the 5300 Call Report and should be published aggregately. The task force did not advocate that the agency monitor members’ use of any services. The task force also highlighted federal credit union executive management compensation. It pointed out that increased transparency of executive compensation would improve “accountability and be more consistent with the prevailing public policy.” The NCUA report did not recommend that individual senior executive compensation information should be provided to the public, although it did recommend that individual compensation information be disclosed to members annually. The task force also recommended that NCUA broaden its efforts to include all federally insured credit unions and to encourage greater involvement by the regional agency offices in implementing outreach policies. For any of the recommendations to be adopted, the NCUA board must first consider public comments before it takes action. The board indicated no timeline to begin the process, according to Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn, who was briefed by the agency early Tuesday. CUNA President/CEO Dan Mica expressed concern about any new regulatory burdens being imposed on credit unions, "given that credit unions are the most regulated of all financial institutions." "Our Governmental Affairs Committee is meeting in town at week’s end, and the Outreach Task Force report will be a major point of consideration," said Mica. "In fact, Board Member Hyland will be on hand to discuss the report’s recommendations with our group. Further, as our Governmental Affairs Conference gets underway next week, we are certain that the task force’s report will be discussed widely among the delegates." "Over the course of the GAC, and likely for the next several months, we look forward to the discussion--and debate--over the report, and the merits of the recommendations," said the CUNA leader. NCUA also will share the report’s findings with key offices on Capitol Hill, according to Dunn. Use the resource links below for a complete CUNA summary of the report and additional details from NCUA.

Inside Washington (02/25/2008)

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* WASHINGTON (2/26/08)--House Majority Leader Steny Hoyer (D-Md.) announced that the August recess will start Aug. 4 (CongressDailyPM Feb. 22), a week earlier than previously planned. In other news, Department of Housing and Urban Development Secretary Alphonso Jackson will testify today during a hearing regarding his sgency's 2009 budget. The Bush administration has proposed a 2.8% increase in discretionary spending in a $38.5 billion budget (CongressDailyAM Feb. 25) ...

Information on NCUA TAG grants available

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ALEXANDRIA, Va. (2/26/08)—The National Credit Union Administration (NCUA) has posted online its “General Guidelines 2008 Technical Assistance Grants (TAG) For Credit Unions” manual to assist those low-income designated institutions interested in applying for available funds. For fiscal years 2008 through 2009, Congress appropriated $975,000 to the Community Development Revolving Loan Fund (CDRLF) for the purpose of making grants. In addition to the appropriation, income earned on the CDRLF’s loans and the investment portfolios are also available for grant awards. The total funding is divided among the programs listed in the NCUA manual, which names and describes each initiative and notes application periods. Pages four and five of the NCUA guide include the following information:
* The application period for the Building Internal Capacity/Technology grant initiative opens March 7 and closes April 25. There is $300,000 allocated to the program, the maximum grant ward is $7,000, and awards will be announced June 20; * For Enhancing Member Services grants, the NCUA will accept application from May 2 to July 11 and has $400,000 for these awards. The maximum grant under this initiative is $15,000 and grants will be announced Sept. 5; * The application period for Staff, Official, and Board Member Training grants is currently open and will remain so until its $120,000 appropriation is exhausted. The maximum grant is $3,000; * The application process for Student Internship awards is currently open and will remain open until the program’s $85,000 funding is exhausted. The maximum amount per grant under this initiative is $3,000; * Starting May 12, low-income designated credit unions may apply for maximum grants of $6,500 under the Volunteer Income Tax Assistance program. The NCUA will cease taking applications when the programs $100,000 has been awarded; and * Applications for Urgent Needs Grants, for a maximum of $3,000 per grant, are currently being accepted. No closing date is noted in the manual.
Also included in the manual is information of such topics as: the way the NCUA’s grant process works; where can credit unions obtain grant applications; how grant applications are evaluated; and what factors might cause an application to be denied. Use the resource link below to access the NCUA information.

iRoll Calli notes CU fight to ease credit crunch

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WASHINGTON (2/26/08)—Credit union efforts to aid economic stimulus initiatives and bankers’ opposition to those efforts were spotlighted in an article Monday published by Roll Call, a widely read publication covering Capitol Hill. Staff writer Kate Ackley wrote that the nationwide credit crunch has reinvigorated the long-running lobbying feud between credit unions and the banking industry as credit unions seek to help ease the crunch with an increase in member business lending (MBL) authority. Credit unions have been seeking to address the current 12.25% of assets MBL cap through legislation, such as the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537) which proposes a 20% ceiling. However, in response to the nation’s credit woes, CUNA has pushed for breaking the MBL provision out of the more comprehensive CURIA bill as a way to open up more sources of credit for their communities. As CUNA President/CEO Dan Mica explains in the article, the credit union trade associations is pursuing three legislative options to get the cap raised: another stimulus package, a stand-alone bill and an amendment or rider attached to any other measure. “We think we would be a part of a solution this country needs,” Mica said in the article. He added that there seems to be no public policy reason credit unions shouldn’t be able to get the provision, but noted the bankers’ long-standing feud with credit unions as a hindrance. “At least in some part, the banks are responsible for this subprime crisis,” Mica added. “The credit unions have not been part of this problem in any way, so we think we ought to be able to make these small loans.” The article noted that banks want to “put the brakes” on the credit unions’ plan, arguing that “there is no credit crunch on its end — at least when it comes to business loans.” An unnamed banking lobbyist said in the article, “I don’t necessarily see how business loans would help. Lending to businesses isn’t really where the problem is. The problem is the housing market, and they can’t help in that regard.” The lobbyist called the credit unions’ efforts “opportunistic.” However, also in the article a House staffer said opening up more capital from credit unions would stimulate the economy. “The leadership in the Financial Services Committee has expressed an interest in moving parts of the legislation,” the aide said. “The loan limits could potentially increase.” Ackerman also noted that during its Governmental Affairs Conference next week, CUNA will be organizing about 4,500 credit union representatives to visit Capitol Hill during the GAC in support of increasing the caps and other legislative priorities. “Every state in the union will be represented,” Mica said.

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.

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 …

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.

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.

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.

Inside Washington (02/20/2008)

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* WASHINGTON (2/21/08)--Former depositors of Superior Bank, Hinsdale, Ill., were shut down by the U.S. Supreme Court Tuesday as they tried to reclaim losses they said the bank paid unfairly to shareholders. The court refused to hear the case, which depositors brought against the Pritzker family, a co-owner of the bank, and entitites such as the Federal Deposit Insurance Corp. The court’s decision not to hear the case upholds a decision an appeals court made last May in which plaintiffs were denied $20 million of the $31 million owed to the Pritzers after the bank went under in 2001 ... * WASHINGTON (2/21/08)--Lawmakers wrote a letter to Treasury Secretary Henry Paulson and Secretary of Education Margaret Spellings Friday urging them to ensure the liquidity of student loans available under the Federal Family Education Loan Program (FFELP). The lawmakers said they are concerned that lenders facing liquidity problems because of the credit crisis could affect long-term education financing. Nearly $60 billion in new FFELP loans will be needed for 6.7 million borrowers for the next school year. There have been several reports of lenders leaving FFELP because of the loans’ thin margins. College Loan Corp., one of the largest FFELP lenders, announced it will no longer participate in the program, the letter said ... * WASHINGTON (2/21/08--The Government Accountability Office (GAO) this week released its second of two reports that examines leveraging as it relates to federal housing and community and economic development programs. The report looks at the following programs: the Department of Housing and Urban Development’s (HUD) Community Development Block Grant (CDBG), HOME Investment Partnerships (HOME), and HOPE VI programs; and the Treasury Department’s Community Development Financial Institutions (CDFI) Financial Assistance, Low-Income Housing Tax Credit, and New Markets Tax Credit programs. Specifically, the GAO said in a summary, the report examines the leverage measures HUD and Treasury reported for the selected housing and community and economic development programs, and the transparency of the data and methods used to calculate them. Also, the report studied the relevance of leverage measures in assessing the performance of the selected programs. The report also provided examples of how federal funds have been leveraged in the selected programs …

NCUA on appraisal documentation records retention

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ALEXANDRIA, Va. (2/21/08)—As part of a string of legal opinion letters released this week, the National Credit Union Administration (NCUA) advised credit unions about documentation required on real estate appraisals and records retention requirements. Each letter was in response to specific inquiries made by an individual credit union. A third letter on member business lending “direct experience” requirements (News Now Feb. 19) was posted on the agency Website at the same time. Regarding real estate appraisals, the NCUA said its rules do not require a credit union to have a checklist or narrative to document its review of an appraisal ( 12 C.F.R. Part 722). However, while not required, the practice is recommended in interagency guidance on independent appraisal and evaluation functions. In 2005, the NCUA, along with the other federal financial institution regulators, issued joint guidance, which stated in part that appraisal reviews should be documented in loan administration files, either in “checklist or narrative format.” It further stated that certain appraisals should be reviewed more comprehensively to assess the technical quality of the appraiser’s analysis prior to making a final credit decision, according to the NCUA. The NCUA opinion letter on records retention stated that a federal credit union may preserve original loan documents for outstanding loans to members, in an electronic format instead of a paper format. “The Electronic Signatures in Global and National Commerce (E-Sign) Act established a general rule of validity for electronic records and signatures for transactions, effective October 1, 2000, with records retention requirements effective March 1, 2001,” the letter said. It referred attention to Part 749 of the agency's rules and regulations, which describe obligations for federally insured credit unions to maintain a records preservation program and implements the E-Sign Act.

Compliance Advertising rates during volatile time

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WASHINGTON (2/21/08)—In a volatile rate environment, can a credit union marketing department make it’s best informed guess at where its board will set next week’s rates and advertise based on that prediction? The Credit Union National Association’s (CUNA’s) February Compliance Challenge quizzes, What’s a marketing department to do when a deadline for a newspaper ad runs ahead of a rumored rate change? The Challenge poses this situation: A credit union marketing department wants to place an ad in the local newspapers for Home Equity Lines of Credit (HELOC) the following week. Rumors running throughout the credit union indicate the board of directors may approve a reduction in the HELOC APR to 5.25% at its meeting early next week. The trouble is the ad deadline is now. May the marketing department assume that the board will reduce the APR for HELOCs to 5.25% and advertise that in the newspapers? No. No. No. The marketing department should not advertise a HELOC APR of 5.25% based upon an assumption because the board may not actually agree to reduce the rate at all or may not reduce the APR as low as 5.25%, CUNA compliance experts warn. Regulation Z (Section 226.16(a)), implementing Truth in Lending Act provisions, requires a credit union only to advertise credit terms that will actually be made available to members. For more on this and other credit union compliance issues, use the resource link below to take the Compliance Challenge.

NCUA Legal opinion on lending experience rule

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ALEXANDRIA, Va. (2/20/08)—Credit unions may use different approaches to satisfy a federal requirement that it retain an employee with at least two years experience before launching a member business lending (MBL) program, according to a recent National Credit Union Administration (NCUA) legal opinion letter. The opinion letter was inspired by an inquiry asking whether a credit union must always use the services of a third-party underwriter to satisfy the NCUA’s member business lending (MBL) rule’s two-years-of-direct-experience requirement. NCUA Associate General Counsel Sheila Albin responded that while a credit union may use the services of an outside party, it is not required to do so. It also may use the direct experience of its own employees. Further, wrote Albin, a credit union is not required to hire an individual who has the requisite experience at the time of hiring. It may satisfy the direct experience requirement instead with an employee who has developed the requisite experience over time. However, if a credit union chooses to take the latter course of action, it is subject to certain regulatory limitations. For instance, to qualify an existing employee must be familiar with such things as the proper underwriting, analysis, and origination of MBLs in order to understand their complexity and risk exposure. Use the resource link below to read the NCUA’s entire opinion letter.

Inside Washington (02/19/2008)

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* WASHINGTON (2/20/08)--The Federal Housing Administration (FHA) may ease some of its FHASecure requirements to help more mortgage borrowers (American Banker Feb. 19). Currently, only 6% of the total $136 billion adjustable-rate mortgages are eligible. The FHA has received 229,597 applications from current borrowers and 5,638 applications from delinquent borrowers, said Bill Glavin, special assistant to Brian Montgomery, FHA commissioner. About 1,487 borrowers have been helped so far. Last month, the American Securitization Forum said if the program were expanded, it could help 607,000 borrowers, or 68% of delinquencies. Glavin noted that the recently approved $168 billion economic stimulus package could help FHASecure by raising FHA, Fannie Mae and Freddie Mac loan limits to $729,750, though the loan limits expire at the end of this year ... * WASHINGTON (2/20/08)--National banks will pay roughly 2.5% lower assessment fees effective March 31, the Office of the Comptroller of the Currency (OCC) announced yesterday. OCC will reduce rates in each assessment bracket, and add two new brackets for the largest banks. The new framework replaces the existing top bracket, which applies to the portion of assets held by a national bank exceeding $40 billion. The two new brackets will be for assets between $40 billion and $250 billion, and assets exceeding $250 billion ...

Inside Washington (02/18/2008)

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* WASHINGTON (2/19/08)--Representatives from the National Credit Union Administration’s (NCUA) Office of Public and Congressional Affairs answered questions and distributed materials at the National Consumer Protection Week Consumer Education Fair on Capitol Hill yesterday. NCUA was joined by several other federal agencies and consumer groups at the event, which helped raise awareness of the upcoming National Consumer Protection Week March 2-8, 2008. Credit Union National Association President/CEO Daniel Mica visited the NCUA booth during the event. From left are Mica and Jeremy Carl, NCUA associate director of external affairs. (Photo provided by CUNA) ...

Live UBIT update webcast from GAC

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WASHINGTON (2/19/08)—The Credit Union National Association (CUNA) will be staging a March 4 Webcast to present the most timely information on unrelated business income tax (UBIT), including an update on litigation and compliance issues. The Webcast will be broadcast live from CUNA’s Governmental Affairs Conference (GAC) held here from March 2-6. It will present an overview of the history of UBIT, as well as detail the status of a UBIT lawsuit filed in January by Community First CU against the Internal Revenue Service. Community First, based in Appleton, Wisc., is seeking a refund of taxes paid on income from several insurance products. The credit union said at issue is about $54,000 in taxes it paid in 2006 on income from the sale of credit life and credit disability insurance, and guaranteed auto protection (GAP) insurance. CUNA backs the credit union’s action and challenges recent opinions issued by the IRS stating that several insurance and investment products are subject to UBIT. CUNA strongly believes the activities are consistent with state-chartered credit unions' tax exempt purposes and, therefore, not subject to UBIT. The March 4 Webinar will be moderated by Larry Blanchard, UBIT Steering Committee chairman and CUNA Mutual Group SVP of special projects. Also scheduled to participate are: Eric Richard, CUNA general counsel, Faye Patzner, CUNA Mutual Group general counsel, Mary Martha Fortney, CEO, National Association of State Credit Union Supervisors, and Brett Thompson, President/CEO, Wisconsin CU League. The free Web session will be 2:00-3:15 p.m. ET. Use the resource link below to register for the Webcast.

Massachusetts Egan defines credit union CRA stance

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WASHINGTON (2/19/08)—Credit unions were not involved the discriminatory lending practices that brought about the Community Reinvestment Act in the 1970s and they already lend to their communities, said Dan Egan, president of the Massachusetts CU League, in a recent article. Countering calls from a Massachusetts banker to apply CRA to credit unions and other lenders, Egan said, “Credit unions are all about community. They’re already lending within their communities.” Anabela Pereira, chief executive of the Pioneer Valley FCU, backing up Egan’s statement, said federally chartered credit unions shouldn’t be covered by CRA because they’re so community-focused by nature. “We’re complying without even complying with the CRA,” said Pereira, of the Springfield-based credit union, in the article. The credit union officials made their remarks in a Feb. 18 Boston Herald piece, “Banker Wants CRA Expanded.” The article reported that Citizens Bank Chairman Lawrence Fish stirred up controversy within Massachusetts financial circles recently by insisting in a Washington Post column that CRA should apply to all credit unions and Internet banks. State-chartered credit unions in Massachusetts already are required to comply with CRA requirements. Fish, as chairman of Citizens Financial Group, also testified Feb. 13 before the House Financial Services Committee at its hearing, “The Community Reinvestment Act: Thirty Years of Accomplishments, but Challenges Remain.” The committee is expected to conduct additional hearing on CRA, focusing on the law's relevancy today and ways in which it could be modified to better reflect the changing financial services environment.

NCUA issues prohibition orders against six

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ALEXANDRIA, Va. (2/19/08)--The National Credit Union Administration (NCUA) has issued orders prohibiting six individuals from participating in the affairs of any federally insured financial institution. The NCUA posted the following announcement its Web site:
* Herbert R. Hansen, a former manager at the merged Dorsey Laboratories FCU, Lincoln, Neb., pled guilty to embezzlement. Hansen was sentenced by the U.S. District Court of Nebraska to 15 months in prison followed by 5 years of probation and ordered to pay $298,414 in restitution; * Danielle Hartsell, a former teller at former Nor-Car FCU, Easton, Pa., consented to entry of a prohibition order against her prohibiting her from further participation in the affairs of any federally insured financial institution; * Kennae Rakeem Jeffries, a former employee at Honda FCU, Torrance, Calif., has been prohibited from participating in the affairs of an insured credit union or other federally insured financial institution and ordered to pay $61,541.75 plus interest in restitution; * Nathan Marcum, a former loan officer at the former U.S. Employees Butler County Ohio FCU, Fairfield, Ohio, pled guilty to credit union theft and filing a false income tax return. The U.S. District Court for Southern Ohio sentenced Marcum to 28 months in prison followed by three years of supervised probation, and he was ordered to pay $242,270 in restitution: * Angelica H. Sim, a former teller at Coastway CU, Cranston, R.I., pled no contest to charges of embezzlement and fraud before the Rhode Island Superior Court. Sim received a 5-year deferred prison sentence and was ordered to pay $28,000 in restitution; and *Irene Nancy Worona, a former teller at Mercer County Community FCU, Sharon, Pa., pled guilty to three counts of theft and was sentenced by the Mercer County District Court to three years of supervised probation.
Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million. Use the resource link below to find NCUA prohibition orders online.

CUNA DCUC urge caution with any DoD rule tweaks

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WASHINGTON (2/18/07)—In a joint letter to the Department of Defense (DoD), two credit union groups said DoD accomplished its goal to target certain predatory lending practices with its rule to implement provisions of the John Warner 2007 National Defense Authorization Act. The Credit Union National Association (CUNA) and the Defense Credit Union Council (DCUC) noted that the Act was intended to stop specific predatory lending practices that have been the most harmful to military servicemembers and their families. “In our view, this objective has been accomplished primarily by limiting the impact of the rule to those creditors that offer payday loans, vehicle title loans, and refund anticipation loans (RALs),” the groups said. The letter noted that credit unions have been, and will continue to be, a “significant partner in the battle to eradicate predatory lending.” “For this reason, we would oppose expanding the scope of this rule to include other lending products, as this may unnecessarily interfere with the products offered by credit unions that would benefit military servicemembers and their families,” the letter warned. If DoD is considering that or any other change to its current rule, CUNA and DCUC advised that the department wait a “significant period of time” before making any changes to determine whether the current rule is sufficiently meeting the objectives of the 2007 Act. The letter noted a number of initiatives that CUNA and credit unions support as a means to promote consumer financial education to help Americans avoid the pitfalls of abusive lending practices and to become better managers of their personal finances. Credit unions provide financial education, in combination with responsible lending products, and thereby have enabled credit unions and their members to escape much of the direct impact of the subprime mortgage crises that is currently gripping the country. Credit unions’ traditional focus on providing financial education for consumers has been enhanced on the national level by such things as CUNA’s Financial Literacy Task Force, formed in 2006. The Task Force hosted a financial literacy summit in September of its inaugural yea and has issued “a substantive long-term strategic plan,” the letter noted. “Of specific interest to DoD, CUNA and a number of other sponsors produce a weekly one-hour radio program that focuses on financial education. This program offers consumer finance information and advice from financial services experts on topics such as mortgages, savings options, retirement plans, car buying, debt management, and more,” it added. Use the resource link below to read the complete letter.

Ellsworth signs on to support CURIA

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WASHINGTON (2/18/08)—Rep. Brad Ellsworth (D-Ind.) signed on to the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537) last week to become the 143rd official backers of that bill. In 2007 Ellsworth, a freshman congressman and a credit union member, unseated his Republican opponent, Rep. John Hostettler, who cast one of only eight votes paced against H.R. 1151, the 1998 Credit Union Member Access Act. Key features of CURIA include proposals to:
* Increase the current cap on loans to members for business purposes (MBLs) from 12.25% to 20% of assets, allowing credit unions to assist more members start and expand small businesses and to promote economic growth. The bill would also exempt loans under $100,000 and those to nonprofit religious organizations from the MBL calculation; *Reform the National Credit Union Administration's original prompt corrective action system to a risk-based approach more closely resembling the current Federal Deposit Insurance Corp. capital standard for banks; * Clarify the 1998 Credit Union Membership Access Act to allow all credit unions, regardless of charter type, to serve those in underserved areas. The bill would also update the definition of an underserved area, incorporating definitions from the Community Development Financial Institutions Act and the New Markets Tax Credit; and *Establish additional consumer safeguards in the event of a credit union conversion to another form of financial institution.
For more CURIA details, a complete list of co-sponsor, and related stories, use the resource links below.

Inside Washington (02/15/2008)

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* WASHINGTON (2/18/08)--Senate Democrats are putting together a package to help the housing market. Senate Majority Leader Harry Reid said the package could go on the floor Feb. 25 (CongressDaily PM Feb. 14). It would provide $200 million for housing counselors to help families about to lose their homes and raise the cap on mortgage revenue bonds by $10 billion. Four billion dollars would be placed in a Community Development Block Grant to help cities buy and revive foreclosed properties. Language to clarify home disclosure statements would be included, in addition to a measure that would allow bankruptcy judges modify mortgages on the brink of foreclosure ... * WASHINGTON (2/18/08)--House Financial Services Committee Chairman Barney Frank (D-Mass.) said he has been working on more proposals to keep homeowners from foreclosure (American Banker Feb. 15). He has collected input from the Treasury Department and Bank of America on how to protect servicers who modify loans from investor lawsuits. Frank also is working on proposals to allow public entities to purchase foreclosed properties and refinance distressed loans ... * WASHINGTON (2/18/08)--Comptroller of the Currency John Dugan promoted awareness of consumer protection resources at a National Consumer Protection Week event on Capitol Hill Friday. The Office of the Comptroller of the Currency (OCC) supported the week’s theme “Financial Literacy: A Sound Investment” by sharing information, resources and providing staff to answer questions. Topics address included gift cards, cashiers checks, nontraditional mortgages and how to get assistance through the agency’s consumer assistance group. The OCC’s website, HelpWithMyBank.gov, provides answers to questions based on calls to the consumer assistance group each year ...

Compliance Mortgage Forgiveness Act and Form 1099-C

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WASHINGTON (2/15/08)--Cancellation of debt reporting requirements have NOT changed under the Mortgage Forgiveness and Debt Relief Act of 2007 and information to the contrary is just plain wrong, according the compliance experts at the Credit Union National Association (CUNA). Under the act, credit unions still must:
* Fill out the Form 1099-C on home loans in foreclosure; * Fill out the Form 1099-C on home loans where they work out with the borrower a loan modification where less debt will be repaid by the borrower than under the original contract; and * Fill out the Form 1099-C on bankruptcies involving business and investment debt.
"Just keep filing those 1099-C form, as required," says Kathy Thompson, CUNA's senior vice president of compliance. "An ‘identifiable event'--as spelled out in the 1099-C instructions--has occurred, so the form needs to be filed, even though the person may no longer have to pay tax on the amount reported as ‘canceled.'" What does the new law do? Thompson says it temporarily provides that the discharge of indebtedness on mortgage loan "acquisition indebtedness" up to $2 million--secured by the borrower's principal residence--will not trigger federal income taxation. And the law only waives the income taxation for 2007, 2008 and 2009. Thompson explains: A key reason the IRS needs the 1099-C is to start that dialogue with the taxpayer on whether taxes are due or are forgiven under the temporary law. The loan not only must have been secured by the member's principal residence but also had to be "acquisition debt" – money borrowed to buy, build or improve the home. "Debtors who have heard about the new law may be surprised to learn that if they refinanced and used money to buy a car, pay tuition or take a vacation, the new law doesn't provide them tax relief," noted Thompson. "And mortgage loans secured by property that is not the debtor's principal residence aren't covered by the 2007 debt relief act." "But whether the borrower qualifies for tax relief isn't the credit union's concern. Credit unions just need to keep filing the 1099-C any time a debt over $600 is canceled. Don't make any changes in your current 1099-C filing procedures--or if applicable, 1099-A ‘abandonment' forms, Thompson warns. Use the resource link below for more on this and other credit union compliance issues.

Financial Services member circulates CU story

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WASHINGTON (2/15/08)—Rep. Tom Price sent a letter to all his colleagues in the House focusing their attention on a Wall Street Journal article entitled “Credit Unions Offer Lifeline on Mortgages.” Price, a Republican from Georgia, is a member of the House Financial Services Committee. Price wrote to his fellow lawmakers, “The article points out that while some lenders have tightened underwriting standards given current market conditions,…many credit unions remain well capitalized and in a position to help the consumer refinance.” The article, which originated as a Dow Jones News Service column and was picked up by WSJOnline, said: “Big banks still smarting from multibillion-dollar subprime losses have tightened lending standards and are lending almost exclusively to those with top credit scores. Many individual who were eligible a year ago fro a traditional mortgage can’t get refinancing for their subprime loan. “Credit unions to the rescue. Unlike big lenders, credit unions didn’t suffer losses in recent months because they never made risky subprime loans.” The article also highlighted Credit Union National Association Chief Economist Bill Hampel's assessment that most credit unions have strong balance sheets and near-record capital levels, which allow them to make any type of loan despite the subprime crisis.

NCUA releases Feb. 21 meeting agenda

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ALEXANDRIA, Va. (2/15/08)—The National Credit Union Administration (NCUA) released the agenda for its Feb. 21 open board meeting. The agency will consider a final rule on Part 797 of its rules and regulations for debt collection procedures. Also on the agenda is the agency’s quarterly insurance fund report.

Inside Washington (02/14/2008)

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* WASHINGTON (2/15/08)--National Credit Union Administration Chairman JoAnn Johnson highlighted important credit union programs and initiatives that are making a positive impact in African-American communities because of February as African-American History Month. “I appreciate the role credit unions are playing in empowering African American communities, particularly in the area of financial literacy and homeownership,” Johnson said ... * WASHINGTON (2/15/08)--The U.S. Small Business Administration (SBA) renewed its partnership with the Minority Business RoundTable (MBRT) yesterday in an effort to support small-business development initiatives in underserved communities. The partnership will allow organizations to share resources and educate minority entrepreneurs on how to use SBA products and services to grow business. The two-year agreement intends to help strengthen and expand small-business development in the nation for minority entrepreneurs ... * WASHINGTON (2/15/08)--A bailout of the bond insurance industry is not necessary, said Charles Chaplin, chief financial officer of bond insurer MBIA, during testimony to a House panel. MBIA is adequately capitalized to meet policyholder obligations, he added (The New York Times Feb. 14). Problems in the bond industry were triggered by the subprime mortgage crisis, leaving insurers worried about their credit ratings. Gov. Eliot Spitzer (D-N.Y.) said millions of Americans who own bonds could lose money, and college loans, state and local taxes, and museum budgets could be affected. U.S. Rep. Paul Kanjorski (D-Pa.) has suggested tighter regulation of the bond industry while Warren Buffett, billionaire investor, said he could help by offering $800 billion in second insurance ...

Inside Washington (02/13/2008)

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* WASHINGTON (2/14/08)—The Senate Banking Committee Wednesday voted 11-10 to approve a bill that would serve to ban most commercial firms from owning industrial loan corporations (ILCs). ILCs are state-chartered banks offering limited financial services and fall under Federal Deposit Insurance Corp. supervision. (CongressDailyPM Feb. 13). Sen. Mike Crapo (R-Idaho) had been expected to introduce financial institutions regulatory relief provisions as an amendment to the ILC bill, but scrapped his plans after the Credit Union National Association and the National Association of Federal Credit Unions Tuesday said credit unions could not support a lopsided package. The draft amendment would have proposed to increase business lending limits and auto lending investment limit for thrifts, but failed to address the credit union member business lending ceiling or modification of the credit union prompt corrective action system to a risk-based approach … * WASHINGTON (2/14/08)--Rep. Maxine Waters (D-Calif.) could propose legislation that would ban foreclosures unless loan mitigation efforts are made. Acceptable mitigation efforts include late-payment waivers, loan-term modification, forbearance, maturity date extension, or moving the loan to another mortgage company (American Banker Feb. 13). Borrowers who could prove their credit scores were affected by subprime adjustable-rate mortgages would not be disqualified from mitigation. Industry representatives say the bill would cause problems because it would break existing mortgage contracts and open loan servicers to lawsuits ... * WASHINGTON (2/14/08)--Comptroller of the Currency John Dugan called for revisions to the Community Reinvestment Act (CRA) to provide CRA consideration for community development investments in middle-income communities distressed by foreclosures. Dugan also asked Congress to require nonbanks to comply with CRA requirements. The nonbanks played a large role in the subprime mortgages, and because they are not covered by CRA, they have no CRA incentive to address these problems, he said ...

CU literacy program noted at presidents council

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WASHINGTON (2/14/2008)--President George W. Bush’s Advisory Council on Financial Literacy held its inaugural meeting yesterday in Washington, D.C., with the Credit Union National Association’s (CUNA) financial education partner seated at the table. During the first meeting, council members introduced themselves, proposed financial literacy initiatives and established subcommittees.
Click to view larger image CUNA Regulatory Attorney Luke Martone (left) and National Endowment for Financial Education (NEFE) President/CEO Ted Beck in the Treasury's Cash Room before the start of yesterday's inaugural meeting of the President's Advisory Council on Financial Literacy. CUNA and NEFE have a partnership for the High School Financial Planning Program. (Photo provided by CUNA)
Ted Beck, CEO of the National Endowment for Financial Education (NEFE)—CUNA’s eight-year partner in financial literacy efforts--serves on the panel. Cutler Dawson, president/CEO of Navy Federal CU in Merrifield, Va., also is a member. Beck told the council that NEFE’s High School Financial Planning Program (HSFPP) has reached more than 800,000 high school students. He also noted that NEFE’s efforts to create a pilot program for college students. “Financial literacy is a continuous process,” said Beck. U.S. Rep. Judy Biggert (R-Ill.), who formed the Financial and Economic Literacy Caucus in 2005, provided opening remarks and acknowledged NEFE’s Beck. CUNA partnered with NEFE in 2000. Under the partnership, CUNA encourages credit unions to have their local schools offer HSFPP, which is a free financial education resource for high school students. The student guides carry the America's Credit Unions brand. As part of the literacy council’s organization agenda, five subcommittees will address:
* Financial Literacy for Youth; * Workplace Financial Education; * Financial Access for Underserved; * Research on State of Financial Literacy in the U.S.; and * Outreach.
The 19-member council’s mission is to focus exclusively on economic empowerment issues. It operates under the guidance of the U.S. Treasury Department with the specific charge of "keeping America competitive and assisting citizens in understanding and addressing financial matters." Charles R. Schwab, chairman/CEO of the Charles Schwab Corp., serves as the council's chairman. Operation HOPE Founder, Chairman/CEO John Hope Bryant is vice-chairman. The council’s next meeting is scheduled for June 18.

CUNA urges careful FACT Act definitions

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WASHINGTON (2/14/08)—The Credit Union National Association (CUNA) supports proposed Fair and Accurate Credit Transactions (FACT) Act rules and guidelines intended to enhance the “integrity” and “accuracy” of information furnished to credit bureaus. CUNA argues, however, that both terms should be defined in guidelines, not within the rules themselves. Under an inter-agency plan proposed last November, consumers would be able to directly dispute inaccuracies about certain information reflected on their consumer reports with the furnishers of that information. The proposal was issued by the National Credit Union Administration (NCUA), the Federal Trade Commission (FTC), and other agencies are required to develop rules under provisions of the Fair and Accurate Credit Transactions (FACT) Act. In comment letter to the NCUA and FTC, CUNA said it is “very concerned” with the proposal’s definition of accuracy, which requires that the information provided to the credit rating agencies (CRAs) be completely “without errors.” CUNA suggested that the phrase be deleted from the definition. CUNA said that it believes the definition of “accuracy” should also apply to the provisions of the proposal that require furnishers of credit information to investigate disputes, based on a direct request from the consumer. Further, CUNA argued that it is unnecessary for the definition to include a requirement that furnishers update the information as necessary to ensure the information is correct. “Credit unions recognize that updating the information is necessary, but are concerned that new regulatory requirements may necessitate significant operational changes. The agencies should clearly indicate that institutions will not be required to undergo arbitrary exercises, but will be expected to keep the information current,” the CUNA letter recommended. .CUNA also urged caution with the definition of “integrity” found in the regulators’ plan and warned that the definition should not dictate the form and manner in which credit information should be reported. CUNA also recommended to the NCUA that its examiners be trained so they understand that many credit unions may not need to develop extensive policies and procedures. Also, the agencies should consider developing model policies and procedures that credit unions may use. Use the resource link below to read CUNA’s complete comment.

House members see CUs to the rescue column

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WASHINGTON (2/14/08)—Credit Union National Association (CUNA) President/CEO Dan Mica Wednesday shared a little sunshine with House members on a cold, dank Washington day: a Dow Jones News Service column on how credit unions are helping their communities amid rising mortgage foreclosure rates. In an accompanying note to the lawmakers, Mica explained that the column shows “how credit unions are filling the gap created by other lenders who are dropping out in the wake of the subprime crisis.” “As the column’s author notes: ‘Credit unions to the rescue. Unlike big lenders, credit unions didn’t suffer heavy losses in recent months because they never made risky subprime loans,’” Mica pointed out. The Feb. 11 article also highlighted CUNA Chief Economist Bill Hampel’s assessment that most credit unions have strong balance sheets and near-record capital levels, which allow them to make any type of loan despite the subprime crisis. A version of the article also appeared on Wednesday on WSJ Online.

Franks panel takes broad look at CRA

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WASHINGTON (2/14/08)—The House Financial Services Committee Wednesday began what its chairman has said will be a broad study of the 31-year-old Community Reinvestment Act (CRA), and as expected the fact that credit unions do not fall under CRA requirements was noted during the hearing proceedings. CRA was enacted in the late 1970s to stop banks from denying credit to consumers and small businesses in low-income areas The general picture that developed during the testimony of three panels of witnesses at Wednesday’s hearing was that CRA has been an important piece of legislation to encourage better lending practices. The committee heard from federal banking and thrift regulators, and industry and consumer groups. The regulatory agencies represented at the hearing were the Federal Reserve Board, Comptroller of the Currency, Federal Deposit Insurance Corp., and the Office of Thrift Supervision. In general, those witnesses concurred that CRA had been successful in its intent and suggested relatively minor changes that they said could update the law sufficiently to address emerging issues. “While the hearing today was broad and exploratory, we know that there are more to come and we will be following developments closely,” said Ryan Donovan, CUNA vice president of legislative affairs, after the hearing. He noted that it is likely that, as during a question-and-answer session with witness John Taylor of the National Community Reinvestment Coalition, the committee will hear occasional calls to apply CRA to credit unions. Donovan reiterated CUNA’s opposition to the imposition of CRA requirements on credit unions. “It would make no sense to impose CRA on credit unions for the simple reason that credit unions may only lend to their members, who are the sources of their deposits, and therefore--by their very nature--comply with the spirit of the Act,” Donovan said. CUNA analysis has shown that as credit union ability to serve communities has increased, their performance in lending to low- and moderate-income (LMI) borrowers is superior to other lenders. According to 2005 and 2006 data collected through Home Mortgage Disclosure Act (HMDA) reporting:
* Credit unions make a greater proportion of HMDA-covered loans to LMI borrowers than do other mortgage lenders; * Credit unions approve first mortgage loans to LMI and minority borrowers at much higher rates than do other lenders. Similarly, credit unions deny first mortgage loans to LMI and African American borrowers at much lower rates than do other lenders; * Credit unions are much less likely than other lenders to make high-rate loans. When credit unions make high-rate loans the rates tend to be substantially lower than the rates typically charged by other lenders; and * Credit unions are portfolio lenders, whereas other lenders are much more likely to use the originate-to-sell model--which has been recognized as one of the key drivers of sub-prime lending abuse and recent mortgage market disruptions.
The House Financial Services Committee is expected to conduct additional hearing on CRA, focusing on the law’s relevancy today and ways in which it could be modified to better reflect the changing financial services environment.

Inside Washington (02/12/2008)

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* WASHINGTON (2/13/08)--The Treasury Department announced Project Lifeline, which would help borrowers who have missed more than three mortgage payments. Though they are not required, lenders would attempt to modify borrowers’ loans to be more affordable (The New York Times Feb. 12). Those who are bankrupt, who will face foreclosure within one month, or who purchased vacant or investment properties do not qualify for Project Lifeline. Lender participants include Citigroup, Bank of America, Countrywide Financial, Washington Mutual, JPMorgan Chase and Wells Fargo. About 575,000 borrowers could be helped by the project, according to Moody’s Economy.com. Ted W. Lieu (D), chairman of the banking and finance committee of the California State Assembly, said the plan was “like giving six students a homework assignment but not requiring that they turn in the assignment or even report on its progress.” Lieu told the newspaper that the banking industry has not followed through on its commitment to help homeowners ... * WASHINGTON (2/13/08)--The Office of the Comptroller of the Currency (OCC) has suspended the chairman of First National Community Bank in Dunmore, Pa. Louis A. DeNaples was charged with four counts of perjury on Jan. 23 during his testimony to Pennsylvania state officials. The suspension prohibits him from participating in any other depository institutions while his criminal charges are pending ... *WASHINGTON (2/13/08)--The Federal Reserve Board announced Wednesday that it has made amendments to Appendix A of Regulation CC that reflect the restructuring of the Federal Reserve's check processing operations in the Tenth and Eleventh Districts. As of April 19, 2008, the head office of the Federal Reserve Bank of Kansas City no longer will process checks, and banks currently served by that office will be reassigned to the head office of the Federal Reserve Bank of Dallas. As a result of these changes, some checks deposited in the affected regions that currently are nonlocal checks will become local checks that are subject to shorter permissible hold periods…

SBA notes CUs five-year 7a participation

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WASHINGTON (2/13/2008)—-Five years ago this month, the U.S. Small Business Administration (SBA) expanded its guaranteed loan program to all credit unions, regardless of charter. More than 385 credit unions now participate in the SBA 7(a) program.
Click to view larger image (CLICK TO ENLARGE) CUNA President/CEO Dan Mica (left) and SBA Administrator Steve Preston yesterday discuss credit union participation in SBA lending. (Photo provided by CUNA)
Credit unions’ increased participation in SBA programs was among the topics Credit Union National Association (CUNA) President/CEO Dan Mica and SBA Administrator Steve Preston discussed yesterday at the agency’s headquarters in Washington, D.C. Credit unions accounted for only about 1% of such lending in 2007. While Preston noted credit unions’ greater participation in SBA lending, and said he remains focused on providing more capital to help small businesses grow. Mica praised the SBA for improved paperwork processes, but said the agency should continue to improve efforts at speeding applications, a point Preston acknowledge and pledged to improve. Mica and Preston discussed other impediments to member business lending (MBL) for credit unions--including the statutory cap on MBLs. Even though the Federal Credit Union Act’s MBL cap does not apply to SBA loans, the restriction results in credit unions’ reluctance to even initiate MBL programs, according to Mica. “Because of credit unions’ restrictions, they can’t count on partnering with the SBA on all their MBLs,” said Mica. “MBL programs are costly to set up and administer and credit unions may reach the cap fairly soon with non-SBA loans.” Preston also explained to Mica two key SBA initiatives--the Patriot Express program to meet the business lending needs of military personnel; and the Rural Advantage Program, which provides a simplified application process for loans up to $350,000 or less in rural communities. “CUNA looks forward to working closer than ever with the SBA to help credit unions meet the lending needs of small businesses in their communities, which in turn can help strengthen the economy,” Mica told Preston. CUNA Deputy General Counsel Mary Dunn and SBA National Ombudsman Nick Owens also participated in the meeting.

NACHA rule change to ID originators

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WASHINGTON (2/13/07)—The originators of automated clearinghouse transactions will have to be identified starting June 20 under a rule change recently adopted by NACHA, the electronic payments association. The Credit Union National Association (CUNA) has supported the identification plan. CUNA maintains that it would enhance a Receiving Depository Financial Institution’s (RDFI’s) customer service capabilities by reducing the time it would take to resolve customer service inquiries. Credit unions are more likely to be RDFIs than an originator of the payments transaction. NACHA has said that it is rare to encounter problems with the identification of companies in ACH transactions. (American Banker, Feb. 12) However, CUNA believes the new requirement will cut customer services costs by reducing the number of inquiries prompted when a consumer doesn’t recognize a transaction. CUNA is currently performing a final rule analysis of the NACHA action and will soon have more information for credit unions.

CUNA NAFCU No support for lop-sided reg relief bill

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WASHINGTON (2/13/08)--A broad regulatory relief effort being considered by the Senate Banking Committee was scrapped late last night after the Credit Union National Association (CUNA) and the National Association of Federal Credit Unions (NAFCU) Tuesday said credit unions could not support the lop-sided language. In a rare joint letter, sent to Senate Banking Committee Chairman Christopher Dodd (D-Conn.), CUNA and NAFCU applauded Sen. Mike Crapo (R-Idaho) and other panel members for taking the lead in the Senate on regulatory relief for financial institutions in 2008. But the credit union groups said they could not back an amendment as drafted because it would not provide balanced regulatory relief for all financial services providers. For instance, the package proposes to increase business lending limits and auto lending investment limit for thrifts, but does not address the credit union member business lending ceiling or modification of the credit union prompt corrective action (PCA) system to a risk-based approach. “The credit union and bank amendments to this legislation are not in balance and we cannot, consequently, support them,” said CUNA President/CEO Dan Mica Tuesday. “We applaud and thank Sen. Crapo for this leadership on the overall issue of regulatory relief for financial institutions, especially credit unions. However, regulatory relief among financial institutions must be in equilibrium in order for all to have the same opportunities to thrive,” Mica said. “We will be working with senators to achieve regulatory relief that is balanced and we appreciate this opportunity to broach this issue in the Senate,” he added. The Credit Union Regulatory Improvements Act (CURIA, H.R. 1537), with 142 official supporters in the House, proposes to increase the member business lending cap to 20%, up from the current 12.25%, and also to modify PCA to a risk-based system. “Credit unions are well suited to help during these difficult economic times when credit is becoming scarce. We believe that providing balanced and meaningful evenhanded regulatory relief to all financial institutions would provide significant economic stimulus at no cost to taxpayers. We urge you to support such efforts,” the CUNA-NAFCU letter said. Sen. Crapo was expected to introduce his financial institutions regulatory relief provisions as an amendment to an industrial loan company bill that is scheduled to be considered by the Senate Banking Committee on Wednesday. Late Tuesday evening, Crapo's office announced it would not offer the amendment.

Inside Washington (02/11/2008)

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* WASHINGTON (2/12/08)--The Securities and Exchange Commission (SEC) is weighing its credit-rating-company rules after investors lost on products backed by subprime mortgages (Bloomberg Feb. 11). The SEC could propose new rules this spring that would provide more information about past ratings and the difference between ratings on corporate and municipal bonds versus ratings on structured debt. Banks and securities have lost $146 billion since 2007, the agency said ... * ALEXANDRIA, Va. (2/12/08) -- National Credit Union Administration (NCUA) Vice Chairman Rodney Hood said he would come away from the 25th anniversary celebration for the nation’s largest student-run federal credit union with best practices to incorporate in his Blueprint 2020 Initiative. At the celebration, Hood commended Georgetown University Alumni and Student Federal Credit Union (GUASFCU) for its 25 years of service and for spreading knowledge of the philosophy and mission of credit unions and raising awareness of the careers available in this industry. The goal of Hood’s Blueprint initiative is to attract well-trained and highly competent new credit union employees, board members, supervisory committee members and credit committee members to the credit union movement. Hood noted that GUASFCU is entirely student-run; currently, with over 150 interns, and raises awareness of the careers available in the industry …

Rep. Lantos CURIA co-sponsor dies at 80

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WASHINGTON (2/12/08)—Rep. Tom Lantos (D-Calif.), known to credit unions as a supporter of regulatory relief legislation, died Monday morning at Bethesda Naval Medical Center, according to his office. Lantos, the only survivor of the Holocaust ever to serve in Congress, was diagnosed with esophageal cancer in December and subsequently announced he would not seek re-election due to his anticipated medical treatments. At the time of his decision, Lantos said, “It is only in the United States that a penniless survivor of the Holocaust and a fighter in the anti-Nazi underground could have received an education, raised a family, and had the privilege of serving the last three decades of his life as a Member of Congress. I will never be able to express fully my profoundly felt gratitude to this great country.“ “Tom Lantos was a distinguished member of Congress and a friend to credit unions,” Ryan Donovan, vice president of legislative affairs fro the Credit Union National Association (CUNA), said Monday. “He will be sorely missed in the House, and in the country, and across the world,” he added. Lantos, known as a unwavering human rights advocate, was a co-sponsor of the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537).

Credit union SBA participation on agenda

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WASHINGTON (2/12/08)—Credit Union National Association (CUNA) President/CEO Dan Mica is scheduled to meet today with the administrator of the Small Business Administration (SBA) to explore greater credit union involvement in SBA programs. CUNA has been in regular contact in recent years with the SBA urging the agency to remove structural roadblocks to programs like its 7 (a) guaranteed lending program to enable more credit unions to participate. Bucking a general trend of decline in 7 (a) participation, the SBA reports that 386 credit unions are currently in the 7a program—up from 315 a year ago. However, CUNA has told the SBA and testified on Capitol Hill that more credit unions want to use the program but are kept out because of costs and complex paperwork. Credit unions represent only about one percent of SBA lending, CUNA says. Last month, SBA Administrator Steven Preston said that loan volume for its signature 7 (a) program has decreased overall, and that originations dropped to 20,000 in the fourth quarter. He said his agency is attempting to expand participation, but acknowledged that such things as slow loan turnaround times, a lack of support services for lenders, and complex rules and paperwork can be roadblocks to participation. Because of these roadblocks, the SBA has lost 368 financial institutions in the past two years--a 7% decline, Preston said. (American Banker, Jan. 23) In November, the agency started a program to speed up payments of loan guarantees, but it faces challenges such as inefficient workflows and information technology systems. It could take until April or May to streamline the program, according to Preston.

CUNA watches CRA developments

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WASHINGTON (2/12/08)—It is important to note that credit unions are not a target of this week’s hearing on the Community Reinvestment Act (CRA), said Ryan Donovan, vice president of legislative affairs for the Credit Union National Association, Monday. The House Financial Services Committee has scheduled a “commemorative” hearing on Wednesday entitled "The Community Reinvestment Act: Thirty Years of Accomplishments, but Challenges Remain." (News Now, Feb. 6) “Obviously, we are watching this very closely,” Donovan said of the proceedings, “It would be naïve to believe the credit unions won’t come up at all during the hearing. But the committee chairman has never indicated an interest in applying CRA requirements to credit unions. However, we have been told that we are not the focus of the hearing and that this is not a legislative hearing." ” “In fact, Chairman Frank has been heard to say that if every lender operated as credit unions do, there would be no need of CRA,” Donovan added. He noted that the chairman, Rep. Barney Frank (D-Mass.), has said he intends to conduct a series of hearings on CRA this year and is looking at expanding its coverage beyond banks and thrifts to such entities as finance and insurance companies. "Regardless of the focus Wednesday, we know that at a hearing like this, anything can happen. Members of the committee and the witnesses can bring up just about anything--including credit unions--either in the testimony or during the question-and-answer period," Donovan said. There are no credit union witnesses scheduled among the 15 slated to appear, Donovan said, because “in general, the credit union industry does not have CRA expertise.” Congress enacted CRA in 1977 in response to the "redlining" of lower income and minority neighborhoods by banks and thrift institutions during the 1960s and early 1970s. The purpose was to ensure that for-profit financial institutions were adequately meeting the financial service needs of all parts of the communities from which they draw deposits. To see names and affiliations of witnesses, use the resource link below.

Comedian Klein headlines Late Night at the GAC

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WASHINGTON (2/11/08)--Robert Klein--the acclaimed comedian whose career has also encompassed Broadway, television and film--will be this year's entertainment for "Late Night at the GAC." The Bronx-born Klein was nominated twice for Grammy Awards for "best comedy album of the year" for his albums "Child of the Fifties" and "Mind Over Matter." He received a Tony nomination for best actor and won a Los Angeles Drama Critics Circle Award for his performance in the hit Neil Simon musical, "They're Playing Our Song." He also has appeared in many notable films, most recently in "Rein Over Me," "Two Week's Notice," and "How to Lose a Guy in 10 Days." Klein's television appearances include a starring role on the hit NBC series, "Sisters." And he is a regular on the TV talk shows, with more than 100 appearances over the years on "The Tonight Show" and "Late Night with David Letterman" alone. Late Night at the GAC is March 4 during CUNA's Governmental Affairs Conference in Washington, DC. There is still time to register.

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.

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.

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.

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” ...

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.

Lawmakers ask OCC for credit card perspective

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WASHINGTON (2/8/08)—In another indication that the topic of credit card reform is reigniting on Capitol Hill, five members of the House Financial Services Committee recently asked the Office of the Comptroller of the Currency for its recommendations for improved practices. In a letter signed by three Democrats and two Republicans, the panel members outlined reform proposals currently circulating and requested that Comptroller John Dugan supply his agency’s analysis of the broader impact of each plan of action. “Our primary goal is to ensure that legitimate consumer concerns are aggressively addressed while minimizing the potential negative unintended consequences that may arise thought overly broad legislative solutions,” the letter said. The lawmakers said that given the “ongoing and growing concerns” about the state of the nation’s economy and in light of the 2.5 billion cards in circulation worldwide, the issues involved in reform considerations are “too important .to consumers and financial institutions to “act imprudently.” The letter is signed by Reps. Dennis Moore (D-Kan.), Christopher Shays (R-Conn.), Ed Perlmutter (D-Co.), Michael Castle (R-De.), and Nydia Velazquez (D-N.Y.) and dated Feb. 1. Also on the Hill this week, Rep. Barney Frank (D-Mass.), who chairs the House Financial Services Committee, and Rep. Carolyn Maloney (D-N.Y.), who heads that panel's financial institutions subcommittee, circulated a “Dear Colleague” letter asking fellow House members for support for credit card reforms. (See News Now, Feb. 7) Specifically, the letter to Comptroller Dugan requests analysis of proposals, including:
* Prohibiting issuers from determining pricing of credit card rates based on reasons unrelated to whether cardholders have paid their bills on time; * Setting limits on the maximum interest rate that can be applied to credit cards; * Improving the timing and adequacy and clarity of credit card disclosures; and * Requiring allocation of payments to higher rate balances first, or to apply payments on a pro-rata basis to outstanding balances subject to different interest rates, such as promotional rate balances vs. new balances or cash advances.

NCUA warns vishing attacks are increasing

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ALEXANDRIA, Va. (2/8/08)—The National Credit Union Administration (NCUIA) has warned credit unions that “vishing” attacks are on the rise—scams that use telephone systems to garner confidential identification information. As with “phishing” which uses electronic contacts, in vishing attacks crooks claim to be with legitimate financial institutions or other entities. They ask consumers to “verify” or “re-submit” personal information such as bank account and credit card numbers, Social Security Numbers, passwords, and personal identification numbers The NCUA fraud alert explains that vishing scams use of social engineering and Voice over Internet Protocol (VoIP) technology to exploits the public's trust in landline telephone services. “The victim is often unaware that VoIP allows for caller ID spoofing thus providing anonymity for the criminal caller,” the alert noted. The NCUA said vishing is attractive to criminals because VoIP service is fairly inexpensive, especially for long distance, making it cheap to make fake calls. Also, because it’s Web-based, criminals can use software programs to create phony automated customer call center service lines. The NCUA advised that, for their protections, consumers should be” highly suspicious” when receiving messages—via telephone, email, or otherwise--directing them to call and provide personal, confidential, and/or account related information For their part, credit union managers must, where appropriate file a Suspicious Activity Report in accordance with established regulation. As specified by NCUA Rules & Regulations Part 748, management must provide notice to the appropriate NCUA Regional Director, and in the case of state-chartered credit unions, to their state supervisory authority. Management is advised also to contact and file a report with local law enforcement authorities. The NCUA said it will continue to follow the issue and provide information as the situation warrants. Late last month, the agency sounded the alarm about a new scam in which fraudulent wire transfers have been performed on home equity lines of credit (HELOC) at several financial institutions, including credit unions.

BSA compliance Where is the Sect 326 list

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WASHINGTON (2/8/08)— Credit union personnel keeping track of compliance requirements associated with the USA Patriot Act probably wonder what ever became of an elusive list named by the act., according to the Credit Union National Association’s (CUNA’s) Compliance Challenge. Section 326 of the USA Patriot Act requires institutions to check “a list of known or suspected terrorists or terrorist organizations issued by any Federal government agency and designated as such by Treasury in consultation with the Federal functional regulators.” But did the federal government ever issue a “Section 326 List”? “To date, no such list has been issued,” says Valerie Moss CUNA’s director of compliance information “For the time being, credit unions need to check any lists issued by the Office of Foreign Assets Control (OFAC) and respond to the Financial Crime Enforcement Network’s (FinCEN) 314(a) requests for information.” CUNA will let credit unions know if the elusive 326 List ever appears, she adds. Use the resource link below for more on this and other compliance topics.

Capitol Hill urged to support Little Guy in 08

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WASHINGTON (2/8/08)--Urging Capitol Hill pedestrians to “Look out for the Little Guy in ’08,” among other slogans, a group of credit union representatives reintroduced the Little Guy to congressional staffers during a “standout” here yesterday.
Click for slide show (CLICK TO VIEW SLIDESHOW) Throngs of people encounter credit union activists standing up for the “Little Guy” on Capitol Hill Thursday morning. (Photo provided by CUNA)
Waving signs and holding placards amid a colorful background of “Little Guy in ‘08” balloons, the 30 credit union representatives distributed about 3,000 buttons to passers-by. The buttons featured the Little Guy, the slogan “Little Guy in ‘08” and the Little Guy’s website-- www.lookoutforthelittleguy.org. Buttons were also distributed to nearly all offices of senators and representatives. According to the Credit Union National Association’s (CUNA) Patrick Keefe, the purpose of the event was three-fold to:
* Direct congressional staffers and others to the “lookoutforthelittleguy.org” website, * Reintroduce them to the “Little Guy” in 2008; and * Remind them that credit unions serve the “Little Guy.”
“Political campaigns use ‘stand outs’ to demonstrate support for a particular candidate or cause by gathering a group of supporters equipped with signs to distribute literature or buttons or other campaign paraphernalia,” Keefe said. “We felt congressional staff, in this historic political year when they are paying close attention to the elections, would be drawn to an election event look and feel when reintroducing the Little Guy for the year,” he noted. The credit union representatives positioned themselves at locations close to the commuter entry points on the House and Senate sides of Capitol Hill. Commuters were offered buttons while the credit union representatives waved the signs and placards and chanted the slogans. Among the other slogans recited during the “standout”:
* “There’s no debate, Little Guy in ’08!” * “Show the Little Guy some big love in ’08.” * “Careful! Don’t step on the Little Guy.” * “You cannot deny the Little Guy!” * “How ‘bout some big props for the Little Guy.”
“Once again in 2008, we will be using alternative means that typified our campaign in ’07 for sending the message that Congress should ‘look out for the Little Guy,’ by supporting credit unions and their issues,” Keefe said. “Look for other events and activities in months to come.” Watch clips from yesterdays event by clicking on the video below.

Inside Washington (02/07/2008)

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* WASHINGTON (2/8/08)—Credit union shared branching networks banded together last year to dispel confusion caused by separate networks requiring different procedures for fulfilling Bank Secrecy Act (BSA) requirements. The networks designed a single rule to apply nationwide in an effort to promote consistency and increase clarity for credit unions who join the networks. However, despite the policy action, confusion lingers among credit unions regarding requirements within networks for such things as filing of Currency Transaction Reports (CTRs), Suspicious Activity Reports (SARs) and performing Office of Foreign Assets Control (OFAC) checks. FSCC Network is offering free BSA Shared Branching Rules Trainings on March 25 and April 9 to help credit unions gain clarity … * WASHINGTON (2/8/08)--Congress Thursday approved a $168 billion economic stimulus package that would give low- and middle-income Americans, retirees and disabled veterans government rebate checks (The Los Angeles Times Feb. 8). Individuals would receive checks up to $600. Couples would receive checks up to $1,200 and $300 for each child. Disabled veterans, low-income and retirees on Social Security would receive $300. The checks should arrive in May ... * WASHINGTON (2/8/08)--Senate Banking Committee Chairman Christopher Dodd (D-Conn.) said he will schedule a panel vote next week regarding commercial ownership of industrial loan companies (ILCs). Dodd said Wednesday that he plans to move forward with his bill to ban ILCs despite opposition from Sen. Robert Bennett (R-Utah), a strong ILC supporter (American Banker Feb. 7). Dodd’s efforts come after a moratorium on ILC applications, imposed by the Federal Deposit Insurance Corp., expired Jan. 31 ... * WASHINGTON (2/8/08)--The Office of the Comptroller of the Currency (OCC) published a Community Developments Insights report describing how the Low-Income Housing Tax Credit program is used to develop affordable rental housing. It also addresses the considerations facing bank investors who invest in the credits ...

Reps. Frank Maloney seek credit card bill support

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WASHINGTON (2/6/08)—Rep. Barney Frank (D-Mass.), who chairs the House Financial Services Committee, and Rep. Carolyn Maloney (D-N.Y.), who heads that panel’s financial institutions subcommittee, have asked fellow House members for support for credit card reforms. In what is known as a “Dear Colleague” letter, Frank and Maloney noted that they are introducing comprehensive credit card legislation they say addresses major abuses, while fostering fair competition and “the values of the free market.” According to the bill’s designers, it would:
* Offer cardholders the right to cancel their card when faced with a rate increase while paying off their existing balance at the rate they agreed to when they borrowed it; * Bar issuers from applying rate increases retroactively, to existing balances, for reasons unrelated to whether cardholders have paid their bills on time: * Ban collection of interest on amounts already paid; * Require issuers to allocate a cardholder's payment between their balances, where cardholders have balances at different rates; * Stop issuers from using "prime rate", "fixed rate" and similar terms in a deceptive way by setting a single definition of such terms; * Require that payments made before 5pm EST on the due date be considered on time and be credited that day; * Require that for cards whose total fixed fees over a year exceed 25% of the credit limit, all fees for the year be paid up front, before the card is issued.
The letter said that Frank and Maloney plan to move forward promptly with legislative hearings and markups this spring. Last year, Frank put card reform on his committee’s legislative priorities agenda and charged Maloney with the task. The New York congresswoman in August, after convening a roundtable discussion with credit card issuers and consumer groups, identified four principles she said would guide her credit card reform legislation. The first “pillar” is to ensure consumers are able to repay their debt before a credit card is issued. The second pillar is simpler consumer disclosures. The third is to better inform cardholders throughout the time they hold a card. The final is to promote consumer education by issuers that would encourage "responsible, successful credit use, especially among new credit entrants and customers with special needs."

New IRS filing requirements for some state-chartered CUs

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WASHINGTON (2/6/08)—A new Internal Revenue Service filing requirement kicks in this year for small state credit unions that have not been obliged to file IRS Form 990s or 990-EZs. Small credit unions with "gross receipts" of $25,000 or less are now required to electronically file Form 990-N or e-Postcard. “It is important for state-chartered credit unions to be aware of the rule change, and our analysis indicates that about 350 will be affected by the new requirement,” Lilly Thomas, assistant general counsel for the Credit Union National Association, said Tuesday. A CUNA Final Rule Analysis defines gross receipts as the total amounts an organization received from all sources during its annual accounting period, without subtracting any costs or expenses. Credit unions that are required to file the e-Postcard should have received a notice from the IRS informing them of their requirement. CUNA warns credit unions that failure to file a required e-Postcard for three consecutive years will result in the loss of tax-exempt stautus. The form is due by the 15th day of the fifth month after the close of the organization’s tax period. For example, if their tax period ends on Dec. 31, 2007, the form is due May 15, 2008. There are a few exceptions for organizations not required to file Form 990 or Form 990-EZ that have gross receipts of less than $25,000, and would not be required to file the new e-Postcard (new Internal Revenue Code Section 6033(i)). These include federal credit unions as well as credit unions that are included in a group 990 return. To read the full CUNA analysis, use the resource link below.

Inside Washington (02/06/2008)

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* WASHINGTON (2/7/08)--Robert Steel, Treasury undersecretary for domestic finance, expressed that he would be open to expanding the Hope Now alliance mandate if the interest-rate freezes do not help enough subprime borrowers with adjustable-rate mortgages (American Banker Feb. 6). Steel answered questions regarding the alliance during an American Securitization Forum conference in Las Vegas Tuesday and indicated the Treasury may consider additional foreclosure prevention … * WASHINGTON (2/7/08)--Senate Banking Committee Chairman Christopher Dodd (D-Conn.) was expected to meet with Federal Reserve Board Chairman Ben Bernanke yesterday to discuss the foreclosure crisis (American Banker Feb. 6). Dodd met with Treasury Secretary Henry Paulson Jan. 25 to discuss similar topics, and is scheduled to meet today with Federal Deposit Insurance Corp. Chairman Sheila Bair today regarding commercial ownership of industrial loan companies … * WASHINGTON (2/7/08)--Thirty small banks have been chosen by the Federal Deposit Insurance Corp. for a two-year pilot project regarding small-dollar lending products. The study aims to identify replicable small-dollar loan products can be used as payday loan alternatives. Participation in the study is voluntary. Best practices will be used as a resource for other financial institutions …

Fed consumer advisers to take up mortgages foreclosures

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WASHINGTON (2/6/08)—The Federal Reserve Board announced Wednesday that its Consumer Advisory Council (CAC) intends to take up proposed rules for residential mortgage transactions an foreclosure issues at its next meeting, scheduled for March 6. The CAC advises the Fed on its responsibilities under the Consumer Credit Protection Act and on other matters in the area of consumer financial services. The group meets three times a year in Washington, D.C. I n January, the Fed named 10 new members to the CAC, including Alan Cameron, president/CEO of the Idaho CU League who was nominated by the Credit Union National Association (CUNA). Cameron is also head of the CUNA head Consumer Protection Subcommittee. CUNA believes that it is very important for credit unions as consumer-owned co-ops to have representation on the Fed’s consumer advisory board because it does have the Fed’s ear on consumer regulatory issues, The 30 members of the CAC are appointed by the Board of Governors to serve staggered three-year terms.

House committee hearing to examine CRA

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WASHINGTON (2/6/08)--The full House Financial Services Committee will hold a hearing next week on the Community Reinvestment Act (CRA). The hearing, “The Community Reinvestment Act: Thirty Years of Accomplishments, but Challenges Remain,” is scheduled for Feb. 13. Witnesses for the invitation-only event were not determined. According to CUNA Legislative Affairs Vice President Ryan Donovan, the hearing is being held to mark the 30th anniversary of the passage of the Community Reinvestment Act, and is not likely legislative in nature. As early as last summer, House Financial Services Committee Chairman Barney Frank (D-Mass.) indicated plans for a comprehensive review of CRA, which he said has eroded because of an increase in nonbank lenders who need not abide by such rules (News Now Sept. 12, 2007). Frank said it would be unfair to exclude any institutions from a CRA review, but acknowledged if every financial institution was like a credit union, CRA would be unnecessary. CUNA remains opposed to CRA for credit unions. Donovan said the Feb. 13 hearing represents the first in what is likely to be a series of hearings on the issue. He did not expect credit unions to be in the spotlight. “Regardless of the focus, we know that at a hearing like this, anything can happen. Members of the committee and the witnesses can bring up just about anything--including credit unions--either in the testimony or during the question and answer period,” he said. Congress enacted CRA in 1977 in response to the “redlining” of lower income and minority neighborhoods by banks and thrift institutions during the 1960s and early 1970s. The purpose was to ensure that for-profit financial institutions were adequately meeting the financial service needs of all parts of the communities from which they draw deposits.

NCUA alert warns of late HMDA filings

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ALEXANDRIA, Va. (2/6/08)— Credit unions subject to Home Mortgage Disclosure Act requirements for 2007 activity must submit loan/application register (LAR) data to the Federal Reserve Board (FRB) by March 1, 2008. Noting that date in a recent regulatory alert, the National Credit Union Administration (NCUA) also warned of the possible consequences of a late filing. A credit union must file HMDA data in 2008 if it meets these three criteria:
* Had total assets as of Dec. 31, 2006 that exceeded $3 7 million., a threshold established by the the Federal Reserve Board; * Has a home or branch office in a metropolitan statistical area (MSA); and * Originated during 2007 at least one home purchase loan or a refinance of a home purchase loan secured by a first lien on a one-to-four-family dwelling.
In its alert, the NCUA stated it anticipates that every credit union that is required to report 2007 HMDA data will provide a readable transmission file to the FRB by the March 1, 2008 deadline. Following March 1st, the Fed will provide a list of delinquent filers to the NCUA, the agency noted, and credit unions appearing on this list could become subject to civil money penalty assessments. Use the resource link below to access the NCUA Alert.

Inside Washington (02/05/2008)

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* WASHINGTON (2/6/08)--The Office of Housing and Enterprise Oversight announced that President Bush’s 2009 budget would provide $66.6 million for the agency. The amount is $0.6 million more than the 2008 budget. The budget also calls for legislation to create a regulator for Fannie Mae, Freddie Mac and the Federal Home Loan Banks ... * WASHINGTON (2/6/08)--A proposed requirement forcing lenders to assess a mortgage borrower’s ability to repay could increase loan costs, said Gov. Randall Kroszner of the Federal Reserve Board Monday. The rule could raise litigation risk and compliance costs, which would then increase credit costs for borrowers with high risks, he added (American Banker Feb. 5). The proposal could go into effect next year. The comment period ends April 9 ... * WASHINGTON (2/6/08)--Ford Motor Co. filed another application Friday for an industrial loan company (ILC), marking the first commercial firm to apply for a charter after a moratorium on ILCs imposed by the Federal Deposit Insurance Corp. expired last month. Ford applied in June 2006 but later withdrew its application (American Banker Feb. 5) ... * WASHINGTON (2/6/08)--President Bush announced Monday that the proposed 2009 budget for the U.S. Small Business Administration would authorize more than $28 billion in its primary small-business financing programs, including a level of $17.5 billion for the Guaranteed Loan Programs, $7.5 billion for the Certified Development Company, and $3 billion for venture capital support under the Small Business Investment program. The overall proposed budget is $657 million, a 15.5% increase over 2008 and a 6% increase in core operating budget over 2008. Including anticipated carryover funds, the total spending package would be $819 million ...

Task force to address third-party vendors due diligence

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WASHINGTON (2/5/08)-–The Credit Union National Association (CUNA) is establishing a new task force to help credit unions meet their due diligence responsibilities with third-party vendors and to do so without unnecessary duplication of effort. The National Credit Union Administration (NCUA) has identified third-party vendor relationships as one of its top examination issues for 2008. The CUNA task force will be headed by Chairman Henry Wirz of SAFE CU in California, and Vice Chairman William Raker of US FCU in Minnesota and will be comprised of 14 additional members from around the country The new task force will provide practical resources and model procedures for assessing, controlling and monitoring the risks associated with third-party vendor agreements and performance. Last week, the NCUA staged a Webinar on 2008 top exams issues. Dominick Nigro, information systems officer of the NCUA's Office of Examination and Insurance, said effective third-party due diligence must include background checks, review of the vendor's business model, and the vendor's financial condition. Board member Gigi Hyland, who moderated the session, specifically highlighted the need to review the legal agreement with the vendor and to ensure compliance with all applicable state and federal laws. The other members of the CUNA task force members are:
* Tom Dare, associate general counsel, CUNA Mutual Group, Madison, Wisc.; * Charles Emmer, president/CEO, ENT CU, Colorado Springs, Co.; * Dave Fearing, VP Sales/Services. Ohio CU Union, Dublin, Ohio; * Tom Gaines. president/CEO., Tennessee CU League, Chattanooga, Tenn.; * Joseph Ghammashi, VP/chief risk officer, Corporate One FCU, Columbus, Ohio; * Debie Keesee, president/CEO, Spokane Media FCU, Spokane, Wash.; * RoxAnne Kruger, SVP, Business and Member Development, Washington CU League, Federal Way, Wash.; * Erin Mendez, SVP, IS and Finance Orange County Teachers FCU, Santa Ana, Calif.; * Dave Osborn, president/CEO, Anheuser-Busch Employees U, St. Louis, Mo.; * Earle Pierce, director, Internal Audit, Community First CU of Florida, Jacksonville, Fla.; * Lisa Pleasure, director, Internal Audit, CommunityAmerica CU, Lenexa, Kan.; * John Sackett, board chair, Royal CU, Eau Claire, Wisc.; and * Christina Vaughn, compl;iance officer, Municipal ECU of Baltimore, Md.

California lawmaker wins CUNA financial ed award

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WASHINGTON (2/5/08)--California State Assemblyman Ted Lieu will receive the Credit Union National Association's (CUNA's) 2007 National Desjardins Youth Financial Education Award for State Lawmakers for his efforts to pass legislation that would funds financial education programs in the state’s schools. In nominating Lieu for the award, the California Credit Union League said the lawmaker’s commitment to the financial literacy issue reveals a “deep understanding of the powerful consequences of appropriate and effective financial literacy on individuals, families and the economy.” Elected to the California State Assembly in 2006, Lieu immediately led the effort to craft a bill that would have authorized schools to include personal finance and financial literacy curriculum in the existing economics requirements for high school graduation. Governor Arnold Schwarzenegger ultimately vetoed the bill. Leiu responded the following year with another bill that would have established the California Financial Literacy Initiative. The program would have collected public and private funds and disbursed them to schools for financial literacy programs. Schwarzenegger also vetoed that bill, calling it “unnecessary.” Lieu will be honored at the 2008 CUNA Governmental Affairs Conference (GAC) in March. The award was bestowed by CUNA's State Credit Union Subcommittee. The award for state lawmakers is the third component of the Desjardins Awards. Related awards go to credit unions and leagues making outstanding efforts to promote financial literacy.

CUNA presses for CU comment on charter changes

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WASHINGTON (2/5/08)—The Credit Union National Association (CUNA) is launching an all-out press to encourage credit unions to comment on a National Credit Union Administration initiative to more clearly define a credit union board's fiduciary duties in the face of major decisions, such as mergers or conversions to mutual thrifts. The NCUA is asking credit unions whether it should develop new regulations that would address situations in which a federally insured credit union merges or converts to another type of financial institution, other than a mutual savings bank. The agency is also asking for comments on whether it should amend its current rules on mergers, charters conversions and changes in account insurance. The requests for comments were issued in the form of an advance notice of proposed rulemaking (ANPR) at the Jan. 24 open NCUA board meeting. Mary Dunn, CUNA SVP and deputy general counsel, said Monday, “The NCUA is asking for a whole new layer of regulation for credit unions. We want to make sure the agency receives appropriate comment on every element of their ANPR as they seek comment.” Dunn said CUNA’s efforts prior to forming its comment will be multi-pronged. CUNA will initiate its Operation Comment, which enables a credit union to submit its comment both to NCUA and CUNA simultaneously through the CUNA website. It will be briefing its Federal CU Subcommittee and its Examination and Supervision Subcommittee, Community CU Committee, and the CUNA Councils on the issues involved. CUNA also will be working with its Governmental Affairs Committee during its Governmental Affairs Conference in Washington March 2-6. According to NCUA, the agency is looking for ways to protect the interests of members when their credit union is considering transactions that would significantly affect members’ rights, such as a change in the ownership of the credit union, termination of a credit union’s charter or its federal share insurance. More specifically, NCUA is focusing on six types of transactions:
* A merger of a federally insured credit union (FICU) into another FICU; * A merger of a FICU into a privately insured credit union (PICU); * A conversion of a federally insured state credit union (FISCU) into a PICU; * A merger of a FICU into a financial institution other than a mutual savings bank; and * A conversion of a FICU into a financial institution other than an MSB.
Comments are due tot the NCUA March 31.

Treasury to unveil reg restructuring progress

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WASHINGTON (2/4/08)—Treasury Under Secretary for Domestic Finance Robert. Steel will speak publicly Thursday on Treasury's progress in creating a blueprint to improve the U.S. financial regulatory structure. Steel is scheduled to make his remarks at the New York Society of Security Analysts Annual Wall Street Forum in New York City at 8 a.m. Treasury Secretary Henry Paulson announced plans in June to evaluate and improve financial regulations in ways that would increase efficiency, reduce overlap, strengthen consumer and investor protections and ensure that financial institutions have the ability to keep pace with evolving markets. In October, the department requested public comment on issues involved in its ambitious and comprehensive plan improve the framework for the regulation and insurance of financial institutions. The Credit Union National Association (CUNA) wrote that the current regulatory structure is right for credit unions. Consolidating federal financial institution regulatory agencies would have dire consequences for credit unions because they are "distinctive and exceptional financial organizations" that require their own regulatory framework, the CUNA letter to Treasury said. For more of the CUNA comment letter, use the resource link below.

Inside Washington (02/04/2008)

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* WASHINGTON (2/5/08)--Basel II will be effective April 1, but the 12 largest financial institutions in the U.S. may need six months or more to comply with it. The final rule for Basel II states that financial institutions must submit their compliance plans to regulators by Oct. 1, but they can implement the plans as late as April 1, 2011 (American Banker Feb. 4). During the interim, the institutions must have four consecutive quarters of Basel I compliance but calculate Basel II levels. Gil Schwartz, a former Federal Reserve Board lawyer, said he didn’t think financial institutions would face too many barriers to implement Basel II. Rob Strand, a senior economist at the American Bankers Association, said risk managers are busy. If banks implement Basel II during a rough patch, capital requirements would increase, he added ... * WASHINGTON (2/5/08)--The California Reinvestment Coalition, the Community Reinvestment Association of North Carolina, the Neighborhood Economic Development Advocacy Project and the New Jersey Citizen Action are objecting to the sale of Countrywide Financial Corp. by Bank of America. The consumer groups have asked the House Financial Services Committee and the Senate Banking Committee to hold congressional hearings on the matter. The groups stated that Countrywide’s business practices have contributed to many of its borrowers facing foreclosure and they are concerned that Bank of America has not released a plan to ensure that efforts will be made to keep borrowers in their homes ... * WASHINGTON (2/5/08)--The Securities and Exchange Commission (SEC) extended Sarbanes-Oxley compliance for one year so it can conduct a cost-benefit study of Section 404. The study will consist of a Web-based survey and in-depth interviews, and is expected to be complete later this year. Section 404 requires company management to assess the effectiveness of the company’s internal controls over financial reporting ...

Financial institution diversity in House subcommittees sights

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WASHINGTON (2/4/07)--The House subcommittee on oversight and investigations, has announced a hearing Thursday on diversity in the financial services industry. The hearing will focus on the employment, retention and promotion of minorities and women at all levels in the financial services sector, according to announcement from the subcommittee’s chairman, Rep. Melvin Watt (D-N.C.). Watt said witnesses would include representatives from the Equal Employment Opportunity Commission (EEOC), financial industry representatives and non-governmental organizations that monitor workplace diversity. The subcommittee will be investigating best practices for expanding the presence of women and minorities in the financial services industry and economic benefits that may result from diversity. “This hearing will examine workplace diversity in the financial services industry. I look forward to hearing from the Equal Employment Opportunity Commission (EEOC), industry representatives and non-governmental organizations that monitor workplace diversity about best practices for expanding the presence of women and minorities in the financial services industry and about the economic benefits that result from diversity.”

President wants deep CDFI cutsagain

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WASHINGTON (2/4/08)—In his FY 2009 budget proposal submitted to Congress Monday, President George W. Bush is seeking a deep reduction in the money appropriated for the Treasury Department’s Community Development Financial Institutions (CDFI) Fund. The administration plan would give the CDFI Fund $28.6 million, broken into two parts: $24.4 million for the actual CDFI program and $4.2 million for the New Market’s Tax Credit Program. That is down from the $94 million approved by Congress for FY 2008. The 2009 spending plan requests no funding for either the Bank Enterprise Program or Native American initiatives. In its FY2006 and FY2007 budget proposals, the Bush administration proposed consolidating the CDFI Fund along with several other community development block grant programs. It also proposed that they be administered by the Department of Housing and Urban Development and the Department of Commerce. That proposal was not was not included in the FY2008 budget, nor was it brushed off for this newest budget package. The Credit Union National Association (CUNA) has worked with the National Federation of Community Development CUs and the Coalition of Community Development Financial Institutions to oppose previous attempts to move administration of the Fund and cut its annual appropriation. CUNA supports keeping the Fund under the administration of the Treasury Department.

Inside Washington (02/01/2008)

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* WASHINGTON (2/4/08)--Federal Deposit Insurance Corp. Chairman Sheila Bair is worried about the next mortgage problem--1.7 million nontraditional loans with interest rates that will reset next year (American Banker Feb. 1). The loans are worth $600 billion, and 75% of borrowers owe more than what their home is worth, Bair told the Senate Banking Committee Thursday. Committee Chairman Christopher Dodd (D-Conn.) encouraged lawmakers to take action, saying he wants to propose a government entity that would purchase distressed mortgages. But Republicans, such as Sen. Richard Shelby (Ala.), advised lawmakers not to rush. Robert Steel, Treasury undersecretary for domestic finance, said two-thirds of the 1.8 million mortgages ready to reset would be adjusted. He said he was optimistic that borrowers would be helped and that the Treasury is looking after the situation ... * WASHINGTON (2/4/08)--Comptroller of the Currency John Dugan said his office is focusing on the high community bank concentrations in commercial real estate (CRE). The agency plans to tackle the problem by increasing interaction between supervisors and banks with concentrations in CRE loans declining in quality. The OCC, he said, expects banks with CRE concentrations to assess their portfolio based on current market conditions and make adjustments as conditions change. The ratio of commercial real estate loans to capital has nearly doubled in the past six years. Over one-third of the nation’s community banks have CREs exceeding 300% of their capital, and 30% have construction and development loans exceeding 100% of capital, Dugan said ... * WASHINGTON (2/4/08)--Charlie McCreevy, the European commissioner for the Internal Market and Services of the European Union (EU), said a global response is needed to solve the subprime mortgage crisis (CongressDaily PM Feb. 1). He also questioned whether anyone had thought that the U.S.’s subprime problems would cause European banks to nearly collapse. Restoring the market confidence will be a long-term process, he said. McCreevy has met with Securities and Exchange Commission Chairman Christopher Cox about U.S. and EU regulations that affect the insurance industry and securities. EU officials were disappointed to see U.S. states freezing out European companies through protectionist policies, he said ...

Reps. Kanjorski Maloney to address GAC

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WASHINGTON (2/4/08)— Two senior members of the House Financial Services Committee—Reps. Paul Kanjorski (D-PA) and Carolyn Maloney (D-NY)—will address attendees at the Credit union National Association’s upcoming Governmental Affairs Conference. Rep. Kanjorski is the second-ranking Democrat on the House Financial Services Committee--behind Chairman Barney Frank, who is also speaker at this year’s GAC--and chief sponsor of the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537). He also chairs the HOuse subcommittee on capital markets, insurance and government-sponsored enterprises. Rep. Maloney, also a senior committee member, is chairwoman of the House Financial Services subcommittee on financial institutions, and in recent years has taken an active interest in addressing abusive practices related to credit cards and overdraft protection programs. CUNA’s 2008 Governmental Affairs Conference is March 2–6 at the Washington Convention Center. Use the resource link to register or learn more.

April 1 deadline on Justice credit counseling proposal

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WASHINGTON (2/4/08)—Credit unions and other interested parties have until April 1 to comment on a Justice Department (DOJ) proposal regarding credit counseling for consumers filing for bankruptcy. The proposed rule would set the procedures and criteria U.S. Trustees would use to review applications of those seeking to provide approved nonprofit budget and credit counseling under 2005 statutory revisions to the bankruptcy code. The Bankruptcy Abuse Reform Act was signed into law April 20 of that year. It requires that every individual debtor receives counseling from an approved nonprofit budget and credit counseling agency sometime during the 180 days prior to their filing for bankruptcy relief. It also requires that they receive debtor education training after they file. If approved, the DOJ proposal, published in the Feb. 1 Federal Register, would supersede its earlier interim final rule published in July of 2006. The new plan has contains several changes to the interim proposal, as well as enhanced consumer protections, according to DOJ. The most significant changes to the interim include:
* Adding identification procedures for clients when accessing Internet or telephone counseling sessions; * Establishing a limit for credit counseling fees to be presumed reasonable; * Preserving clients' rights under 11 U.S.C. 502(k); * Requiring agencies to provide additional counseling at no extra cost to clients when a debt repayment plan has been completed or terminated so that clients may file bankruptcy if they so choose; * Providing guidance on agencies' responsibilities to individuals with limited English proficiency; and * Requiring appropriate disclosures be made before providing services to clients, such as an agency's fee policy and the prohibition from receiving referral fees.
The proposed rule clarifies the U.S. Trustees’ previous position that creditors, such as credit unions, that wish to become an approved credit counseling agency may not provide counseling services to any client (member) that has a loan with the creditor. A 2007 Government Accountability Office report questioned the value of the bankruptcy counseling requirement. It said anecdotal evidence suggests that by the time most clients receive the counseling, their financial situations are dire, leaving them with no viable alternative to bankruptcy. However, the Credit Union National Association (CUNA) backs pre-filing counseling for consumers and pre-discharge financial education as a way creditors can work much earlier with borrowers than when they are so overwhelmed as to be on the verge of bankruptcy. Use the resource link below to read the DOJ proposal.