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Washington Archive

Washington

Hefty assessment on banks approved by FDIC

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WASHINGTON (3/2/08)--To address the ongoing problems in the banking system, the Federal Deposit Insurance Corp. (FDIC) took dramatic action Friday. The agency approved a final rule on risk-based assessments, as well as amendments to its plan to restore its insurance fund. It also issued an interim rule on an emergency special assessment of 20 basis points on FDIC-insured depository institutions, a premium that will total approximately $15 billion. The emergency special assessment combined with a longer-term fee increase, also approved by the FDIC board at the Friday meeting, means that FDIC-insured banks and thrifts will have to pay approximately $27 billion in total insurance premiums in 2009. The FDIC took these measures to repair its already weakened insurance fund, which absorbed $18 billion in losses last year. The FDIC estimates that the fund could experience approximately $65 billion in losses over the next five years. As of December 2008, the FDIC's fund had a balance of approximately $19 billion. Friday’s actions increased the quarterly insurance fees required of FDIC-insured institutions; these fees vary depending on the risk category of the institution and its investments. Included in the board’s actions was an “emergency special assessment” of 20 basis points. All FDIC-insured institutions must pay the “emergency special assessment” of 20 basis points, which will be imposed June 30 and collected on Sept. 30. FDIC staff noted that emergency action was required because, without immediate intervention, the reserve ratio of the fund would drop close to zero or become negative in 2009. The FDIC also approved a rule that gives it the authority to assess future emergency assessments if warranted. As noted, the FDIC also adopted changes to the fund’s restoration plan, increasing from to seven years from five years the period over which it must restore the fund’s reserve ratio to 1.15%. The agency’s staff noted that many member institutions urged FDIC to take advantage of its authority to extend the restoration period beyond five years. Such an extension is permitted for the FDIC under “extraordinary circumstances.” The FDIC did not issue guidance or otherwise indicate how insured institutions must account for the fund’s restoration. The agency last imposed a special assessment in 1996, but that assessment did not apply to most FDIC-insured banks and thrifts.

Inside Washington (02/27/2009)

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* WASHINGTON (3/2/08)—The Federal Deposit Insurance Corporation (FDIC) voted Friday to amend the restoration plan for the Deposit Insurance Fund (DIF). The agency, in a release, said under a restoration plan approved last October, the agency set a rate schedule to raise the DIF reserve ratio to 1.15% within five years. Friday’s action extends the restoration plan horizon to seven years in recognition of the “current significant strains on banks and the financial system and the likelihood of a severe recession.” The amended restoration plan was accompanied by a final rule that sets assessment rates and makes adjustments that improve how the assessment system differentiates for risk. Currently, most banks are in the best risk category and pay anywhere from 12 cents per $100 of deposits to 14 cents per $100 for insurance. Under the final rule, banks in this category will pay initial base rates ranging from 12 cents per $100 to 16 cents per $100 on an annual basis, beginning on April 1. The FDIC also adopted an interim rule imposing a 20 basis point emergency special assessment on the industry on June 30. The assessment is to be collected on Sept. 30… * WASHINGTON (3/2/08)—Daniel Tarullo was formally sworn in as a member of the Board of Governors of the Federal Reserve System at a ceremony Friday in the atrium of the Fed’s main building here. Federal Reserve Chairman Ben Bernanke presided over the ceremony. Tarullo assumed his position on Jan, 28, following his confirmation by the U.S. Senate the previous day. His term expires Jan. 31, 2022…

Examiner guidance on CU SIP

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ALEXANDRIA, Va. (3/2/09)--The National Credit Union Administration (NCUA) unveiled supervisory guidance for its examination staff regarding the impact the agency’s corporate stabilization program may have on credit union balance sheets. The NCUA said its Supervisory Letter 09-01 instructs examination staff to differentiate between the impact of recent NCUA actions and operational activities by credit union management when evaluating credit union performance and risk profile. The letter also sets forth guidance allowing for examiner recognition of possible temporary reductions in return on assets (ROA) resulting from credit union participation in the Credit Union System Investment Program (CU SIP). NCUA Chairman Michael Fryzel said the supervisory letter “makes clear and appropriate distinctions between NCUA board actions related to the corporates and decisions made by an individual credit union.” He said credit union members deserve to know the bigger picture factors that are having an effect on their credit union’s bottom line. He added they also need to know “that the regulator is working with the industry to maintain a strong and vibrant credit union system despite the adverse environment.”

Senate to take up spending bill today

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WASHINGTON (3/2/09)—The U.S. Senate is scheduled to take up an omnibus appropriations bill today that includes language removing the statutory cap on the lending authority of the Central Liquidity Facility (CLF). The bill, approved last week by the House of Representatives, also includes provisions to expand lending in disadvantaged communities by doubling appropriations for the U.S. Treasury Department's Community Development Financial Institutions (CDFI) Fund. The Obama administration wants more than $200 million to be available for the CDFI Fund. Another spending measure of interest to credit unions, the National Credit Union Administration’s (NCUA) Community Development Revolving Loan Fund program would get $1 million, available until Sept. 30, 2010, for technical assistance to low-income designated credit unions. Regarding the NCUA’s CLF, in 1981, Congress imposed a $600 million cap. It increased the CLF’s borrowing authority to more than $21 billion during Y2K to provide assurance during the millennium date change; however, in FY2001-2008 the cap has been maintained at $1.5 billion. Last year, the Credit Union National Association (CUNA) worked to get the cap lifted to $41.5 billion in the Continuing Resolution, but that expires on March 6. The Credit Union National Association (CUNA) has a long-standing policy of supporting removal of the cap on CLF’s borrowing authority. The role of the CLF is back-up liquidity provider, compared to the role of the Federal Reserve System’s discount window, which is lender of last resort. The Senate is not expected to vote on the spending bill until later this week and is expected to make changes to the House-passed version. That means the House and Senate will have to meet in conference to hammer out the differences in the bills.

New credit card rule analysis CUNA

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WASHINGTON (3/2/09)—An analysis of a final rule governing certain credit card practices is now available on the Credit Union National Association’s (CUNA) website. The CUNA analysis addresses the rule adopted by The National Credit Union Administration (NCUA), along with the Federal Reserve Board and the Office of Thrift Supervision (OTS), which is effective July 1. 2010. Only federal credit unions fall under the provisions of the new requirements. However, the CUNA analysis advises that the Federal Trade Commission (FTC), with authority in this area over state-chartered credit unions, may expect state-chartered credit unions to comply with the rule. Practices addressed in the NCUA-Fed-OTS rule include:
* Time periods for making payments; * How payments may be allocated to card balances; * Allowable interest rate increases on outstanding balances; * Acceptable methods for computing balances that are subject to interest charges, and * Definition of excessive security deposits and fees that are charged when credit is issued.
The prohibited acts or practices outlined in the final rule will not be deemed unfair or deceptive if they occurred prior to the effective date, unless other specific circumstances suggest otherwise, CUNA notes. Use the resource link below for the complete analysis.

NCUSIF shows preliminary accounting decisions

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ALEXANDRIA, Va. (3/2/09)—The most recent monthly National Credit Union Share Insurance Fund (NCUSIF) report showed the fund booked both the expenses and the income associated with the corporate credit union stabilization plan in January. The National Credit Union Administration’s (NCUA) NCUSIF booked, for accounting purposes, a $1 billion expense for “Loss on Investment – Corporate” that is related to its capital infusion into U.S. Central FCU. It also booked a $3.7 billion "Insurance Loss Expense" to control for the risk associated with NCUA's guarantee of "excess" corporate credit union share deposits. The information was revealed last week at the NCUA’s open board meeting. Although the NCUA booked the $1 billion investment in U.S. Central as an insurance fund loss, that investment has not been economically impaired. The agency is writing it off because the money will not be available to pay off any possible future insurance losses until U.S. Central repays the NCUSIF's "capital note." The $3.7 billion related to the corporate share guarantee has similarly not been economically impaired, but has been added to the NCUSIF's reserve for insurance losses, which now stands at over $3.9 billion. However, the NCUA also booked the NCUSIF’s $4.84 billion in “accrued recapitalization and premium income” in January, again for accounting purposes, despite the fact that NCUA has not yet collected the premium from credit unions. Unless the NCUA adopts an alternative approach to how the costs of the corporate stabilization program will be paid or changes course on its accounting decision, its action could force credit unions to have to reflect all of their insurance costs for the corporate assistance, the replenishment of the 1% deposit and the premium, on their March call reports. The NCUA, as a government agency, has flexibility to deviate from Generally Accepted Accounting Principles (GAAP) in its financial reporting if the Office of Management and Budget (OMB) and the Comptroller General agree to such a deviation. The Credit Union National Association (CUNA) has urged the agency to work with OMB and the Comptroller General to use that authority to spread out the impact of the agency’s Corporate Credit Union Stabilization program on the NCUSIF and ultimately credit unions, said Mary Dunn, CUNA deputy general counsel, last week. She added, “We will continue pressing NCUA to take steps to mitigate the costs of the assistance to the corporate credit unions.” The NCUA also reported that January 2009 NCUSIF actual net income was $150.7 million, significantly higher than the $128.3 million in net income that NCUA staff originally budgeted for January 2009.

Inside Washington (02/26/2009)

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* WASHINGTON (2/27/09)--More than 70 Pennsylvania credit union leaders attended a congressional breakfast sponsored Wednesday by the Pennsylvania Credit Union Association (PCUA) during the Credit Union National Association's Governmental Affairs Conference. Congressional delegates attending included Jason Altmire (D); Chris Carney (D); Charles Dent (R); Patrick Murphy (D); Tim Murphy (R); Allyson Schwartz (D); Bill Shuster (R); and Glenn Thompson (R). Also attending was a representative of Rep. John Murtha's (D) office. Visits to Capitol Hill Wednesday included meetings with Sen. Arlen Specter (R) and Rep. Jim Herlach (R), Tim Holden (D) and Todd Platts (R). PCUA President/CEO Jim McCormack and Christina Mihalik, PCUA vice president, governmental affairs, joined Mid-Atlantic Corporate FCU President/CEO Jay Murray and his staff for a visit with Rep. Paul Kanjorski (D) to provide and update on the corporate credit union system. Newly elected Rep. Kathy Dahlkemper (D) was visited by PCUA Board director Norb Kaczmarek, CEO, Erie FCU; Dave Ackerman, CEO of USX FCU, and USX board member Christopher Panian … * WASHINGTON (2/27/09)--The board of the Federal Deposit Insurance Corp. (FDIC) is scheduled to meet today to set deposit insurance premium rates for second quarter, but many expect its staff to recommend charging a special assessment on the banking industry so it can boost federal reserves (American Banker Feb. 26). Although such an assessment has not been determined, sources said officials may consider a rate between 14 and 16 cents for every $100 in domestic deposits. If FDIC elects to go this route, sources said the special assessment would be charged in the second quarter on top of current premiums. Most banks typically pay 12 to 14 basis points at present … * WASHINGTON (2/27/09)--Former Washington State Gov. Gary Locke has been tapped by President Barack Obama as the latest nominee for secretary of commerce (The New York Times Feb. 26). He is Obama's third nominee for the position. Two other nominees--New Mexico Gov. Bill Richardson and Sen. Judd Gregg of New Hampshire--withdrew their nominations. Richard cited a federal investigation into state contracting. Gregg, a Republican, decided he and Obama weren't in tune on issues. Locke--a partner in Seattle law firm Davis Wright Tremaine, where he represented Microsoft and other firms doing business in China--is a pro-trade Democrat. He was the nation's first Chinese-American governor from 1997 to 2005 … * WASHINGTON (2/27/09)--Office of Thrift Supervision (OTS) Director John Reich said Thursday that consolidation of regulators won't be a cure-all for the gaps that exist in financial regulation and noted there are still advantages to thrift charters. OTS regulates 810 thrifts focused mostly on mortgage lending. Policymakers have in the past several months called for a consolidation of OTS and the regulator of the nation's largest banks, the Office of the Comptroller of the Currency. "Moving boxes on a chart will not assure that we have a level playing field and will not ensure that gaps in regulation that have existed and still exist are covered," Reich said (Reuters Feb. 26) … * WASHINGTON (2/27/09)--The Treasury Department Wednesday revealed specifics on how it and an interagency team of federal regulators would perform stress tests on the nation's 19 largest banks to determine if their capital is enough to survive a deep recession. Banks with more than $100 billion in assets will undergo two tests: a baseline scenario reflecting consensus expectations and a more adverse scenario. Both would project the gross domestic product (GDP) growth, the unemployment rate, and changes in housing prices. The adverse scenario would assume a GDP of -3.3% in 2009 and a gain of 0.5% in 2010; an unemployment rate of 8.9% in 2009 and 10.3% in 2010; and house price declines of 22% in 2009 and 7% in 2010. The Treasury expects the tests to be finished by the end of April. If a test indicates a bank's capital is inadequate, the bank will have six months to raise the funds via private investors or by accessing capital from the Treasury. Analysts say the real story is how the government will convince private investors to invest in undercapitalized banks (American Banker Feb. 26) …

Obama proposes doubling of CDFI funds

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WASHINGTON (2/27/09)—The Obama administration has proposed expanding lending in disadvantaged communities by doubling appropriations for the U.S. Treasury Department’s Community Development Financial Institutions (CDFI) Fund. A White House document noted that, through merit-based grant programs, the CDFI Fund helps locally based financial institutions offer small business, consumer and home loans in communities and populations that lack access to affordable credit. John Hildreth, senior legislative representative for the Credit Union National Association (CUNA), said that if the budget is passed by the U.S. Congress, it would mean that more than $200 million would be available for the CDFI Fund. CDFIs are financial intermediaries such as certain credit unions, banks, loan funds, venture capital funds, corporation-based lenders and microenterprise development loan funds. The House on Wednesday passed the Obama administration's omnibus spending bill.

Kanjorski announces systemic risk hearing

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WASHINGTON (2/27/09)—Rep. Paul Kanjorski (D-Pa.) announced what he said would be the first in a series of hearings to examine how to improve the ability of the government to prevent private sector activities from putting the country’s economy at risk. Kanjorski is chairman of the House Financial Services subcommittee on capital markets, insurance, and government-sponsored enterprises, He said his subcommittee’s series of hearings will assist its parent committee craft legislation to create a systemic risk regulator for the financial services industry. The initial hearing is scheduled for March 5. Witnesses will be announced at a later date.

Jenkins thanks CUs for support

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WASHINGTON (2/27/09)--Rep. Lynn Jenkins (R-Kan.) thanked credit unions for their support in helping her win a seat in the U.S. House of Representatives during the closing session of the Credit Union National Association (CUNA) Governmental Affairs Conference Thursday. “I have all of you to thank for the opportunity,” she said. “Thank you for the role, and I’m looking forward to building relationships with Kansas credit unions and all of you.” Jenkins, a long-time credit union advocate, defeated Rep. Nancy Boyda (D-Kan.) in 2008 with the help of the Credit Union Legislative Action Committee (CULAC), CUNA’s federal political action committee. Like other policymakers speaking at the closing session, Jenkins noted a mortgage cramdown bill that is expected to be voted on in the House next week. “Cramdown increases lender risk and [leads to] interest rate hikes,” she said. There’s also a difference between helping lenders and lenders who knowingly sold unaffordable mortgages to borrowers, she added. “Those who made their payments on time [and made good mortgages] should not have to pay for the mistakes of lenders who made bad mortgages.”

Royce Cramdown not in CUs interest

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WASHINGTON (2/27/09)—Mortgage cramdown is not in credit unions’ best interests, according to Rep. Ed Royce (R-Calif.). Royce commented on a cramdown bill--which was expected to be voted on Thursday but was moved to next week—during a speech at the closing session of the Credit Union National Association (CUNA)’s Governmental Affairs Conference. The bill would allow bankruptcy judges to alter terms of mortgages nearing default. Like several other policymakers who expressed their opposition to the proposed legislation during the conference, Royce said cramdown would lead to higher interest rates. The House delayed its scheduled cohsideration of the bill Thursday. Royce also noted that cramdown would send a message to society that it’s okay to “walk away from contractual agreements.” “Should we allow breach of contract?” Royce said. “There would be adverse consequences in the availability of loans.” Investors would fear putting their money into the market, he added. Credit unions’ conservative lending standards sharply contrast the over-leveraging of other financial institutions. Credit unions are exemplary in their standards, and they know how to treat borrowers, Royce said. Subjecting credit unions to the Community Reinvestment Act (CRA) would be a “grave mistake,” Royce added, and said he did not support mark-to-market accounting. “We need to make sure credit unions are not punished for other’s mistakes,” he said. Credit unions should spread their awareness to Capitol Hill, so legislators understand how much credit unions mean not only to the U.S.—but overseas. “Credit unions work—if it’s in Orange County, Calif., or Cape Town, South Africa,” he said. “The credit union movement brings capital to the communities who need it most.” Overall, Royce said he is confident that credit unions will survive tough economic times. “I know we’re going to get out of this debacle with credit unions stronger, and ready to go out and create economic recovery,” he said.

No taxation of CUs Camp says

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WASHINGTON (2/27/09)—“No taxation of credit unions!” Rep. Dave Camp (R-Mich.) exclaimed to an audience of credit union representatives at the Credit Union National Association (CUNA) Governmental Affairs Conference during Thursday’s closing session. The audience enthusiastically responded to Camp’s statement with a round of applause as he continued to praise credit unions for their work, and recognized that credit unions’ unique structure and tax-exempt status often subjects them to scrutiny. Camp is ranking minority member of the powerful House Ways and Means Committee. “Credit unions face challenges,” he said. “But you remain strong financially. If banks followed your strategies, we would not be facing this credit crisis.” Echoing similar thoughts from other lawmakers this week, Camp voiced his opposition to a mortgage cramdown bill that is expected to be voted on by the House next week. If passed, the bill would allow bankruptcy judges to alter the terms of borrowers’ existing mortgages. “It’s a bad policy,” Camp said. “It should not become law.” Camp encouraged credit unions to continue spreading their message on Capitol Hill. On Wednesday afternoon, Camp said he met with a number of credit union representatives and appreciated what they had to say. “I was pleased to see you on the Hill,” he said, noting that other lawmakers he spoke with also said they were happy to talk with credit union representatives face-to-face. CUNA President/CEO Dan Mica, who later took the stage, said he had received positive feedback about credit unions’ Hill hikes the day before. “You are the pulse of the communities [you serve],” Camp added. “We need to hear from you.”

Vote on mortgage bankruptcy bill delayed

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WASHINGTON (2/27/09)—The U.S. House of Representatives postponed its scheduled consideration of H.R. 1106 Thursday and pushed back substantive debate and a vote until probably next week. The bill contains a provision strongly opposed by the Credit Union National Association (CUNA) that would allow bankruptcy court judges broad authority to change terms of existing mortgages. That practice is commonly referred to as a mortgage “cramdown.” The bill, however, also carries language that would make permanent the higher federal share and deposit insurance cap of $250,000 enacted on a temporary basis in October as part of the Emergency Economic Stabilization Act. The favorable insurance provision appears to remain on track, according to CUNA Vice President Ryan Donovan. But, he said, the negative message on cramdowns, delivered while 4,200 credit union representatives were in town for CUNA’s 2009 Governmental Affairs Conference (GAC), may have slowed the track for that plan. “From a credit union perspective,” Donovan said Thursday, “getting the House to put the brakes on is a positive development.” Earlier this week, CUNA sent a letter to each member of the House to urge changes to the proposed cramdown authority, which CUNA said is “overly broad in scope, application and duration.” CUNA supports other provisions of H.R. 1106, which includes measures that would help families stay in their homes, including improvements to the Hope for Homeowners programs and a safe harbor for lenders that modify certain types of mortgages. CUNA encouraged lawmakers to consider amendments that would limit the application of the bill's cramdown proposal to the subprime and nontraditional mortgages that caused the housing crisis and that would provide a firm sunset on the authority conveyed to the bankruptcy courts through this legislation. The letter also reiterated CUNA’s strong support of the permanent extension of the $250,000 deposit insurance limit, as well as language which would allow the National Credit Union Administration (NCUA) as much as five years to replenish the National Credit Union Share Insurance Fund (NCUSIF) when the fund drops below the statutorily required level.

Lawmaker credits CUs work on cramdown bill

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WASHINGTON (2/27/09)—Rep. John Culberson (R-Tex.), using the micro-blogging service called Twitter, praised credit unions for their work against a mortgage “cramdown” bill. As approximately 4,200 credit union representatives prepared to leave Washington following the final sessions of the Credit Union National Association’s (CUNA’s) Governmental Affairs Conference (GAC), Culberson wrote:
* “The credit unions have done a great service to America by persuading (House Speaker Nancy) Pelosi to pull the bad housing bill from the floor today."
Twitter limits micro-blog postings to 140 characters. “But Rep. Culberson said it all in those few letters,” said Ryan Donovan Thursday. Donovan is CUNA's vice president of legislative affairs. “The Hill visits that are launched in conjunction with CUNA’s GAC are always valuable. This recognition just underscores the impact credit unions have with their grassroots advocacy, especially during the GAC when our numbers are so strong,” Donovan said.

Shared-sign rule adopted by NCUA

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ALEXANDRIA, Va. (2/27/09)—Life may just have gotten a little simpler for credit union personnel responsible for posting share insurance signs at teller stations accepting deposits for both federally insured credit unions and nonfederally insured credit unions. The National Credit Union Administration (NCUA) adopted a final rule that does away with a complicated requirement that a second sign must list each federally insured credit union served by the teller along with a statement that only these credit unions are federally insured. The new rule replaces the required list of federally insured credit unions with a statement that not all of the credit unions served by the teller are federally insured and members should contact their credit union for more information. When it proposed the rule change, the NCUA noted that over the past 37 years, however, the nature of shared branching has changed considerably. The first shared branches were local operations involving just a few credit unions. Now, the NCUA proposing document said, some shared branch networks are national in scope and service hundreds, if not thousands, of individual credit unions. Under modern conditions, the old rule was potentially posing a problem for members who had to sift through a lengthy list of credit union names to ascertain the insurance status of their particular credit union. The new rule becomes effective 30 days after publication in the Federal Register.

NCUA plan could help CU SIPHARP

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ALEXANDRIA, Va. (2/27/09)—The National Credit Union Administration (NCUA) proposed a change to its investment rules for natural person credit unions. The change could remove an impediment to credit union participation in two agency programs, one intended to provide liquidity relief for corporates and the other foreclosure mitigation assistance. At its open board meeting Thursday, the NCUA board set a 60-day comment period for its plan to revise Part 701 of its rules. The change would allow investments by natural person federal credit unions under the Credit Union System Investment Program (CU SIP) and the Credit Union Homeowners Affordability Relief Program (CU HARP) to be excluded from a credit union's total assets for purposes of calculating the operating fee. Under SIP, the NCUA’s Central Liquidity Facility (CLF) makes a secured, one-year advance to the natural person credit union. The credit union must concurrently invest the amount of the advance in a fixed-rate, matched-term, guaranteed note that is issued by the participating corporate. The SIP notes are guaranteed by the National Credit Union Share Insurance Fund. Corporate credit unions use the funds to retire borrowings from outside the credit union system. The CLF determines which corporates will issue the SIP notes to which credit unions. CU HARP, on the other hand, is intended to assist homeowners who are facing delinquency, default, or foreclosure of their mortgages. It’s a one-time, two-year, $2 billion program under which the CLF makes advances for a maximum term of one year, renewable for one year. The Credit Union National Association sought the investment rule change to facilitate credit union participation in the programs.

CUNA to Obama More CU biz loans could ease crunch

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WASHINGTON (2/26/09)--Following President Barack Obama’s speech Tuesday night before the Joint Meeting of Congress, the Credit Union National Association (CUNA) asked the White House to consider credit unions as a key part of the solution to the credit crunch facing America’s small businesses. A letter sent to the president Wednesday said CUNA is “very pleased that your administration is moving swiftly and aggressively to restore confidence and re-start lending.“ “We hope you support credit unions as part of the solution by calling on Congress to enact legislation that eliminates the credit union member business lending cap,” wrote CUNA President/CEO Dan Mica. Mica noted that the cap has been in place only 10 years and it was arbitrarily set in response to banking lobbyists who wanted to restrain credit unions. He noted that there is no economic or safety and soundness rationale for the 12.25%-of-assets cap. Without that ceiling, Mica wrote, "We estimate that credit unions could lend up to $10 billion in new business loans during the first year after the credit union business lending cap was eliminated." The average credit union business loan is under $200,000, which means that credit union business loans go to the small businesses that need them the most, Mica pointed out. It is not about lending to build shopping centers or sports arenas; it is about helping businesses make payroll, stay in business, expand their businesses and stimulate the economy, the CUNA letter said. “Encouraging competition by permitting credit unions to do more small business lending could go a long way to eliminate the credit crunch and restore confidence in the economy. It may even encourage America’s community banks to lend more to small businesses,” Mica suggested. Use the resource link to read the complete CUNA letter.

Inside Washington (02/25/2009)

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* WASHINGTON (2/26/09)--National Credit Union Administration (NCUA) Chairman Michael E. Fryzel encouraged credit unions to participate in America Saves Week--which ends Sunday--as a way to improve consumer saving and stress the importance of financial literacy. "I look at this initiative as one that demonstrates the credit union philosophy," he said. "A proactive focus on the members and aiding them in basic financial decision-making is central to America Saves Week. It also has an obvious connection to NCUA and industry efforts to promote improved financial literacy as a way to help members make informed decisions," he added. NCUA posted new savings resources on a Financial Education Page on its website. The section features links to government and non-profit sites listing information on saving for a number of goals ... * WASHINGTON (2/26/09)--The Internal Revenue Service (IRS) announced Wednesday that taxpayers who qualify for the first-time homebuyer credit and purchase a home before Dec. 1 this year can claim the tax credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year. Qualifying taxpayers can get up to $8,000, or $4,000 for married filing separately. IRS has posted a revised version of Form 5405, First-Time Homebuyer Credit on IRS.gov. For more information, use the link ... * WASHINGTON (2/26/09)--House Financial Services Committee Chairman Barney Frank (D-Mass.) and more than a dozen other committee Democrats have asked a bank that received Trouble Asset Relief Program (TARP) funds to give back the government funds it spent hosting a PGA Tour event for clients. In a letter to the $68.9 billion asset, Chicago-based Northern Trust Corp.'s president/CEO, Frederick H. Waddell, the legislators expressed anger and dismay about the spending and urged the bank to "take corrective action." The letter said the behavior "demonstrates extraordinary levels of irresponsibility and arrogance." The bank said the tournament is part of a five-year contract signed in 2007 and is a business decision regarding an annual event ot show appreciation for clients (American Banker Feb. 25) … * WASHINGTON (2/26/09)--Mortgage bankers say they want the Obama administration's housing plan expanded so more struggling borrowers can refinance their loans. Mortgage Bankers Association (MBA) President John Courson sent a letter Monday to Treasury Secretary Timothy Geithner and Housing and Urban Development Secretary Shaun Donovan asking that the plan include mortgages not owned or guaranteed by Fannie Mae and Freddie Mac, as well as those exceeding the temporary conforming limit of $729,750 in certain more costly areas. MBA also suggested increasing or eliminating the plan's 105% cap on loan-to-value ratios and requested it include a "safe-harbor" provision to protect servicers that modify loans from lawsuits by investors. It recommended encouraging the Financial Accounting Standards Board to suspend temporarily accounting charges for securitizations that may affect bank capital (American Banker Feb. 25) … * WASHINGTON (2/26/09)--Three credit union CEOs from York, Pa., met Monday with U.S. Rep. Todd Platts (R-Pa.) and assistant Bob Reilly to discuss the interchange issue and mortgage cramdown legislation (Life is a Highway Feb. 24). Dave Baker, CEO of York Educational FCU; Dennis Flickinger, CEO of First Capital FCU and president of the York Chapter; and Brad Warner, CEO of White Rose CU, also discussed the National Credit Union Administration's Corporate Stabilization Program. The congressman indicated an interest in learning more about the plan. He plans to attend the next chapter meeting, where the plan will be discussed …

Wis. senator CUs are real people for real reasons

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WASHINGTON (2/26/09)—Credit unions are “real people to real people for real reasons,” according to Sen. Herb Kohl (D-Wis.)
Clifford “Chip” Coenen, left, vice president of business development at Lakeview CU, Neenah, Wis., explains some of credit unions’ concerns about the future to Sen. Herb Kohl (D-Wis.) during a Hill hike Wednesday afternoon. Wisconsin credit union representatives met with both Kohl and Sen. Russ Feingold (D-Wis.)
Kohl and Sen. Russ Feingold (D-Wis.) met with a group of Wisconsin credit union representatives during an annual Hike the Hill event Wednesday afternoon, which coincided with the Credit Union National Association’s Governmental Affairs Conference. Both senators thanked credit unions for their work. “You guys do a great job,” Kohl said. “I am one of your many admirers.” Feingold echoed similar sentiments. “I’m a big fan of credit unions,” he said. “[Credit unions provide] a very important way for citizens to access financial services.” During the Wisconsin meeting, credit union representatives told their senators that they want member business lending (MBL) caps lifted from the 12.25% limit. “We believe that [by changing the MBL cap] we can play a vital part in turning the economy around,” said Brett Thompson, president/CEO of the Wisconsin league. Many credit union representatives in the audience shared their stories about member business lending. Kim Sponem, Summit CU, Madison, Wis., emphasized the need for more small business lending by noting the vacant strip malls in her city as an example. If credit unions could lend more, they could help small businesses fill those empty spaces, she said. Feingold said that he would be open to supporting credit unions on raising MBL caps, but recognized that with the economy, “this is a difficult time.”
Illinois Credit Union League representatives met with Rep. Luis Gutierrez (D-Ill.) on Capitol Hill Wednesday. League representatives discussed member business lending caps, mortgage cramdown and the effects of data breaches on credit unions with Gutierrez. From left are: Gutierrez; Ryan Donovan, Credit Union National Association vice president of legislative affairs; and David Mooney, CEO, Alliant CU, Chicago. (Photos provided by CUNA)
Credit union representatives also alerted their senators to a mortgage cramdown bill that is expected to be voted on today. Cramdown would allow bankruptcy judges to alter the terms of existing mortgages that are nearing default. Both senators were receptive—Kohl said the Senate doesn’t currently have a timeline for the bill, and Feingold noted that he would take a look at Sen. Richard Durbin’s (D-Ill.) and Sen. Arlen Specter’s (R-Pa.) list of modifications to the cramdown bill. In addition to discussing their concerns, credit union representatives also assured the senators that they would continue to do their best to serve members despite a tough economy. “When the chips are down, people get hurt, and we all have to keep moving forward,” said Clifford “Chip” Coenen, vice president of business development at Lakeview CU, Neenah, Wis.

Last Day GAC Blog LIVE

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WASHINGTON (2/26/09)—The Credit Union National Association's (CUNA's) GAC Blog wraps up its inaugural effort today, but not before bringing you the live-action report on the final sessions of the conference here. On the line up for Thursday:
* Rep. Dave Camp (R-Mich.) who is ranking minority member of the House Ways and Means Committee; * Rep. Maxine Waters (D-Calif.), House Financial Services Committee; * Rep. Ed Royce (R-Calif.), House Financial Services Committee; and * Al Roker, NBC Today Show.
CUNA Editorial Communication Vice President Lisa McCue and Communications Specialist Tiffany Stronghart will provide updates throughout the morning. Quick research shows hundreds have followed the GAC Blog. Also, for full coverage of events, read CUNA's daily online news service News Now. Use the resource links below to access the GAC Blog and to sign up for News Now headlines via email.

Maloney backs independent CU regulator

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WASHINGTON (2/26/09)— Rep. Carolyn Maloney (D-N.Y.) told a credit union group Wednesday that, as the country’s policymakers consider financial services regulatory reform, she backs retaining an independent regulatory arm just for credit unions. Maloney, who is chairman of the House Joint Economic Committee, also said that if government funds were ever needed in the uncertain future to back the National Credit Union Share Insurance Fund (NCUSIF), she was there in Congress to support such a plan. “I am part of your voice in Congress,” Maloney told attendees of the Credit Union National Association’s 2009 Governmental Affairs Conference (GAC), “and I am proud to be with you.” Maloney also endorsed the credit union tax status. She came out in favor of a plan to allow the NCUSIF to recognize its insurance costs over five years, rather than the currently required one year. That change, contained in a House bill that is expected to be voted tomorrow, would give credit unions some flexibility on when they must fund costs associated with the National Credit Union Administration’s corporate credit union stabilization plan and reflect them on their books.

Forbes proposes three economy quick-starts

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WASHINGTON (2/26/09)--Publisher Steve Forbes proposed three changes as a quick way to start the nation back on the road to prosperity, a formula that won him frequent applause during the Credit Union National Association Government Affairs Conference (GAC) Wednesday. He recommended suspending the mark-to-market accounting requirement,
Steve Forbes, chairman/CEO of Forbes, Inc., editor-in-chief of Forbes Magazine, and former Republican candidate in the U.S. Presidential primaries, told GAC attendees that he proposes three steps for resolving the economic crisis. (Knudsen photo)
restoration of the Securities and Exchange Commission uptick rule, and proposed a move by the Federal Reserve to aggressively purchase mortgage-backed securities. Forbes said the mark-to-market rule was especially grievous. “Unless we deal with it, the current problem is going to linger,” he told the CU executives attending the session. “Try to mark something to market when there is no market,” he added, “It’s insane.” “Suspend it, and restore the uptick rule, and worst of the crisis will be over,” the GAC speaker said. Forbes, who is CEO and publisher of Forbes Magazine, and a former Republican candidate for President, said the current economic emergency had its roots in Federal Reserve Policy. He said the Fed flooded markets with too much liquidity in 2004, adding: “When you have a lot of liquidity, it must go somewhere. It went into housing.” Forbes said that after the current economic problem is solved, to insure prosperity, Congress needs to simplify the tax code—a favorite topic during his campaign for president. “The Bible has 773,000 words,” he noted, “and the tax code has 9 million words, and nobody knows what’s in it.” In addition to the frequent bursts of applause, and a standing ovation, Forbes was asked during the question and answer session whether he might consider running for President again. His answer, “No, I’m content now just being an agitator.”

Hood invites dialogue on CU issues

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WASHINGTON (2/26/09)—National Credit Union Administration (NCUA)
National Credit Union Administration Vice Chairman Rodney Hood urges credit unions to continue to make further suggestions to modify the agency's plan to stabilize the corporate credit union system. (Knudsen photo)
Vice Chairman Rodney Hood said even though the agency’s rule to stabilize corporate credit unions is a product of considerable study, the NCUA is open to suggestions on how it can be improved. During a speech before the Credit Union National Association’s (CUNA’s) Governmental Affairs Conference, Hood challenged credit union executives to submit ideas. He said credit unions have a record of success that will produce the kind of expertise vluable in a dialogue on how stability can be achieved in the corporate system. “We have to be bold. Hope is not a strategy, and failure is not an option,” Hood added. He also stressed that there was “no silver bullet” as far as resolving this kind of complicated issue. Hood noted the agency has requested credit union views in Advance Notice of Proposed Rulemaking (ANPR) on the subject of corporate solvency. “I will read those letters personally,” he pledged. “You have a voice, and I want to hear it.” Hood also urged credit unions to continue working on innovative ideas on risk management, and options for aiding members suffering hardships because of the economic down turn. He said credit unions must continue to be an alternative to pay-day lenders. Hood stressed the importance of credit union visits to congressional offices during the Washington conference. “Impress on those you talk to the importance of using the CLF (Central Liquidity Facility) not just for liquidity, but also for capital,” he encouraged. He also urged members visiting Capital Hill to lobby for legislation to give credit unions more authority to make member business loans. “Remember,” he added, “there are 90 million members counting on us.”

Fed Reg Z changes affect open-end loans

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WASHINGTON (2/26/09)--Changes to Regulation Z recently issued by the Federal Reserve Board mean changes to the way credit unions conduct their lending business.
Bill Klewin of CUNA Mutual Group speaks at the Credit Union National Association’s Governmental Affairs Conference on amended regulatory language to Reg Z and how it will affect credit union lending. (Photo provided by CUNA Mutual Group)
The amended regulatory language and how it affects lending procedures was explained Tuesday by CUNA Mutual Group Associate Counsel William Klewin during a regulatory panel discussion at the Credit Union National Association’s annual Governmental Affairs Conference in Washington, D.C. The regulatory changes specifically affect multi-featured, open-end lending--a practice used for nearly 30 years that allows credit unions to have a single lending contract with a member, covering multiple lending products. Under this plan, the member can have multiple sub-accounts with different program features and rate structures. “Some features of the program might be used repeatedly, like an overdraft line, while others might be used infrequently, such as the part of the credit line available for secured credit,” Klewin said. “On the other hand, if the program as a whole is subject to prescribed terms and otherwise meets the definition of open-end credit, the program would be considered a single, multi-featured plan.” Because regulatory observers feared a change that would negatively impact multi-featured, open-end lending practices, credit union organizations--including CUNA Mutual--worked to raise awareness of the issue and prepare for potential disruptions to credit unions’ lending practices. CUNA Mutual met with Federal Reserve Board staff to discuss the issues and propose alternatives, filed comments with the board and continued to work with credit union organizations and regulators following the comment period. Klewin said the final rule keeps the multi-featured, open-end lending program intact with some commentary changes:
* Each sub-account is not required to have a self-replenishing credit limit; * Language was retained that views the plan as a whole, while some features may be used infrequently; and * Credit unions are permitted to verify information in certain circumstances to assure continued creditworthiness.
“The rule changes require credit unions to review their products, policies and procedures to identify any necessary changes as a result of the new regulations,” Klewin said. Affected credit unions work closely with their data processing and loan origination system providers to support any needed changes, he added. In addition to communicating best practices around Reg Z change implementations, CUNA Mutual continues to post updates on these changes. Use the link.

Frank CUs will feel like brother of prodigal son

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WASHINGTON (2/26/09)—Credit unions will likely feel like the brother of a “prodigal son” this year as Congress works to clean up the subprime mortgage mess, Rep. Barney Frank (D-Mass.) told attendees of the Credit Union National Association’s (CUNA) Governmental Affairs Conference Wednesday.
Click for slide show Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee spoke to the Governmental Affairs Conference Wednesday. Click to see a slideshow of more speakers.
Frank, chairman of the House Financial Services Committee, continually complimented credit unions for helping Americans, especially low-income Americans, access affordable financial services. But although credit unions “in no way contributed” to the subprime mortgage meltdown, they will likely feel the effects of it. Such as in the story of the prodigal son, “well-behaved” credit unions will continue their responsible financial activities as other institutions that “behaved badly” and triggered the credit crisis receive help. “You’re the good son,” Frank said. But, “you are the victim of other’s mistakes. You’ve been damaged.” As the “good son,” credit unions will not experience a change in tax status. And because credit unions did not contribute to the current financial crisis, there is no reason to impose additional restrictions on them, Frank said. “If credit unions made all of the mortgage loans, then there would have been no subprime crisis and therefore no economic crisis,” he said. Frank also briefed attendees on the way Congress will have to handle the financial crisis—by first dealing with the crisis, and then finding ways to prevent it from happening again. Congress’ high priority is getting the credit system functioning again. Frank assured credit unions that Congress would work with them to minimize any damage they are experiencing because of others’ mistakes. It’s important to remind legislators that credit unions play a significant role in legitimate community-oriented financial activities, he said.

Boehner Cramdown will lead to uncertainty for CUs

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WASHINGTON (2/26/09)—A mortgage cramdown bill expected to be voted on today could lead to uncertainty for credit unions as mortgage lenders, according to Rep. John Boehner (R-Ohio). Speaking to a group of credit union representatives at the Credit Union National Association’s (CUNA) Governmental Affairs Conference Wednesday, Boehner—a lifelong credit union member—outlined the reasons why the mortgage cramdown bill would be detrimental to credit unions. Mortgage cramdown—which allows bankruptcy judges to modify the terms of a struggling homeowner’s existing mortgage—would increase interest rates, Boehner said. “[Cramdown] would lead to lower liquidity in a time when we need more liquidity,” he said. Boehner briefly discussed mortgage cramdown as a method that was used “for a reason more than 100 years ago to keep interest rates low and keep liquidity in the market.” However, cramdown is now an outdated method, and could allow judges “to do almost anything” with mortgages if the bill if passed, he said. Rep. Eric Cantor (R-Va.) echoed similar thoughts during a later speech. Cramdown “does not make sense,” and will “make it more difficult for you to provide members with credit,” he told credit unions. CUNA opposes mortgage cramdown because it believes it could lead to borrowers’ gaming of the lending system. An unsatisfied homeowner could stop payments on a home and still keep it, CUNA has said.

Dodd says CUs serve all Americans

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WASHINGTON (2/26/09)—Chairman Christopher Dodd of the Senate Banking Committee, noting a scheduled Wednesday afternoon meeting between federal lawmakers and Obama administration officials about restructuring the financial services regulatory scheme, assured credit unions that they have standing in those discussions. “As we modernize the regulatory structure, there will be a seat at that table for America’s credit unions,” Dodd declared to attendees of the Credit Union National Association’s (CUNA’s) Governmental Affairs Conference. He addressed the Wednesday morning general session. Dodd praised the work of credit unions. “You serve all Americans,” the Democrat from Connecticut said, adding that credit unions make sure to provide financial services to low-income and underserved communities. For all that has changed because of the country’s economic upheaval, and for all that will change as policymakers modernized the financial “architecture” of the country, the credit union vision of economic inclusiveness remains unchanged, Dodd said. He added that in ordinary times, the credit union philosophy is important, and it just becomes more so in extraordinary times. Dodd said, “You’ve been successful. You’ve done a good job. You’re strong. You’re vibrant. You’ve been conservative in the management of your financial affairs.” However, the banking panel chairman acknowledged that credit unions, in the current economic upheaval, are “paying an awful price” for a problem created by other, less responsible lenders. “That is why Congress made credit unions eligible for TARP funds,” Dodd said, referring to the 2008 passage of the of the Emergency Economic Stabilization Act, which, in part, established the U.S. Treasury Department’s Troubled Asset Relief Program (TARP). As implemented by Treasury Department to date, credit unions have not been included, and CUNA continues to work for credit union access to the program.

Inside Washington (02/24/2009)

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WASHINGTON (2/25/09)--The Network of Latino Credit Unions and Professionals (NLCUP) signed an agreement with the Internal Revenue Service (IRS) at the Credit Union National Association's Governmental Affairs Conference Tuesday. The agreement calls for the NLCUP to assist with tax education and outreach on emerging or changing tax laws and issues. During tax season, all NLCUP member credit unions will provide information, education and services in Spanish about tax compliance. The initiative aims to help low- to moderate-income people and families to meet their tax obligation and enhance their money management skills. Front row from left are: Ana Marie Argilagos, senior consultant Annie E Casey Foundation; Winona Nava, CEO of Guadalupe CU and chair, CUNA Hispanic Advisory Board; Carlos Calderon, CEO of OAS Staff FCU and chair of NLCUP; Crystal Philcox, IRS SPEC Area 3 director; and Pablo DeFilippi, director of membership, National Federation of Community Development CUs and NLCUP Board Member. (Photo provided by the National Federation of Community Development CUs) … * WASHINGTON (2/25/09)--The House is expected to take up this week mortgage bankruptcy reform to decrease foreclosures and boost bank liquidity. Legislation by John Conyers (D-Mich.), chairman of the House Judiciary Committee, and Barney Frank (D-Mass.), chairman of the House Financial Services Committee, would enable bankruptcy judges to cram down mortgage debt and restructure terms on loans to prevent foreclosures. Government-insured mortgages, such as those backed by the Federal Housing Administration, would be permitted to cover a lender's loss when mortgage debt is crammed down. The measure also would make permanent the increase in deposit insurance coverage to $250,000 per account. The Senate has not scheduled a vote yet (American Banker Feb. 24) … * WASHINGTON (2/25/09)--Senate Banking Committee Chairman Christopher Dodd (D-Conn.) has asked the Securities and Exchange Commission (SEC) to hold off on implementing compensation rules he wrote for the economic stimulus package signed into law Feb. 17. The Treasury Department has one year to write regulations that would restrict the pay of executives at banking companies that accept government bailout funds. However, in a Feb. 20 letter to SEC Chairman Mary Schapiro, Sen. Dodd asked SEC to wait until guidance is issued before enforcing the measure. The provision requires that banking companies' CEO and chief financial officer provide written certification that they have complied with the law (American Banker Feb. 24) … * WASHINGTON (2/25/09)-- Federal Deposit Insurance Corp. (FDIC) Chairman Sheila Bair said all large U.S. banks currently are well-capitalized, but prolonged shocks to the banking system may mean more banks would require additional capital from the government. She said it would be surprising to see government take active ownership and control of large banks. Bair noted that this week's stress tests will determine whether banks have adequate capital. If they don't, the Treasury would make additional stock purchases to increase the capital buffer, she added. She made the comments during an interview on CBS's "Early Show." (American Banker Feb. 24) … * WASHINGTON (2/25/09)--The Federal Deposit Insurance Corp. (FDIC) is supposed to discuss Friday changes to its premium assessment system and set premium rates for the remainder of 2009 (American Banker Feb. 24). Board members are expected to to propose higher premiums for banks that rely heavily on brokered funding or secured liabilities such as advances from Federal Home Loan Banks. FDIC set its first-quarter rates in at between 12 cents and 14 cents per $100 of domestic deposits for healthy institutions. In October, the agency proposed a range of 10 to 14 basis points for subsequent quarters. The plan also includes an additional premium--as high as seven scents--for banks with excess noncore funding. And it includes credits for banks taking steps to reduce FDIC's resolution costs in case of failure … * WASHINGTON (2/25/09)--New York financier Steven Rattner will be the lead advisor on the auto industry bailout for Treasury Secretary Timothy F. Geithner and National Economic Council Director Lawrence H. Summers. Rattner, 56, will advise the officials on the reorganization efforts of General Motors and Chrysler, which are receiving government bailout funds. He was considered a front runner for the position of car czar in the Obama administration, but that position was eliminated.(The New York Times Feb. 24) …

NCUA sees growth in CUs but decline in net income

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ALEXANDRIA, Va. (2/25/09)—The National Credit Union Administration (NCUA) reported growth in federally insured credit unions’ loans and savings in 2008, though return on average assets declined as loan loss reserves were increased. Net income decreased 47.5%, based primarily on a 112.3% increase in a provision for loan and lease losses as credit unions prepare for possible losses. Significant increases in delinquencies and charge-offs indicate ongoing stress in the financial sector, NCUA said. “Membership grew and lending expanded as credit unions readily fulfill their mission of serving members in these difficult financial times,” said NCUA Chairman Michael Fryzel. “Adverse economic conditions and distress in the financial sector places credit unions at greater risk; however, net worth remains high helping to stabilize the industry. “With safety and soundness the priority, NCUA has proactively adopted a more frequent examination contact schedule and activated a national examination team with the knowledge, skill, and experience to effectively deal with current issues,” he added. Details of major balance sheet categories and membership growth in federally insured credit unions from Dec. 31, 2007, to Dec. 31, 2008:
* Assets increased 7.7% to $813.4 billion from $755.0 billion; * Loans increased 7.08% to $566.0 billion from $528.6 billion; * Investments increased 16.7% to $166.3 billion from $142.5 billion; * Shares increased 7.71% to $681.1 billion from $632.4 billion; * Net worth increased 3.26% to $88.9 billion from $86.1 billion; and * Membership increased 2.0% to 88.6 million members.
Reviewing 2008 asset figures, loan and investment activity fluctuated by category. Lending expanded in most categories, with the largest a 14.5% increase recorded in first mortgage real estate loans and lines of credit. Used vehicle loans increased 5.8% while new vehicle loans declined 6.2%. Reflecting stress in the economic sector, foreclosed real estate grew 112.4% and repossessed automobiles increased 27.8% during 2008. While both indices saw significant gains, they continue to represent a relatively low percentage of the total loan portfolio. Delinquent loans as a percentage of total loans increased to 1.37% at year-end 2008 from 0.93% at year-end 2007, while net charge-offs to average loans grew to 0.84% from 0.51%. The loan-to-share ratio remains a strong 83.1%, as total loans and total shares expanded at a similar pace. Regular shares increased 5.7% while money market shares increased 15.6%, share certificates increased 4.7% and IRA/KEOGH accounts increased 13.7% during 2008. The return on average assets ratio declined to 0.31% from 0.63% primarily due to increased funds set aside for loan and lease losses and other non-operating expenses. For more information, use the link.

Instant online convention coverage--GAC Blog (02/24/2009)

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WASHINGTON (2/25/09)--Credit unions are encouraged to check in on the Credit Union National Association's (CUNA's) GAC Blog to get the latest news on happenings at the 2009 Governmental Affairs Conference Feb. 23-26. More than 4,200 credit union representatives are in town for CUNA's premier conference featuring addresses by top policymakers, and more. CUNA Editorial Communication Vice President Lisa McCue and Communications Specialist Tiffany Stronghart will provide frequent convention updates. Also, for full coverage, read CUNA's daily online news service News Now. The CUNA GAC Daily will be distributed to conference attendees and News Now readers will have access to its electronic version. Use the resource links below to access the GAC Blog and to sign up for News Now headlines via email.

Mecham CUs need to advocate for CUs

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WASHINGTON (2/25/09)—Credit Union National Association (CUNA) Chairman Kris Mecham told Government Affairs Conference participants that the Washington, D.C. meeting offers credit unions the opportunity to prove they can contribute more to getting the economy on track. He encouraged credit unions to join CUNA and the leagues in their advocacy work and help tell the credit union story on Capitol Hill. The traditional visits to Congressional offices, in conjunction with the GAC, are especially important this year, he said. Mecham said credit unions must stress the stability of the credit union system in the midst of the current turmoil, and the fact that Congress can help the system make an even larger contribution. ‘We do have a story to tell,” he added. “We are the solution. We are not broken. We should stress that we want their support.” Mecham said a perfect example was the current federal limit on credit union member business lending, at a time when a capital crunch was one of the big causes of the current economic tensions. “With a mere stroke of a pen, we have the ability to put millions of dollars into the economy,” he added, referring CUNA’s efforts to get a legislative change. Mecham also said members must stress during the Capitol Hill visits credit union opposition to legislation that would allow bankruptcy judges to rewrite mortgage contracts—the so-called “cramdown” bill. A House vote is expected Thursday. He said the bill would only interfere with the traditional time-honored credit union process of negotiating loans with members suffering financial setbacks. The chairman, newly installed to that position, stressed that credit unions visits have a special influence on Congress because the politicians often react positively to grassroots lobbying efforts. “Ask yourself during this meeting,” Mecham told the conferees, “What have I done to promote advocacy. If we do that, we will be and important part of the overall solution.”

NCUAs Marquis CUs cant afford not to invest in corporates

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WASHINGTON (2/25/09)—During a packed question-and-answer session about the corporate credit union system at the Credit Union National Association’s (CUNA) Governmental Affairs Conference Tuesday, National Credit Union Administration (NCUA) Executive Director Dave Marquis encouraged credit unions to support the corporate credit union system. “Credit unions can’t afford not to invest in corporates,” he told an almost-full room of conference attendees. He noted that about 98% of credit unions depend on corporates for their payment systems. During the session, credit union representatives had the opportunity to ask questions about the corporate credit union network and receive answers from a panel of NCUA senior staff. The session was moderated by Kathy Thompson, CUNA senior vice president of compliance. Panelists included:
* Owen Cole, NCUA Central Liquidity Fund president; * Larry Fazio, NCUA deputy executive director; * Bob Fenner, NCUA general counsel; * Scott Hunt, Office of Corporate Credit Unions director; * Marquis; and * John Kutchey, acting examination and insurance director.
Credit unions’ questions to the panel ranged from how the corporate credit union system and the Central Liquidity Facility works, to how the NCUA’s corporate stabilization plan would affect credit unions’ balance sheets. In one example, Marquis suggested credit unions present their members with a balance sheet explaining that their return on assets was affected due credit unions’ cooperation in helping the corporate system. Marquis also noted that results of PIMCO, which NCUA has engaged to analyze corporate investments, would be as transparent as possible without exposing individual credit union exam information. However, PIMCO will not release its methodologies, Marquis noted. At the end of the session, Thompson encouraged credit unions to submit their comments about an Advanced Notice of Proposed Rulemaking (ANPR) to CUNA regarding the structure of operation of corporate credit unions. The ANPR focuses on the role of corporates in the credit union system and details possible changes to the regulations governing corporates. Comments on the ANPR are due April 6.

Interchange heating up CUNA says

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WASHINGTON (2/25/09)—While there is no bill introduced in the House or Senate yet this year on interchange fees, Credit Union National Association (CUNA) Vice President of Legislative Affairs Ryan Donovan said Tuesday that it is only a matter of time until one is unveiled. Donovan, speaking to reporters covering CUNA’s 2009 Governmental Affairs Conference here, said “the merchants are ramping up” for the next round of effort to push for government intervention to cap fees charged merchants by the payment card network each time a consumer uses a card for a purchase. CUNA opposes such intervention and argues that the free market should set interchange fees, not the federal government. CUNA, and other opponents of government interference in interchange fees, say the fees have assisted the growth of universal acceptance of cards and the innovation of super-fast authorization technology and enhanced security measures—all benefits to card-using consumers. At its Tuesday afternoon GAC sessions, CUNA offered a breakout program on interchange fees, moderated by CUNA Federal Legislative Affairs Director Michele Johnson. The information session focused on what is likely to happen with interchange legislation in the 111th Congress, and what it means for credit unions. Johnson reiterated the expectation that there will be a bill introduced this year. Addressing the session participants were:
* Daniel Swanson, counsel to Sen. Dick Durbin of the Judiciary Committee who was a sponsor of interchange legislation in the last Congress; * Mark Caverly, executive vice president of Local Government FCU, Raleigh, N.C.; * Jennifer Hatcher, senior director, government relations, for the Food Marketing Institute; and *Jeffrey Tassey, of Tassey & Associates, also manager of the Electronic Payments Coalition (EPC) which advocates for the payment card industry on interchange legislation. CUNA is a member of EPC.
Caverly, the credit union executive, got a rousing favorable response when he said, “This is not a fight to be waged by MasterCard, Visa, or the large card issuers – it’s our fight.” He warned that the Merchants Payment Coalition, in favor of capping fees, is attempting to link the interchange issue to predatory lending and the sub-prime mortgage crisis. “Credit unions have much to lose, but perhaps more importantly, our members have much to lose,” Caverly said, and encouraged, “ It’s time to tell our story on Capitol Hill.”

Fryzel asks CUs for help in assisting corporate network

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WASHINGTON (2/25/09)—During his speech at the morning session of the Governmental Affairs Conference Tuesday, National Credit Union Administration (NCUA) Chairman Michael Fryzel asked credit unions for help in assisting the corporate network.
Click for slide show NCUA Chairman Michael Fryzel speaks at the CUNA GAC. Click for a slideshow of speakers who addressed the conference.
Specifically, Fryzel asked credit unions to submit their feedback and ideas to help the corporate credit unions. NCUA Board Member Gigi Hyland reiterated similar thoughts when she addressed the crowd at a later session. “I read every single comment letter that comes in because I believe it makes me a better policymaker,” she told credit union attendees during her speech. The NCUA is working on ideas regarding its corporate stabilization program and wants feedback from credit unions. One approach the agency is considering is using the National Credit Union Share Insurance Fund as a collection fund for the Central Liquidity Facility to align expenses. As a part of this approach, credit unions would be asked to deposit their premiums into a new, separate insurance fund to shift the expense burden over a five-year time frame. Fryzel told credit unions to be prepared for more losses and asked them to be flexible with their approach in helping the corporate credit union network weather the economic crisis. “There are no easy choices,” Fryzel said. “We must stay calm, brace ourselves and take necessary action when called upon. “Credit unions are always good at driving the charge. We must rise to the occasion, and the credit union industry has done that before,” he added. Fryzel also asked credit unions for three items: to help generate ideas on how to help the corporates, lobby Capitol Hill for the tools credit unions need so they can solve the economic crisis “ourselves,” and extend more credit to people who depend on it. “You come to Washington the most capitalized and sound financial institutions,” Fryzel said. “You are not the problem—you are the solution.”

Fire it up Kanjorski tells CUs

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WASHINGTON (2/25/09)—“Fire it up!” Rep. Paul Kanjorski (D-Pa.) emphatically told credit union attendees during the morning session at the Governmental Affairs Conference Tuesday, to which attendees responded: “Ready to go!” Kanjorski, who was introduced to attendees as “a true credit union champion,” by Pennsylvania Credit Union Association President/CEO Jim McCormack, fired up attendees to solve the problems plaguing the nation’s financial sector. Credit unions started out 100 years ago by solving the problems of middle class Americans, and “that’s how we’re going to win this. We’ve met challenging times before and won. We know how to do it,” he said. Kanjorski recognized credit unions’ banker battles, saying that “if bankers don’t want us to give loans, they’ll make a big mistake.” But, he noted, “We’ve got battles and that’s got to wait for another day.” “Finding who’s at fault” for the economic turmoil won’t help, either. “We’ve got a very sick patient on the floor [the U.S. economy],” Kanjorski said. “We need to save the patient.” To help the economy, credit unions need to make smart decisions and lead the cause for America. Credit unions also must make Congress realize that they want to lead Americans “out of the darkness.” “Don’t leave Washington, D.C., in doubt, or think, ‘woe is me,’ ” Kanjorski said. Credit union representatives need to return to their homes and find ways to help homeowners get out of a predatory mortgage, or help the unemployed find new jobs. “You have to get this economy going,” he said. “If we put all our energies forward and make the right decisions, we’ll do it.” Kanjorski, who was re-elected to his position as a U.S. representative this past year, also thanked credit unions for their support during his campaign. “The most important people in my political life were my friends—the credit unions,” he said.

Hyland vows to look at corporate plan alternatives

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WASHINGTON (2/25/09) — National Credit Union Administration (NCUA) board member Gigi Hyland urged credit unions to comment on her agency’s Advanced Notice of Proposed Rulemaking (ANPR), which addresses a reform of the corporate credit union system. Hyland, addressing a packed house during the Credit Union National Association’s (CUNA’s) Governmental Affairs Conference (GAC) here, said it is vital for credit unions to take a role in defining the future of the corporate credit union system. She assured the audience of more than 4,200 credit union representatives that she reads each comment letter addressed to the agency before she votes on a regulatory issue. The deadline for comment is April 6. “Tell us (the NCUA) how you use the corporate credit unions. Do you use them? How do they fit into your strategic plan,” said Hyland. Hyland also told the GAC attendees that she understands how difficult it is for a credit union to face members and explain why the credit union has to pay for problems in another part of the credit union system, referring to liquidity problems in the corporate credit union system. In January, the NCUA announced a plan to stabilize the corporate credit unions. To date, the agency intends to fund the program through a share insurance premium assessed against natural-person credit unions, a plan that CUNA believes imposes too great a burden on credit unions. Hyland, and earlier in the morning NCUA Chairman Michael Fryzel (see related story: Fryzel asks CUs for help in assisting corporate network), expressed willingness to consider alternative plans. “I will devote my energy to reviewing every viable option,” Hyland vowed. She also pledged transparency in NCUA decisions, “so you are as informed as possible” about agency actions. The NCUA board member reminded her credit union audience that it is the cooperative spirit behind the cooperative system—the synergies in the system—that have made credit unions “ the success that they are” and gotten the movement through other tough economic times. CUNA has issued a comment call urging credit unions to share their ideas about restructuring the corporate system. Use the resource links below to read the NCUA ANPR and the CUNA request for comment.

CUNA urges House Beware of cramdown dangers

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WASHINGTON (2/25/09)—Every member of the U.S. House was urged Tuesday by the Credit Union National Association (CUNA) to consider changes to mortgage “cramdown” provisions in H.R. 1106 that are overly broad in scope, application and duration. CUNA supports other provisions of H.R. 1106, which includes measures that would help families stay in their homes, including improvements to the Hope for Homeowners programs and a safe harbor for lenders that modify certain types of mortgages. The bill also includes language that makes permanent the $250,000 deposit insurance limit enacted on a temporary basis in October as part of the Emergency Economic Stabilization Act, as well as language which would allow the National Credit Union Administration (NCUA) as much as five years to replenish the National Credit Union Share Insurance Fund (NCUSIF) when the fund drops below the statutorily required level. CUNA strongly supports these provisions. The House is expected to vote Thursday on the bill. In a letter to each House member, CUNA, however, encouraged lawmakers to consider amendments that would limit the application of the bill’s cramdown proposal to the subprime and nontraditional mortgages that caused the housing crisis and that would provide a firm sunset on the authority conveyed to the bankruptcy courts through this legislation. CUNA President/CEO Dan Mica wrote that since late 2007, when the subprime mortgage crisis developed, credit unions have recognized the need for Congress to take steps to try to keep people in their homes. “In fact, credit unions were the first group of mortgage lenders to be open to legislation that would provide limited loan modifications in bankruptcy,” Mica wrote, referring to an action known as a “cramdown.” “We have worked since that time to ensure that this legislation be targeted to the mortgages that have caused the problem, and limited to address the crisis at hand,” the Mica letter said. He noted that a major housing initiative announced by President Barack Obama last week proposes a more focused approach, and views bankruptcy as borrowers’ last option to retain their house. “A lender that made a mortgage loan using good underwriting standards should not bear the risk of a decline in the house’s value. The adoption of a broad amendment could result in a number of bankruptcy filings by people who are capable of paying their current mortgages,” Mica warned the House members.

House spending vote Wednesday to include CLF cap

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WASHINGTON (2/24//09)—A draft spending bill circulating in the U.S. House would continue borrowing authority for the National Credit Union Administration’s (NCUA’s) Central Liquidity Facility (CLF) to its full authority of $41 billion through FY 2009. The CLF is authorized by the Federal Credit Union Act to lend up to 12 times its paid-in capital—an amount that translates today to about $41 billion. However, beginning in FY2001 and until last year, Congress has set the annual cap at $1.5 billion. In 2008, then-President George W. Bush signed a funding bill that increased the loan limitation for the CLF to its statutory cap of $41 billion through March 6, 2009. The Credit Union National Association (CUNA) has urged lawmakers to extend the full authority for FY 2009. Increasing the CLF cap to its statutory ceiling is a prudent measure, CUNA maintains, to prevent any credit union liquidity problems during this period of market turmoil in the credit market. CUNA and its Corporate Credit Union Task Force strongly support using CLF funds as a back up to help fund corporate credit union liquidity. The House is scheduled to vote on it spending bill Wednesday. Once passed by the House, the bill goes to the Senate for consideration.

Inside Washington (02/23/2009)

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* WASHINGTON (2/24/09)--National Credit Union Administration (NCUA) Vice Chairman Rodney E. Hood's third annual NCUA Risk Mitigation Summit was Thursday at the Federal Reserve Bank of Atlanta. "I take risk management very seriously and believe that risks should be managed, not avoided. Implemented successfully, enterprise risk management enables management to effectively deal with uncertainty and associated risks," Hood said. Owen Cole, director of the NCUA Office of Capital Markets and Planning, and John Kutchey, acting director of NCUA's Office of Examination and Insurance, explained the agency's Corporate Stabilization Program and answered questions. Robert D. Manning, director of the Center for Consumer Financial Services, Rochester Institute of Technology, and a Filene Research Institute fellow, discussed his responsible debt relief (RDR) algorithm report, saying it "gives credit unions the opportunity to recalibrate and get their members on an even keel during this extraordinarily difficult recessionary period." Richard Dorfman, president/CEO of the Federal Home Loan Bank of Atlanta, noted that credit unions represent Federal Home Loan Banks' fastest-growing segment. "Study yourselves," he said, "because you will be called upon by regulators and others who want to know 'how did you do that.'" … * WASHINGTON (2/24/09)--Mid-Atlantic Corporate FCU will conduct a 'mini town hall' meeting today during the Credit Union National Association's Governmental Affairs Conference in Washington, D.C. The corporate will meet at 2:30 p.m. EST at the Grand Hyatt in the Latrobe Room. The corporate said credit unions are welcome to attend (Life is a Highway Feb. 23) … * WASHINGTON (2/24/09)--In a joint statement Monday, a group of federal regulators pledged to launch a revised program that would shore up struggling banks and include the option of increasing government ownership in a bank. The plan is in line with the Obama administration's plan to strengthen banks without nationalizing them (Associated Press Feb. 23). The Treasury Department, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, Office of Thrift Supervision and the Federal Reserve issued the statement as more concerns surfaced about some of the nation's largest banks needing more assistance. The new program, which begins Wednesday, would give regulators the option to allow the government to boost its ownership in banks without having to inject more taxpayer funds into them. Still, the regulators suggested keeping banks private as a priority … * WASHINGTON (2/24/09)--The Federal Housing Finance Agency (FHFA) says that government-sponsored enterprises (GSE) Fannie Mae and Freddie Mac are allowed to let homeowners in trouble with mortgage payments to refinance their loans without requiring they obtain new mortgage insurance policies. James Lockhart, FHFA director, said that under the GSEs' charter, a borrower need not obtain an additional credit enhancement on a refinanced loan in excess of what is already in place for that loan. Generally, the GSEs' charters require them to obtain credit enhancement for loans they buy or guarantee that are worth more than 80% of a home's value. The Obama administration's housing plan calls for Fannie and Freddie to allow refinancing by four million to five million borrowers whose loans they guarantee (American Banker Feb. 23) … * WASHINGTON (2/24/09)--Citigroup has proposed to regulators that the federal government could expand its ownership of the bank to as much as 40% of the struggling bank's common stock. However, bank officials hope the government's stake would be more like 25% (American Banker Feb. 23). Any deal would increase federal officials' influence over one of the world's largest financial institutions. Currently the government has $45 billion in preferred shares, or about a 7.8% stake, obtained when it injected capital into the troubled bank. The government's preferred shares would be converted into common stock. The bank's officials hope to persuade private investors to follow the government's lead and convert their preferred shares into common stock, said people familiar with the negotiations … * WASHINGTON (2/24/09)--The Federal Reserve Board Monday launched a new section on its website to expand information about the policy tools it has employed to address the financial crisis. The new section also simplifies access to that information, said the Fed in a press release. The section, "Credit and Liquidity Programs and the Balance Sheet," has a detailed explanation of the Fed's balance sheet; descriptions of its liquidity and credit facilities; a discussion of its risk-management practices; information on the types and amounts of collateral being pledged at various lending facilities; and links to congressional reports and other resources …

Instant online convention coverage--GAC Blog (02/23/2009)

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WASHINGTON (2/24/09)--Credit unions are encouraged to check in on the Credit Union National Association's (CUNA's) GAC Blog to get the latest news on happenings at the 2009 Governmental Affairs Conference Feb. 23-26. More than 4,200 credit union representatives are in town for CUNA's premier conference featuring addresses by top policymakers, and more. CUNA Editorial Communication Vice President Lisa McCue and Communications Specialist Tiffany Stronghart will provide frequent convention updates. Also, for full coverage, read CUNA's daily online news service News Now. The CUNA GAC Daily will be distributed to conference attendees and News Now readers will have access to its electronic version. Use the resource links below to access the GAC Blog and to sign up for News Now headlines via email.

Loan mods TARP funds subject of Hill hearings

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WASHINGTON (2/24/09)—Loan modifications and the Troubled Asset Relief Program (TARP) will be the topic of two hearings on Capitol Hill Tuesday. The House Financial Services Oversight and Investigations Subcommittee Chairman Dennis Moore (D-Kan.) announced the first hearing, “A Review of TARP Oversight, Accountability and Transparency for U.S. Taxpayers.” Witnesses scheduled to testify include:
* Neil M. Barofsky, special inspector general, Office of the Special Inspector General, TARP; * Gene L. Dodaro, acting comptroller general, Government Accountability Office; and * Elizabeth Warren, Chair, congressional Oversight Panel, Leo Gottlieb professor of Law, Harvard University.
The second hearing is, “Loan modifications: Are Mortgage Servicers Assisting Borrowers with Unaffordable Mortgages.” Witnesses scheduled to testify include:
* Vance Morris, director for Single Family Asset Management, U.S. Department of Housing and Urban Development; * Grovetta Gardineer, managing director, Corporate and International Activities, Office of Thrift Supervision; * Joseph H. Evers, deputy comptroller for Large Bank Supervision, Office of the Comptroller of the Currency; and * Patrick J. Lawler, chief economist, Federal Housing Finance Agency.

CUNA leaders share message of unity

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WASHINGTON (2/24/09)—Exiting Credit Union National Association (CUNA) Chairman Tom Dorety and CUNA President/CEO Dan Mica took the stage during the Annual General Meeting at the Governmental Affairs Conference (GAC) Monday and provided attendees with a message of unification.
Click for slide show Tom Dorety, exiting CUNA chairman, and Dan Mica, CUNA president/CEO, encouraged credit unions to come together and help provide a solution to the nation’s economic crisis during Monday’s annual general meeting during the CUNA Governmental Affairs Conference. (CUNA photo)
Credit unions may have different ideas about how they can help members and communities weather a troubled economy, but “we need to do this together,” Dorety said. Credit unions can and should be a part of the solution to the economic crisis, because they’ve “always been here for members,” Dorety said. Dorety empathized with some of the economic strains credit unions have been experiencing by using his own credit union, Suncoast Schools FCU in Tampa, Fla.--which he heads as president/CEO—as an example. Suncoast has always focused on providing the best fees, rates and services to members. The credit union takes great pride in offering the narrowest interest rate spread possible while giving back to members. Keeping a net worth of 8% to 9% was reasonable, he said. But things changed. Florida became an epicenter of the credit crisis, and the credit union had to change its focus. Suncoast began making tougher decisions, increasing rate spreads and trying to find ways to reduce expenses. “Other credit unions are doing the same,” he said. “It’s not fun.” For the first time, many credit unions may be posting a negative net income, scrutinizing expenses, or cutting staff. But while credit unions are making tough decisions to ensure a successful future, members do not want them to cut back. “They need for us to be here for them,” Dorety said, noting that one solution may be to move toward capital reform. Mica’s message to the meeting participants was to remember credit unions’ strength and the need to work together through tough economic times, such as credit unions currently face. “Our future is bright,” Mica said, “but it is clouded just now by very real problems.” He added that “under the surface of bleakness” credit unions are “a shining light.” Mica noted that credit unions membership numbers are up, as are saving and lending volumes. “More than ever before, members love (credit unions), and are looking toward us.” Public opinion, Mica said, is shifting more in favor of credit unions now than at any time in the last 10 years. He reiterated that the credit union movement has a capital position of more than 11%, a strength that other businesses would love to have right now, he added. However, Mica noted that that system-wide high capital level should not mask the needs of individual credit unions struggling because of tough market conditions. “Here’s the key: We have to stay together,” Mica told the packed general session. “We are a cooperative system. We have to find ways to work together.” Quoting 16th U.S. President Abraham Lincoln, Mica said, “A house divided cannot stand.” Even in the general economy, Mica said, there are some positive “glimmers” that should be noted. For instance, Mica said, the current global effort to address economic turmoil is, by best estimates, the most coordinated response ever executed by world leaders. He also said that, while painful for individuals, the balance sheet corrections consumers are making to recognize a new economic environment will be valuable into the future.

IRS asked by CUNA Address UBIT issues

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WASHINGTON (2/24/09)—Internal Revenue Service (IRS) Commissioner Douglas Shulman was asked to comment on the contrast between the IRS’s recent expansion of tax deductions for commercial banks and the agency’s simultaneous attempts to expand the application of the Unrelated Business Income Tax to credit unions, in a letter from Credit Union National Association (CUNA) President/CEO Dan Mica. The CUNA letter was a follow up to the group’s query last week at an Exchequer Club luncheon at which the IRS Commissioner spoke and then welcomed questions. CUNA Counsel for Special Projects Michael Edwards referrer to a series of IRS issuances that included IRS Notice 2008-100, a tax policy document which allows special tax breaks for bank acquisitions. For instance, under the Notice 2008-100 tax guidance, Wells Fargo & Co. received an approximately $79 billion tax deduction because of its purchase of Wachovia Corp. Edwards asked, "How does IRS justify its policy of loosening the tax laws as they pertain to banks, at least in some respects, while simultaneously attempting to expand taxation of credit unions." Shulman responded that the notice was due to "the priorities of the Secretary" at the time, Henry Paulsen, and that he disagreed the bank and credit union issues were comparable. The follow up letter reiterated CUNA’s concern that the IRS “may not understand that credit unions are an integral part of the credit markets, especially for consumers, and have been playing a vital role in keeping credit flowing to consumers.” “Tax policies that undermine credit unions’ ability to lend are completely at odds with current efforts to free up the credit markets and can contribute to pro-recessionary credit shortages,” said the Mica letter. Credit unions, Mica noted, are among the few financial institutions that have done exactly what both the Bush and Obama administrations have wanted and have increased their lending. “This vital contribution to the fight against the credit freeze cannot continue at the same level, however, if credit union dollars are diverted to questionable tax payments imposed by the IRS,” Mica noted. “Every dollar that credit unions must pay toward shaky interpretations of UBIT is a dollar that cannot be directed toward consumer loans, or toward capital adequacy in support of such loans,” the CUNA CEO wrote.

NCUF presents four Wegner awards

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WASHINGTON (2/24/09)--For only the third time in 21 years, the National Credit Union Foundation (NCUF) presented four Herb Wegner Memorial Awards at its annual dinner Monday night. Nearly 1,100 credit union leaders and supporters attended the event. “This year’s winners join an elite group of 44 individuals and 20 organizations whose extraordinary efforts over the past 21 years have earned the credit union movement’s highest national honors,” said emcee Bob Schumacher, CEO of MountainCrest CU, Arlington, Wash. Awards and recipients include:
* Lifetime Achievement Award: Bill Sterner, late president/CEO of Elevations Credit Union in Boulder, Colo.; * Individual Achievement Award: Rita Haynes, treasurer, manager and CEO of Faith Community United Credit Union in Cleveland, Ohio; * Individual Achievement Award: Tom Sargent, president/CEO of First Tech Credit Union in Beaverton, Ore.; and * Outstanding Organization Award: Montana Credit Unions for Community Development in Billings, Mont.
Schumacher, who also chairs NCUF’s Awards and Recognition Committee, explained why NCUF chose to present two Individual Achievement Awards this year. Hayne’s achievements in payday loan alternatives, second chance auto loans, and foreclosure preventions are shining examples of how credit unions can change lives in low-income communities, he said. Sargent has achieved what only the most effective national credit union leaders have done throughout our history: uniting credit unions across the country around a single cause, Schumacher added. “We truly appreciate the enthusiasm from credit union supporters who understand how important it is—even in the worst economic times—to share and celebrate the best practices and the best people that credit unions have to offer,” said NCUF Executive Director Steve Delfin.

GAC Corporate CU session packs the house

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WASHINGTON (2/24/09)—A special Monday session on the regulator’s
Click to view larger image CUNA President/CEO Dan Mica (left) is shown on stage for the early-morning Governmental Affairs Conference update on the NCUA’s Corporate CU Stabilization plan. The session packed the Washington Convention Center hall with thousands of credit union representatives, illustrating the heightened concerns regarding the plan. Shown from left: Mica, CUNA General Counsel Eric Richard, CUNA Corporate CU Task Force Chairman Terry West, CUNA Deputy General Counsel Mary Dunn, CUNA Chief Economist Bill Hampel, and CUNA VP of Legislative Affairs Ryan Donovan. (CUNA photo)
corporate credit union stabilization plan drew a packed crowd at an early bird presentation at the Credit Union National Association’s (CUNA’s) Governmental Affairs Conference (GAC) Monday. CUNA and its Corporate Credit Union Task Force continue to investigate possible funding alternatives to the federal regulators’ corporate stabilization plan. The task force by late last week completed its third brain-storming session to detail reasonable ways to make the plan less of a burden on credit unions CUNA President/CEO Mica said Monday that CUNA is well aware of the strong feelings credit unions have about the corporate stabilization plan announced in January by the National Credit Union Administration (NCUA). CUNA also acknowledges, he said, the strong and opposing views credit unions have regarding accepting the U.S. Treasury Department’s Troubled Asset Relief Funds (TARP). CUNA recently executed a survey in which credit unions weighed in on whether or not to seek access to funds from TARP. The poll attracted almost 1,400 responses. The findings:
* Sixty-six percent of respondents strongly opposed an infusion of TARP funds into natural person credit unions to bolster their capital. * Sixty-two percent opposed using TARP to purchase credit unions’ troubled assets.
Survey participants were more favorable toward setting aside TARP funds to backstop the NCUA’s guarantee of deposits by credit unions in corporate credit unions. Forty-two percent favored this, while 29% came out against it. Credit unions were more divided about TARP funds injected to help stabilize corporates or to buy their troubled assets. When asked if CUNA should advocate for these approaches, about one-third indicated a high level of agreement, about one-third had neutral views, and the remaining third reported a high level of disagreement. Mica and Task Force Chairman Terry West urged the GAC gathering to back efforts to open TARP funds to credit unions in case they need them in the uncertain future. West is CEO of Vystar CU in Jacksonville, Fla. The legislation that set up TARP last year included credit unions as eligible institutions, but as implemented by the Treasury Department to date, credit unions have not been included. “This is a train leaving the station," Mica has warned.

Rep. Holmes Norton notes CUs responsible lending

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WASHINGTON (2/24/09)—U.S. Rep. Eleanor Holmes Norton (D-D.C.) told a crowd of more than 4,200 credit union representatives Monday, “Congress knows credit union have been responsible” financial institutions. Addressing the opening general session of the Credit Union National Association’s (CUNA’s) 2009 Governmental Affairs Conference (GAC), Holmes Norton praised credit unions for being responsible lenders. “You serve your members. You serve your communities. You are cooperatives.” She noted that credit unions are not responsible for the current problems in the country’s mortgage markets, because they did not make the kinds of loans that have caused the upheaval. During an introduction of the congresswoman, Mike Beall, Maryland and District of Columbia Credit Union Association president, reminded attendees that Holmes Norton was instrumental in turning around a credit union conversion.

Mecham elected CUNA board chairman

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WASHINGTON (2/24/09)--The Credit Union National Association (CUNA) has elected Kris Mecham as its new chairman. Mecham previously served as CUNA vice chairman. He is president/CEO of Deseret First FCU in Salt Lake City. CUNA also elected new officers to join Mecham on the CUNA Executive Committee. The officers are:
* Vice chair: Harriet May, president/CEO, GECU, El Paso, Texas; * Treasurer: Pat Wesenberg, president, Point Plus CU, Stevens Point, Wis.; * Secretary: Mike Mercer, president, Georgia Credit Union Affiliates; * At-Large: Dennis Pierce, CEO, CommunityAmerica CU, Lenexa, Kan.

Duke professor backs CU system

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WASHINGTON (2/23/09)— Strengthening credit unions could be an effective way of rebuilding the nation's financial system, a Duke University economics professor told a national TV audience Friday. Dan Ariely, James B. Duke Professor of Behavioral Economics at Duke in North Carolina, said credit unions have shown they do the right thing and he would support actions to back them. Ariely, formerly a professor at Massachusetts Institute of Technology, made his remarks on the Lehrer News Hour on PBS. Participating on a panel discussing the country’s financial crisis, Ariely brought up the positive nature of the credit union system. Credit unions, the Duke professor said, represent an alternative banking system in the U.S., one that has done the right thing. He noted that credit unions have been “untouched by all of these problems.” “I think I would personally strengthen them,” Ariely said. Ariely is the author of a number of books, including the currently best-selling “Predictable Irrationality.”

Inside Washington (02/20/2009)

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* WASHINGTON (2/23/09)--National Credit Union Administration (NCUA) Chairman Michael E. Fryzel commended President Barack Obama’s Homeowner Affordability and Stability plan as a step forward to assist struggling homeowners. “The plan breaks new ground in several important respects, and puts more resources toward helping borrowers with refinancing options,” Fryzel said. “And I am gratified to note its similarities to the CU Homeowners Affordability Relief Program, such as the refinancing feature and focus on owner-occupied, non-speculator mortgage holders.” Fryzel encouraged credit unions to focus on helping their members use the mitigation efforts. “This pro-consumer focus is a natural fit for the credit union industry,” he concluded ... * WASHINGTON (2/23/09)--The National Credit Union Administration issued a regulatory alert stating that the Federal Emergency Management Agency has released a revised Standard Flood Determination Form. The

House could vote this week on cramdowns

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WASHINGTON (2/23/09)—The House is expected to vote on a mortgage “cramdown” bill this week and, though changes are expected, Credit Union National Association (CUNA) Vice President of Legislative Affairs Ryan Donovan said Friday it is likely still be unpalatable to credit unions and other lenders. The House vote would come at the same time more than 4,200 credit union representatives are gathered in Washington, D.C. for the 2009 CUNA Governmental Affairs Conference (GAC). The GAC kicked off Sunday and continues through Thursday. CUNA President/CEO Dan Mica issued a statement Friday following news that the “Helping Families Save their Homes in Bankruptcy Act” would reach the House floor by the middle of this week. The bill would make changes in the Bankruptcy Code, including allowing judges to change the terms of existing mortgages, and action known as a “cramdown.” “CUNA opposes HR 200 – or any similar bill – which forces credit unions to accept a lower principal on a mortgage loan by the bankruptcy court. “This measure is overly broad in its application, scope, and duration as it applies to all mortgage loans, unfairly grouping a loan made with strong underwriting standards – such as those made by credit unions -- with a loan made in an unscrupulous manner,” the CUNA leader said. He added, “Credit unions acknowledge that bankruptcy is a legitimate option for eligible borrowers who have no other way to address their indebtedness. We believe that the Bankruptcy Code must fairly balance the rights of both credit grantors and borrowers, and it must recognize the impact that bankruptcy has on the cost of credit to borrowers who do have the ability and determination to repay their obligations. “This legislation does not meet that test.” CUNA’s Donovan added that the situation surrounding the bill remains fluid, and how this issue will be brought to the House floor, and with what other concerns it may be paired, could change. "There is a very real possibility that the cramdown bill will be combined with our deposit insurance bill [H.R. 786] and other legislation that CUNA supports," Donovan said. Even still, Donovan speculated that CUNA would continue to strongly oppose the legislation unless significant modifications are made. "I am not sure that there are very many folks who would consider the prospect of mortgage cramdown and the opportunity to make permanent the increased deposit insurance coverage as equal in importance," Donovan said. He added, "We will be encouraging opposition to the cramdown bill in the House and asking our legislators to bring the deposit insurance bill up as a stand alone measure."

NCUA alert on HMDA filings

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ALEXANDRIA, Va. (2/23/09)— Credit unions subject to Home Mortgage Disclosure Act requirements for 2008 activity must submit loan/application register (LAR) data to the Federal Reserve Board (Fed) by March 2, 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. After March 2, the Fed will provide a list of delinquent filers to NCUA. Credit unions appearing on this list could become subject to civil money penalty assessments. A credit union must file HMDA data in 2009 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.
Credit unions with 25 or fewer entries on their LAR may report and submit the data in paper form. However, all credit unions that have more than 25 entries on the LAR must submit their reports in an automated, machine-readable, form. Use the resource link below to access the NCUA Alert.

Instant online convention coverage--GAC Blog

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WASHINGTON (2/23/09)--Credit unions are encouraged to check in on the Credit Union National Association’s (CUNA’s) GAC Blog to get the latest news on happenings at the 2009 Governmental Affairs Conference Feb. 23-26. More than 4,200 credit union representatives are in town for CUNA’s premier conference featuring addresses by top policymakers, and more. CUNA Editorial Communication Vice President Lisa McCue and Communications Specialist Tiffany Stronghart will provide frequent convention updates. Also, for full coverage, read CUNA’s daily online news service News Now. The CUNA GAC Daily will be distributed to conference attendees and News Now readers will have access to its electronic version. Use the resource links below to access the GAC Blog and to sign up for News Now headlines via email.

GAC launches today Key issues speakers featured

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WASHINGTON (2/23/09)—The National Credit Union Administration’s (NCUA’s) corporate credit union stabilization plan will be among the hot topics getting full attention at the Credit Union National Association (CUNA) Government Affairs Conference (GAC) here this week. CUNA added a special Monday information session on the plan to offer GAC participants an up-to-date and comprehensive view of the agency’s effort, as well as CUNA’s work to lighten the cost burden to credit unions. (See News NowTuesday for coverage of the session.) CUNA also retooled its annual "Hot Exam Issues" GAC breakout session to focus specifically on the NCUA stabilization plan. Moderated by Kathy Thompson, CUNA senior vice president and associate general counsel for regulatory compliance, the Feb. 24 afternoon breakout panel will consist of six key senior staff from NCUA. Also this week, NCUA Chairman Michael Fryzel, Vice Chairman Rodney Hood, and board member Gigi Hyland are scheduled to speak during GAC general sessions. They are expected to address the corporate assistance plan in their remarks. Also on the GAC schedule are key lawmakers, including;
* Senate Banking Committee Chairman Christopher Dodd (D-Conn.); * House Financial Services Committee Chairman Barney Frank (D-Mass.); * House Minority Leader John Boehner (R-Ohio); * Ranking Republican member of the House Financial Services Committee, Rep. Spencer Bachus of Alabama; * Rep. Carolyn Maloney (D-N.Y.), who heads the panel's subcommittee on financial institutions and consumer credit; * Reps. Paul Kanjorski (D-Pa.) and Ed Royce (R-Calif.), key sponsors of credit union legislation; and many more.
More highlights slated for the five-day program include economic commentary from Steve Forbes, editor-in-chief of Forbes magazine, and a political face-off between pundits Paul Begala and Tucker Carlson. Forbes will offer economic outlook and commentary. He attained national visibility in the political arena both 1996 and 2000 when he campaigned for the Republican nomination for President. Carlson and Begala will face off over current developments in national news, politics, and world issues. Carlson is a senior correspondent for MSNBC, and Begala is a CNN political analyst and former top aide to President Bill Clinton. Also, Bob Woodruff of ABC News and his wife, Lee, will provide a poignant start to CUNA's event as they recall the shattering moment when Woodruff was seriously injured by a roadside bomb when assigned to report U.S. and Iraqi security forces near Taji. The 2009 GAC has settled into the Washington Convention for its second year. For 30 years prior, CUNA’s premier conference was held at he Washington Hilton, but burgeoning attendance demanded a larger venue. Even with the economic pressures facing credit unions this year, attendance has reached 4,200, with 458 first-time attendees. The larger space has also enabled CUNA to continue for a second year a free Sunday evening concert, featuring the Lt. Dan Band. The Lt. Dan Band was formed by Chicago composer Kimo Williams and Gary Sinise, actor/musician and star of "CSI New York," a TV show on CBS. "Lieutenant Dan" is the character Sinise played in the 1994 film, "Forrest Gump." The band has completed six tours for the USO and performs regularly for troops. Use the resource link below for more GAC information. Also use the second resource link to view North Carolina CU League first video update on GAC. This installment: Why limit member business lending when there is such a need for what credit unions can provide? Read News Now this week for more. Also, the Michigan Credit Union League will file video reports daily, covering the issues of the day, Hill visits and reaction from CEOs. The reports can be viewed through the league's CUBE TV. Use the link to view the reports.

Inside Washington (02/19/2009)

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* WASHINGTON (2/20/09)--Under a housing plan President Barack Obama released Wednesday, government-sponsored enterprises Fannie Mae and Freddie Mac would receive a larger funding commitment--to $200 billion each--and would assist struggling borrowers refinance loans under them (American Banker Feb. 19). The enterprises had been placed into conservatorship and financial observers say their future may still be uncertain. Robert Litan, senior fellow at the Brookings Institution, noted that the Obama administration is using the enterprises to help the housing market, which will in turn help financial institutions ... * WASHINGTON (2/20/09)--Ben Bernanke, chairman of the Federal Reserve Board, defended the Fed’s actions to help the struggling economy during a speech at the National Press Club this week (The New York Times Feb. 19). The Fed has, and will continue, to do everything it can to help the nation’s financial stability, he told reporters. Bernanke also said the unemployment rate would likely increase to 8%. The Fed also released projections indicating that the economy is expected to grow 2.5% to 2.7% annually during the next five or six years, and that unemployment would be at about 5% ... * WASHINGTON (2/20/09)--Industry trade groups are urging the Department of Housing and Urban Development (HUD) to move backward on a Real Estate Settlement Procedures Act (RESPA) rule (American Banker Feb. 19). In a letter to HUD Secretary Shaun Donovan, the groups said the department and the Federal Reserve Board should band together to make disclosures more effective. RESPA requires that consumers receive disclosures in transactions and outlaws kickbacks that increase settlement service costs. The statute aims to help homebuyers be better shoppers in the home buying process, according to HUD ...

NCUA to vote on insurance signage rule

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ALEXANDRIA, Va. (2/20/09)--The National Credit Union Administration (NCUA) is expected to vote at a board meeting Thursday on a final rule that would change how credit unions display their insurance coverage signs. NCUA was scheduled to vote on the rule at last month’s meeting, but it was pulled from the agenda to reflect President Barack Obama’s halt to implement pending regulations under the Bush administration during its last days. The rule would require that credit unions change their insurance signs to reflect the temporary increase Congress approved in October to insure credit union deposits. The increase, which insures deposits up to $250,000 from $100,000, is effective until Dec. 31. The rule, if adopted, is expected to give credit unions more flexibility in advertisements. NCUA also is scheduled to discuss the status of the National Credit Union Share Insurance Fund and a proposed rule regarding the operating fee calculation for natural person federal credit unions. For more information, use the link.

Compliance Challenge IRAs and minimum distributions

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WASHINGTON (2/20/09)--Are consumers with an Individual Retirement Account (IRA) at a credit union required to take minimum distributions from the account if they reach retirement age this year? No, says the Credit Union National Association’s (CUNA) Compliance Challenge team. Though account owners were previously penalized for not taking out the correct required minimum distribution (RMD) annually at age 70.5, a new law--the Worker, Retiree, and Employer Recovery Act of 2008, signed last year--changes the requirement by suspending the required minimum distributions from qualified retirement accounts including 401(k) plans, 403(b) plans and IRAs for 2009. However, account holders are required to take the RMD scheduled for 2010 by Dec. 31, 2010. IRA holders who reached age 70.5 last year also are required to take their RMDs by April 1 or face excise taxes. The taxes for 2009 will be waived. Credit unions are encouraged to make their members aware of the change, according to CUNA.

CUNA queries IRS on UBIT stance

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WASHINGTON (2/20/09)—Internal Revenue Service (IRS) Commissioner Douglas Shulman was asked by a credit union representative to explain the tax agency’s discrepancy in the tax treatment of banks compared with credit unions. Credit Union National Association Counsel for Special Projects Michael Edwards said that Shulman, in a speech Wednesday, referred to a series of IRS issuances that included IRS Notice 2008-100, a tax policy document which allows special tax breaks for bank acquisitions. For instance, under the Notice 2008-100 tax guidance, Wells Fargo & Co. received an approximately $79 billion tax deduction because of its purchase of Wachovia Corp. “How does IRS justify its policy of loosening the tax laws as they pertain to banks, at least in some respects, while simultaneously attempting to expand taxation of credit unions?” Edwards inquired during a Q-and-A session following the speech. The commissioner was addressing The Exchequer Club in Washington, D.C. Shulman responded that the notice was due to “the priorities of the Secretary” at the time, Henry Paulsen, and that he disagreed the bank and credit union issues were comparable. “The real purpose of the question was to make sure Commissioner Shulman was personally aware of what the IRS staff is doing on credit union unrelated business income tax (UBIT),” Edwards said later. He said CUNA intends to follow up the interaction with a letter to the commissioner asking him to review the IRS's position on UBIT. Two credit unions have presented legal challenges to the IRS stance on UBIT. Bellco CU of Greenwood Village, Colo. file a lawsuit last May that seeks a $199,000 refund for UBIT taxes paid 2001-2003. And in Appleton, Wisc., Community First CU filed a similar complaint in January 2008 seeking a $54,000 refund on UBIT taxes from several insurance products.

Cramdown provisions in Obamas foreclosure plan

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WASHINGTON (2/19/09)--The Credit Union National Association (CUNA) is reviewing President Barack Obama’s Homeowner Affordability and Stability plan, which was released Wednesday and includes a provision for mortgage cramdowns. Under the president’s proposed plan, bankruptcy courts would be allowed to modify terms of existing mortgages so borrowers can continue making payments--commonly referred to as a mortgage cramdown. Homeowners also would be required to ask their loan servicers for a modification and certify that they have complied with reasonable requests from the servicer to provide essential information. The provision would apply only to existing mortgages under Fannie Mae and Freddie Mac conforming loan limits. CUNA is opposed to mortgage cramdowns and is working with policymakers on a more targeted approach to cramdown proposals and the housing crisis. If cramdown legislation is enacted, it must be specifically limited to loans that are subprime, have negative amortization, are fraudulent or abusive, and have large interest rate resets, according to CUNA. CUNA has said mortgage cramdowns could encourage borrowers’ gaming of the mortgage lending system by allowing a dissatisfied borrower to stop payments on a home and possibly be able to keep the home (News Now Feb. 10).

CUNA updates CUs on NCUA corporate plan

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WASHINGTON (2/19/09)—Credit union feelings run deep about whether to pursue access to the U.S. Treasury’s TARP funds, yet early results of a Credit Union National Association (CUNA) survey this week show there is an almost equal divide between those voting ‘yea’ and ‘nay.’ CUNA President/CEO Dan Mica revealed the early survey results during a 75-minute CUNA conference call Wednesday on the latest developments on the National Credit Union Administration’s (NCUA’s) corporate credit union stabilization plan. The CUNA poll ended Wednesday. TARP is a highly controversial issue among credit unions, Mica noted on the call. The legislation that set up TARP last year included credit unions as eligible institutions, but as implemented by the U.S. Treasury Department to date, credit unions have not been included. Mica noted he and other CUNA representatives would be meeting with Treasury officials for further discussions Wednesday afternoon. Under the NCUA corporate liquidity plan, approved at a special closed meeting late last month, the NCUA guarantees uninsured shares at all corporate credit unions through February 2009, and established a voluntary guarantee program for uninsured shares of all corporate credit unions through Dec. 31, 2010. Additionally, the agency has agreed to provide a $1 billion capital note to U.S. Central Corporate FCU. The NCUA declared a premium assessment to restore the National Credit Union Share Insurance Fund (NCUSIF) equity ratio to 1.3%. The premium will be collected later in 2009. Mica said on the CUNA conference call, “If there is one area of agreement in the credit union system, it is that we would like to mitigate the cost of this program to credit unions.” Among alternatives to do just that, CUNA is investigating:
*Allowing credit unions to tap Treasury’s funds as soon as possible to deal with the corporate credit union liquidity emergency. This may require a statutory change and CUNA will sound out federal lawmakers to assess support: and * Use the NCUA’s Central Liquidity Facility (CLF) to provide the funding. CUNA is currently analyzing CLF's legal obligations and whether there may be opportunities for additional approaches or flexibility.
Mica underscored for participants that the complexities around the NCUA plan are extensive—especially in investigating accounting and statutory issues, as CUNA continues to do. He pledged that despite disagreement regarding approach, CUNA will continue to pursue funding alternatives for the NCUA program. CUNA’s efforts will include exploring access to TARP funds to back up the National Credit Union Share Insurance Fund (NCUSIF), as needed. “This is a train leaving the station,” Mica warned. “If we don’t get agreement (among credit unions) to get use of TARP funds for credit unions now, whether we need those funds or not, the opportunity will close for us.” See News Now Friday for final survey results.

Inside Washington (02/18/2009)

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* WASHINGTON (2/19/09)--Strict limits on financial executives’ pay could harm credit unions, small and regional banks, and savings and loans, White House press secretary Robert Gibbs said Sunday (The Washington Times Feb. 16). The Obama administration is seeking to revise a provision in a $787 billion economic stimulus package signed Tuesday that would further limit executive compensation. Under the proposal, financial institutions that receive bailout money from the Troubled Asset Relief Program (TARP) would not be able to pay top executives more than $500,000 until TARP funds are repaid ... * WASHINGTON (2/19/09)--Provisions in an $787 billion economic stimulus package signed into law Tuesday aim to increase Small Business Administration (SBA) lending, but guidance that is set to take place on March 1--a $250,000 limit on the goodwill value--could squash those intentions. Industry observers worry that the goodwill limit could actually discourage SBA lending. The agency is re-evaluating the guidance and could issue a revised version before next month, said Jim Hammersley, SBA loan division director (American Banker Feb. 18). Other provisions in the stimulus affecting the SBA include $69 million to expand staff and marketing, and improve lender oversight, and an increase on SBA loan guarantees to 90% from 85% ... * WASHINGTON (2/19/09)--The National Association of State Credit Union Supervisors (NASCUS) leadership will travel to Washington, D.C., next week for business and credit union system group meetings during the Credit Union National Association’s (CUNA) Government Affairs Conference (GAC). The NASCUS board of directors and Credit Union Executive Council will meet Monday and Tuesday. NASCUS committees will meet Tuesday. NASCUS leadership also is scheduled to meet with congressional leaders and credit union system groups during the GAC. Meetings are also planned for the NASCUS regulator leadership and the National Credit Union Administration ...

Fair value is subject of new FASB projects

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WASHINGTON (2/19/09)—In what appears to be at least a step in the right direction for credit unions, the Financial Accounting Standards Board (FASB) announced Wednesday the addition of four new FASB agenda projects addressing fair value accounting. FASB Chairman Robert Herz said the projects are intended to improve the application guidance used to determine fair value and disclosure of fair value estimates. Credit Union National Association Accounting Task Force Chairman Scott Waite greeted the FASB announcement enthusiastically. CUNA that requested FASB provide additional guidance on fair value accounting. “During my last meeting with the FASB board and in subsequent conversions, I have strongly urged addressing these issues before June. Addressing Fair Value Measurement and (other-than-temporarily impaired assets) OTTI in illiquid and inactive markets is imperative to address very quickly,” Waite said. He is senior vice president and chief financial office of Patelco CU in San Francisco. He added, “I’m ecstatic to see that both areas have been added to the agenda and will be addressed near term. CUNA and I will continue to advocate with the FASB the urgency and positions important to credit unions.” CUNA is currently analyzing the FASB announcement and will provide guidance for credit unions. Some credit unions have experienced serious reductions in capital as a result of the application of fair-value accounting to certain assets and CUNA continues to seek relief. CUNA President/CEO Dan Mica recently expressed CUNA's "strongest support" for efforts to address accounting rules on fair value and other-than-temporarily impaired (OTTI) assets in a letter to Senate Banking Committee Chairman Christopher Dodd (D-Conn.) The FASB fair value projects address four main topics:
* Application guidance on determining when a market for an asset or a liability is active or inactive; * Application guidance on determining when a transaction is distressed; * Applying fair value to interests in alternative investments, such as hedge funds and private equity funds; and * Improving disclosures about fair value measurements.
FASB anticipates completing the first three topics by the end of the second quarter of 2009, and the fourth topic in time for year-end disclosures. The FASB release reminded that it is also working with the International Accounting Standards Board (IASB) on a comprehensive project to improve, simplify, and converge the accounting for financial instruments.

CUNA economist backs jobs creation plan

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WASHINGTON (2/28/09)—President Barack Obama signed the $787 billion stimulus bill into law yesterday in an action the administration has said it hopes will create 3.5 million jobs and bolster the troubled U.S. economy. Last week, as the stimulus debate closed on Capitol Hill, Credit Union National Association (CUNA) Chief Economist Bill Hampel said the jobs-creation portion of the effort should have been even bigger. In a Feb. 13 article in Politico, called “Economists predict stimulus effects,” Hampel said, “The biggest requirement of the stimulus package is to break the current near-term downward cycle” of rising job loss, falling consumer confidence and plunging spending.” Hampel added, “You get some of the biggest bang for the buck” by preventing layoffs, since a dollar spent to keep someone in a job is just as effective as one spent to hire a worker – and it takes a lot less time than other forms of spending. The CUNA chief economist also reminded that even with the bill signed into law, it will take time for its impact to be felt. Among other things, the bill funnels money to alternative energy projects, provides tax cuts for individuals and businesses and gives aid to states. The stimulus package also carries provision for tax cuts, infrastructure projects, and aid to the states. Politico is a prominent publication widely read on Capitol Hill and by Washington's political establishment. Use the resource link below to read the full article.

Dodd asked by CUNA to seek OTTI repair

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WASHINGTON (2/18/09)—Some credit unions have experienced serious reductions in capital as a result of the application of fair-value accounting to certain assets and the Credit Union National Association (CUNA) continues to seek legislative relief. In a recent letter to Sen. Christopher Dodd (D-Conn.), CUNA President/CEO Dan Mica expressed CUNA’s “strongest support” for efforts to address accounting rules on fair value and other-than-temporarily impaired (OTTI) assets. Mica noted that, like other financial institutions, federally insured credit unions with more than $10 million in assets are required to follow U.S. Generally Accepted Accounting Principles (GAAP). Therefore, Mica explained, for mortgage-backed securities (MBS) and mortgage servicing rights, credit unions follow the Financial Accounting Standards Board's (FASB) rules on fair value and mark-to-market accounting in valuing these assets and reflecting them on their financial statements and regulatory call reports. Because of this a number of credit unions—like other financial institutions and companies-- have experienced serious reductions in their capital, according to CUNA. “Fair value accounting impacts the application of accounting standards to assets that must be treated as other-than-temporarily-impaired (OTTI), such as MBS. That is because FASB requires OTTI assets to be written down for the entire difference between their cost and fair value on the day they are recorded,” Mica said. “ Because of the current illiquid market conditions, the difference in these values can be substantial and result in charges to earnings that represent unnecessary and overstated capital reductions,” Mica said in his Feb. 13 letter to the Senate Banking Committee chairman. Mica urged Congress to act to address the burden fair value presents to credit unions. CUNA backs the following actions:
* Direct the Securities and Exchange Commission SEC), under the new chairman, and the FASB to refine "fair value" for periods when an active market for a security does not exist; and * Direct the SEC and FASB to address OTTI again and to recognize the differences between credit losses and liquidity losses due to inactive markets.

Truth-in-Savings final rule analysis offered by CUNA

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WASHINGTON (2/18/09)--The Credit Union National Association (CUNA) has analyzed a final rule by the Federal Reserve Board that addresses disclosures in connection with overdraft protection plans. Although credit unions are not subject to the Fed’s rule, CUNA expects the National Credit Union Administration to issue a similar rule in the future. The final rule--effective July 1, 2010--amends Regulation DD, the Truth in Savings Act. It requires financial institutions to:
* Disclose on a periodic statement the dollar amounts charged for overdraft fees and returned item fees, both for the month and year-to-date; and * Provide account balance information through an automated system that discloses only the amount of funds available for withdrawal, without including the additional funds that would be available under an overdraft program.
In conjunction with this final rule, the Fed also issued a proposal under Regulation E, the Electronic Fund Transfer Act that will provide additional protections relating to the assessment of overdraft fees. These changes will only apply to ATM and debit card transactions. For more information, use the links.

NCUA opines on conflict-of-interest lending reg

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WASHINGTON (2/18/09)--A National Credit Union Administration (NCUA) provision that prohibits credit union officials from receiving compensation when making loans does not apply when a credit union sells loans it previously made, according to NCUA Associate General Counsel Sheila Albin. NCUA responded to a letter questioning whether a general lending regulation prevents credit unions from selling loans to a bank in which one of the credit union’s directors owns stock. The provision, Section 701.21 (c)(8), applies when credit unions make loans to their members, but not to a credit union’s sale of whole loans or participating interest in loans it has granted. “Credit union officials are cautioned, however, to avoid any impropriety when deliberating on or participating in the determination of any matter affecting their pecuniary interest, including the sale of credit union loans to a bank in which an official owns a minority interest,” Albin wrote. In general, the interested director should not deliberate or vote on the transaction. The purpose of the rule is to ensure that an individual in a position of authority does not put self-interest ahead of the credit union’s interest in making good loans and providing good services to members, NCUA said. For the full letter, use the link.

Inside Washington (02/17/2009)

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* ALEXANDRIA, Va. (2/18/09)--A recent National Credit Union Administration (NCUA) legal opinion letter (NCUA General Counsel Opinion 09-0108) explained why a federal credit union is not subject to the Freedom of Information Act (FOIA). Under FOIA, federal agencies are required to make certain records available to the public. However, the NCUA wrote, the law defines agency to include “any executive department, military department, government corporation, government controlled corporation, or other establishment in the executive branch of the government (including the Executive Office of the President), or any independent regulatory agency.” NCUA Associate General Counsel Sheila Albin wrote in the Jan. 26 opinion, “While federal credit unions may be considered federal instrumentalities under certain federal laws, for example tax and bankruptcy laws, federal credit unions are not agencies for purposes of FOIA” … * WASHINGTON (2/18/09)--Financial industry observers are concerned about the possible subjectivity of stress tests at large banks. The Treasury announced last week that tests would be given to 18 of the nation’s largest banks, but it provided no further information (American Banker Feb. 17). The tests, which regulators are developing, could recognize unemployment or a bank’s exposure to derivatives. Ultimately, observers say the tests could indicate a change in the way Troubled Asset Relief Program (TARP) money is used if TARP funds are given to banks who fail the tests. Previously, TARP was given only to healthy banks. Banks were required to stress test their capital levels under original Basel II rules finalized last year ... * WASHINGTON (2/18/09)--Executive compensation limits in a $787 billion economic stimulus package signed by President Barack Obama Tuesday appear to be eased. The compromise package did not include several, more restrictive provisions in the Senate version of the stimulus (American Banker Feb. 17). Two provisions that were killed would have scaled back executive bonuses of more than $100,000 at companies with Troubled Asset Relief Program (TARP) funds and would have limited the total annual compensation executives could receive to $400,000. Under current law, companies are banned from giving bonuses to senior executives until TARP funds are repaid. The Obama administration has indicated that it would revise the executive compensation limits after the legislation is signed. One revision would limit compensation to $500,000 for companies receiving TARP funds ... * WASHINGTON (2/18/09)--The Federal Reserve Board announced that it will restructure its check processing operations in the Third and Fifth Districts. As of April 18, the Baltimore branch office of the Federal Reserve Bank of Richmond no longer will process checks. Banks served by that office will report to the Federal Reserve Bank of Philadelphia. Some deposited checks that currently are non local checks will become local checks subject to shorter permissible hold periods in affected regions ...

Kentucky Supreme Court to review FOM case

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WASHINGTON (2/17/09)—The Supreme Court of Kentucky has agreed to review a field-of-membership (FOM) case that involves the state regulators’ authority to grant FOMs based on the state’s Area Development Districts (ADD). The case was brought by Home Federal Savings and Loan Association against the Kentucky Department of Financial Institutions (DFI) in May 2006. It is known as Home Fed. Sav. & Loan v. Kentucky. The bankers in the case argued that state law does not permit community-based FOMs for state-chartered credit unions. They argued that the ADD would equal a community charter. The Supreme Court decision to review revives credit union hope in the case after a blow on the appeals court level last November. That court sided with a lower court ruling backing the plaintiff. It ruled that the DFI exceeded its statutory authority when it approved geographic fields of membership for six state-chartered credit unions between 2000 and 2005. Wendell Lyons, president of the Kentucky CU League, said Monday that his group is encouraged that the high court granted Discretionary Review. He said he believes the league’s attorney made a compelling argument. Lyons said to agree with the lower court ruling, "one would have to accept that the Kentucky General Assembly, while modernizing the state (credit union) act in 1984 – took the illogical step of gutting the field of membership provisions of the act at the same time.” “We are glad that we are getting another day in court,” he added. The Credit Union National Association (CUNA) joined the case as a “friend of the court” last April. In an amicus brief, CUNA argued, in part, that the lower court incorrectly applied federal administrative law precedent, instead of Kentucky administrative law, to deny the DFI judicial deference. And the court further erred, CUNA argued, because, if correctly applied, the federal precedent would have compelled the court to back the state regulator under judicial deference. General Counsel Eric Richard said CUNA got involved in the case because the lawsuit was part of a pattern in which bankers have been challenging community charters in state courts around the country. In addition to Kentucky, Richard noted, multiple cases have been brought in Missouri, since resolved by state legislation, and in Pennsylvania. Michael Edwards, CUNA counsel for special projects, said he believes the state high court agreed to review the case because of the technical aspects involved. He said the court most likely wants to review the power of a state regulator, as well as what kind of administrative procedures would require that a regulator’s action be given judicial deference in a case. The six credit unions named in the bankers' original lawsuit were:
* Members Choice CU, a $101.7 million asset credit union based in Ashland; * $11.5 million asset C&O United CU, Edgewood; * $77.7 million asset Service One CU, Bowling Green; * $30.7 million asset Beacon Community CU, Louisville; * $57 million asset GTKY CU, Lexington; and * $43 million asset Kentucky Employees CU, Frankfort
It was Members Choice that sought the state Supreme Court’s review.

Lending provisions in stim package could help CUs

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WASHINGTON (2/17/09)--Credit unions should note several agricultural, Small Business Administration and mortgage lending-related provisions that could encourage lending and which could be signed into law today. Credit unions could benefit from an increase in mortgage lending stimulated by a tax break provided to first-time home buyers. Under the stimulus package, first-time homeowners can receive a refundable tax credit equal to 10% of a home’s value--up to $8,000--for purchases made until Dec. 1. The credit must be repaid if the home is sold within three years of purchase. A similar provision was included in last year’s Housing and Economic Recovery Act, H.R. 3221, which allowed homebuyers to receive a tax credit (which must be repaid) equal to 10%--up to $7,500--of a home’s value. The provision applied to homes purchased between April 8, 2008, and July 1, 2009. Credit unions also should note that Federal Housing Administration (FHA) reverse mortgage Home Equity Conversion Mortgage (HECM) loan limits will be raised to $625,000 from $417,000. HECM is available only through an FHA-approved lender and is the only reverse mortgage insured by the government. FHA, Fannie Mae and Freddie Mac loan limits will equal 2008 levels of 125% of median home prices up to $729,750. Credit unions engaged in Small Business Administration (SBA) 7(a) and 504 lending will benefit a provision in the package that would raise the percentage of a loan that the SBA can guarantee to 90% from 85%. Credit unions will benefit from the increase because the guaranteed portion of such loans does not count toward the member business lending cap of 12.25%. (See related story: Stimulus could widen MBL opportunities for CUs) Other SBA provisions in the package:
* Allow small businesses to refinance existing debts under the SBA’s 504 program; * Provide $30 million for the SBA’s microloan program, which provides loans and technical assistance for low-income entrepreneurs and laid-off workers starting their own business; and * Reduce to zero fees on SBA-backed loans.
Credit unions also could benefit from a provision in the stimulus package that provides $150 million for Rural Community Facilities Program business loans and grants through the U.S. Department of Agriculture Business and Industry Guaranteed Loan Program. The added $150 million means that $3.01 billion more for loans and grants is available. Of that amount, $2.99 billion is for guaranteed business and industry loans. All credit unions are eligible to participate in the program. Loans must be collateralized. The interest rate is 2% of the guaranteed amount of the loans--0.25% annually--and does not count against credit union member business lending loan limits of 12.25%. The guarantee limits are: 80% on loans up to $5 million, 70% on loans ranging from $5 million to $10 million, and 60% on loans more than $10 million.

Inside Washington (02/16/2009)

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* WASHINGTON (2/17/09)--The Obama administration is seeking to revise part of a $787 economic stimulus package--even after it has been signed into law, which was expected Monday--to change its approach on executive compensation (The New York Times Feb. 16). The proposed restrictions on compensation are applicable to financial institutions that receive government assistance. Under the proposed restrictions, executives could receive no more than $500,000. The bill approved by the Senate and House last week that prevented institutions receiving money from the Troubled Asset Relief Program from giving bonuses to top executives until they repay their bailout money ...

Last chanceTARP Survey deadline is Wednesday

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WASHINGTON (2/17/09)--Credit unions have one last chance to weigh in on the Credit Union National Association's survey about whether or not credit unions should seek access to funds from the federal government's Troubled Asset Relief Program (TARP). Deadline for comments on the survey is at the end of the day Wednesday. Use the survey link. "We've received overwhelming response to the survey so far," said Mike Schenk, vice president of CUNA's economics and statistics, " and we're urging credit unions to make sure they fill out the survey by the end of the day Wednesday." TARP is a highly controversial issue among credit unions. The legislation that set up TARP last year included credit unions as eligible institutions, but as implemented by the U.S. Treasury Department to date, credit unions have not been included. CUNA Chief Economist Bill Hampel indicated that CUNA has heard from a number of credit unions with very strong opinions on both sides of this issue. "The recent deepening of the economic and financial crisis along with the costs of the National Credit Union Administration's Corporate Stabilization Program has added urgency to the question of credit unions and TARP," he said. "CUNA is considering a number of options, but before making any final decisions we would very much like to hear from as many member credit unions as possible on this issue. Therefore, we are conducting a quick, non-scientific survey," Hampel said. In the survey, CUNA first describes some of the arguments it has heard for and against credit unions gaining greater access to TARP. Credit unions should read the information, consider the arguments and their own views on the subject, and then complete the very brief survey, Hampel instructed. Readers can find out more about the NCUA Corporate Stabilization program and also can access the CUNA TARP survey on the CUNA web site at the links below. For questions regarding the survey, contact Paul Ledin, senior data analyst, at pledin@cuna.com or 800-356-9655, ext. 4389.

CUNA GAC Special NCUA Corporate Plan session

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WASHINGTON (2/17/09)--Responding to intense credit union interest in the National Credit Union Administration (NCUA) corporate recapitalization plan, the Credit Union National Association (CUNA) has added a special session on this topic at the front end of the Governmental Affairs Conference (GAC) next week. An update and dialogue session on the NCUA plan led by CUNA President Dan Mica is set for Monday, Feb. 23, from 8:00 a.m. to 9:15 a.m. The program will precede the conference's opening general session at 9:30 a.m. "We've added this special session so we can give the many credit union leaders coming to the GAC the absolute latest information we've got on the NCUA plan and afford an opportunity for feedback and discussion," Mica said. CUNA also has retooled its annual "Hot Exam Issues" GAC breakout session to focus specifically on the NCUA corporate stabilization plan. Moderated by Kathy Thompson, CUNA senior vice president and associate general counsel for regulatory compliance, the Feb. 24 afternoon breakout panel will consist of six key senior staff from NCUA:
* David Marquis, executive director; * Larry Fazio, deputy executive director; * Robert Fenner, general counsel; * Scott Hunt, Office of Corporate Credit Unions acting director; * John Kutchey, Office of Examination and Insurance acting director; and * Owen Cole, Office of Capital Markets and Planning director, and president of the Central Liquidity Fund.
NCUA Chairman Michael Fryzel, Vice Chairman Rodney Hood, and board member Gigi Hyland are scheduled to speak during GAC general sessions. They are expected to address the corporate assistance plan in their remarks.

Stimulus could widen MBL opportunities for CUs

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WASHINGTON (2/17/09)--Provisions contained in an economic stimulus package signed into law by the president on Monday could benefit credit unions by widening member business lending opportunities. News Now previously reported on the provisions before the stimulus package was approved by both the Senate and the House. Credit unions engaged in Small Business Administration (SBA) 7(a) and 504 lending would benefit from a provision in the package that would raise the percentage of a loan that the SBA can guarantee to 90% from 85%. Credit unions benefit from the increase because the guaranteed portion of such loans does not count toward the member business lending cap of 12.25%. Other SBA provisions in the package:
* Allow small businesses to refinance existing debts under the SBA’s 504 program; * Provide $30 million for the SBA’s microloan program, which provides loans and technical assistance for low-income entrepreneurs and laid-off workers starting their own business; and * Reduce to zero the fees for borrowers on SBA-backed loans.
Two other items in the package would extend tax provisions in last year’s housing rescue bill, H.R. 3221, through 2009. The first provision would allow small businesses to recover the costs of capital expenditures made in 2009 faster than the ordinary depreciation schedule would allow by permitting businesses to immediately write off 50% of the cost of depreciable property. The second provision would allow small businesses to write off up to $250,000 of capital expenditures subject to phase-out once capital expenditures exceed $800,000 through 2009. In H.R. 3221, Congress temporarily increased the amount that small businesses could write off for capital expenditures incurred in 2008 to $250,000 from $125,000, and increased the phase-out threshold for 2008 to $800,000 from $500,000. Current law lets small businesses lower their tax liability by writing off the cost of certain capital expenditures in the year of acquisition instead of recovering the costs over time through the tax code’s normal depreciation schedule. “The provisions contained in the stimulus package present credit unions with ways to offer more attractive small business lending opportunities to members,” said John Hildreth, Credit Union National Association senior legislative representative.

Inside Washington (02/13/2009)

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* WASHINGTON (2/16/09)--House Financial Services Chairman Barney Frank (D-Mass.) Friday released a letter received from JP Morgan Chase CEO Jamie Dimon announcing a three-week mortgage foreclosure moratorium. Earlier in the week, Frank had called on all holders and servicers of mortgages to initiate such a moratorium until President Barack Obama announces the administration’s plan to reduce foreclosures. Dimon said his company’s moratorium extends through March 6. Also last week, the Office of Thrift Supervision had urged its institutions to suspend foreclosures. (See News Now Feb. 12 for more) … * WASHINGTON (2/16/09)--Sen. Christopher Dodd (D-Conn.) Thursday re-introduced the Credit Card Accountability, Responsibility and Disclosure Act to protect consumers from predatory credit card practices. The bill would protect consumers from rate increases and account changes, prohibit unfair application of card payments, protect cardholders who pay on time, limit fees and penalties, ensure that cardholders know the terms of their account and protect young consumers from credit card solicitations ... * WASHINGTON (2/16/09)--The Office of the Comptroller of the Currency and the Office of Thrift Supervision are expanding the scope of mortgage performance data gathered from national banks and thrifts to include information on the affordability and sustainability of loan modifications. The new data will indicate how the modifications changed the total amount of borrowers’ monthly principal and interest payments in 2008. The next Mortgage Metrics Report, scheduled for release in March, will review categories for loan modifications that increased borrowers’ monthly principal and interest payments, did not change payments, and reduced payments by 10% or more ... * WASHINGTON (2/16/09)--John Reich, director of the Office of Thrift Supervision (OTS), announced Thursday that he will leave his position Feb. 27. Scott M. Polakoff, senior deputy director and chief operating officer, will serve as acting director until President Barack Obama appoints a successor. Reich joined the OTS in November 2002 after serving as vice chairman of the Federal Deposit Insurance Corp. (FDIC) board and acting chairman of the FDIC from July 2001 to August 2001 ... * WASHINGTON (2/16/09)--National Credit Union Administration (NCUA) Vice Chairman Rodney Hood met with the Louisiana Credit Union League’s Large Asset Roundtable in Baton Rouge, La., on Wed., followed by the Texas Credit Union League’s Small Credit Union Meeting in Houston on Thursday. Hood met with the groups to discuss the NCUA’s recent action to stabilize corporate credit unions. “It is imperative that all natural-person credit unions continue to maintain their deposits in and continue their support of the corporate credit union system,” he said. “We need everyone to work toward a safe and common goal of creating a safe and secure financial industry for the entire nation” ...

Compliance DMPEA covers what

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WASHINGTON (2/16/09)—During these tough economic times, credit unions are trying to reach out to as many people as possible to provide reliable financial services, the Credit Union National Association’s (CUNA’s) Compliance Challenge points out. But in the world of compliance issues, even such good intentions carry with them some potential pitfalls. For instance, the Challenge says, take a look at what the compliance officer of ABC Community FCU found recently. ABC Community wants to run a series of promotions to increase both membership and the credit union’s visibility in the community. One idea is to send postcards to non-member households announcing a prize drawing for anyone who joins the credit union in the month of March. The credit union’s compliance officer reviews the state’s gaming law, but wonders whether there are any federal laws that might impact the contest mailings. After all, the credit union will be sending the postcards via the United States Postal Service. CUNA’s compliance crew says that the compliance officer has good instincts. ABC Community and those like it need to take a look at a federal law that went into effect in 2000: the Deceptive Mail Prevention and Enforcement Act (DMPEA). The law is intended to prevent deceptive practices in sweepstakes and contest mailings sent through the U.S. mail. The DMPEA covers sweepstakes mailings, skill contests, facsimile checks, and mailings made to resemble government documents. For example, the law prohibits:
* Claims that someone is a winner unless he’s actually won a prize; * Requirements that a person buy something to enter the contest or to receive future sweepstakes mailings. (Could this affect ABC’s contest mailer which requires contestants to sign-up for membership in order to enter the contest?); * Mailing fake checks that don’t clearly state that they are non-negotiable and have no cash value; and * Seals, names or terms that imply an affiliation with or endorsement by the federal government.
For skill contests, in which outcome depends on contestant’s skill rather than a game of chance, the law requires the contest’s sponsor to disclose in a clear and conspicuous way the terms, rules and conditions of the contest and an address where the consumer can reach the sponsor to request that his name be removed from the mailing list. But the law is far denser than that, CUNA warns. Credit unions that are contemplating conducting a sweepstakes or other types of contests should consult with an attorney familiar with both state gaming laws and the federal DMPEA.

CUNA Early details of Obama foreclosure plan

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WASHINGTON (2/16/09)—President Barack Obama is widely expected to announce details of his foreclosure prevention plan some time in the next few weeks, even though U.S. Treasury Secretary Timothy Geithner seemed to indicate in a recent speech the plan may still be a work in progress. The Credit Union National Association has compiled details Geithner has revealed may likely be included in the administration plan. They include the following:
* A commitment to driving down overall mortgage rates by expanding, as necessary, the current effort by the Federal Reserve to spend as much as $600 billion to purchase government-sponsored enterprise (GSE) mortgage-backed securities and GSE debt. The lower mortgage rates are intended to free up funds for working families; * A commitment of $50 billion to prevent avoidable foreclosures of owner-occupied middle-class homes by helping to reduce monthly payments in line with prudent underwriting and long-term loan performance; * An effort to bring order and consistency to the various existing efforts to address the foreclosure crisis by establishing loan modification guidelines and standards for government and private programs; * A requirement that all Financial Stability Plan (FSP) recipients participate in foreclosure mitigation plans consistent with Treasury guidance. The FSP is the administration’s revised Troubled Asset Relief Program (TARP) plan; and * Building flexibility into Hope for Homeowners (H4H) and the Federal Housing Administration to enable loan modifications for a greater number of distressed borrowers.
MSNBC has reported that Obama himself may announce the foreclosure prevention plan as early as this week.

Center Valley FCU liquidated

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ALEXANDRIA, Va. (2/16/09)--The National Credit Union Administration (NCUA) placed Center Valley FCU, Wheeling, W.V., into liquidation Friday. The federal regulator decided to liquidate Center Valley and discontinue its independent operation after determining that the credit union was insolvent and had no prospects for restoring viable operations. At the time of liquidation, the credit union served 3,150 members and had deposits of approximately $8 million. This is the second federally insured credit union to close in 2009. The NCUA said its Asset Management and Assistance Center will issue checks to individuals once they have verified the balances in their share accounts. The NCUA’s National Credit Union Share Insurance Fund insures credit union members’ deposits to at least $250,000 on regular accounts and $250,000 on certain retirement accounts. Center Valley FCU was chartered in 1975 to serve employees of the Ohio Valley Medical Center in Wheeling and the underserved area known as South Wheeling.

New 2.9 billion brings CU SIP to almost 8 billion

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ALEXANDRIA, Va. (2/16/09)--The National Credit Union Administration Friday announced it provided $2.9 billion this month to credit unions participating in the Credit Union System Investment Program (CU SIP), an NCUA initiative designed to add liquidity to the corporate credit union system. This follows the initial Jan. 9 issue when the NCUA’s Central Liquidity Facility (CLF) funded approximately $4.9 billion in advances under CU SIP. Under SIP, the CLF makes a secured, one year advance to the natural person credit union. The credit union must concurrently invest the amount of the advance in a fixed-rate, matched term, guaranteed note that is issued by the participating corporate. The SIP notes are guaranteed by the National Credit Union Share Insurance Fund. Corporate credit unions use the funds to retire borrowings from outside the credit union system. The CLF determines which corporates will issue the SIP notes to which credit unions. NCUA Chairman Michael Fryzel said in a release, “Stabilized liquidity is one of the cornerstones of NCUA’s approach to dealing with the difficulties in the corporate system, and I encourage credit unions to utilize this important tool as we move forward together.” The Credit Union National Association’s Corporate Credit Union Task Force has been investigating alternative funding approaches to reduce the costs to credit unions of funding the NCUA's corporate stabilization program. Included among them is a plan to seek modifications to the CU SIP program to make it more attractive to credit unions.

Special NCUA Corporate Plan session added to GAC

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WASHINGTON (2/16/09)--Responding to intense credit union interest in the National Credit Union Administration (NCUA) corporate recapitalization plan, the Credit Union National Association (CUNA) has added a special session on this topic at the front end of the Governmental Affairs Conference (GAC) next week. An update and dialogue session on the NCUA plan led by CUNA President Dan Mica is set for Monday, Feb. 23, from 8:00 a.m. to 9:15 a.m. The program will precede the conference’s opening general session at 9:30 a.m. “We’ve added this special session so we can give the many credit union leaders coming to the GAC the absolute latest information we’ve got on the NCUA plan and afford an opportunity for feedback and discussion,” Mica said. CUNA also has retooled its annual “Hot Exam Issues” GAC breakout session to focus specifically on the NCUA corporate stabilization plan. Moderated by Kathy Thompson, CUNA senior vice president and associate general counsel for regulatory compliance, the Feb. 24 afternoon breakout panel will consist of six key senior staff from NCUA:
* David Marquis, executive director; * Larry Fazio, deputy executive director; * Robert Fenner, general counsel; * Scott Hunt, Office of Corporate Credit Unions acting director; * John Kutchey, Office of Examination and Insurance acting director; and * Owen Cole, Office of Capital Markets and Planning director, and president of the Central Liquidity Fund.
NCUA Chairman Michael Fryzel, Vice Chairman Rodney Hood, and Board Member Gigi Hyland are scheduled to speak during GAC general sessions. They are expected to address the corporate assistance plan in their remarks.

CU access to TARP survey CUNA urges comment

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WASHINGTON (2/13/09)--The Credit Union National Association (CUNA) is urging member credit unions to answer a new survey about whether or not credit unions should seek access to funds from the federal government's Trouble Asset Relief Program (TARP), a highly controversial issue among credit unions. The legislation that set up TARP last year included credit unions as eligible institutions, but as implemented by the U.S. Treasury Department to date, credit unions have not been included. CUNA Chief Economist Bill Hampel indicated that CUNA has heard from a number of credit unions with very strong opinions on both sides of this issue. “The recent deepening of the economic and financial crisis along with the costs of the National Credit Union Administration's Corporate Stabilization Program has added urgency to the question of credit unions and TARP," he said. “CUNA is considering a number of options, but before making any final decisions we would very much like to hear from as many member credit unions as possible on this issue. Therefore, we are conducting a quick, non-scientific survey," Hampel said. In the survey, CUNA first describes some of the arguments it has heard for and against credit unions gaining greater access to TARP. Credit unions should read the information, consider the arguments and their own views on the subject, and then complete the very brief survey, Hampel instructed. Readers can find out more about the NCUA Corporate Stabilization program and also can access the CUNA TARP survey on the CUNA web site at the links below. For questions regarding the survey, contact Paul Ledin, senior data analyst, at pledin@cuna.com or 800-356-9655, ext. 4389.

Corporate CU Task Force backs CUNA alternatives

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WASHINGTON (2/13/09)--The Credit Union National Association (CUNA) Corporate)
Click to view larger imageCUNA President/CEO Dan Mica (left)and CUNA Board Chairman Tom Dorety engage in the group's Corporate CU Task Force discussion about the National Credit Union Administration's corporate stabilization plan and what lies ahead for credit unions. Dorety is /CEO of Suncoast Schools FCU, Tampa, Fla., and a member of the task force , which is headed by Terry West of Vystar CU in Jacksonville. (CUNA Photo)
Credit Union Task Force Thursday reaffirmed strong support for using the Central Liquidity Facility (CLF) and TARP funds as a back up to help fund corporate credit union liquidity. Under CUNA’s plan, the CLF or Treasury’s TARP could be used as a back up to the National Credit Union Share Insurance Fund (NCUSIF) to help support the cost of the deposit guarantee for corporate credit unions announced by National Credit Union Administration (NCUA) last month. The task force first identified the use of the CLF and TARP funds to lessen credit unions' costs associated with the corporate assistance in its inaugural meeting Jan. 29. The group noted that use of the CLF to provide liquidity or capital directly to the corporates would require an amendment to the Federal Credit Union Act. It endorsed CUNA'S efforts to work with NCUA and the National Association of Federal Credit Unions to seek the statutory change. While backing the CLF and TARP as key priorities, the task force encouraged CUNA to continue working on other alternatives, particularly in the accounting area. Other CUNA alternatives to help mitigate the costs of the deposit guarantee for the corporates include:
* Continued efforts to seek improvements in the accounting treatment of assets that are other-than-temporarily-impaired (OTTI); * Pursuing accounting issues that could allow the NCUSIF to recognize its insurance costs over time, thus giving credit unions some flexibility on when they must fund the costs and reflect them on their books; * Long-term deposits from CUs into corporates; and * Expanding NCUA's Credit Union System Investment Program (CU SIP) to make it more attractive to credit unions.
The task force also discussed plans to have a dialogue in coming weeks with NAFCU on issues surrounding the corporate stabilization plan.

New CUNA audio conference Corporates and what lies ahead

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WASHINGTON (2/13/09)—The Credit Union National Association (CUNA) will offer an in-depth look at the corporate credit union stabilization plan and what lies ahead for the credit union movement, in an upcoming second audio conference on the issues. The free Feb. 18 information session, for CUNA-affiliated credit unions, will provide an overview of recent developments, CUNA’s assessment of each, and the group’s estimation of what is ahead for credit unions. Program speakers will focus particularly on how credit unions can play a role in mitigating costs to their operations of the National Credit Union Administration’s stabilization program. Scheduled speakers include:
* CUNA Chief Economist Bill Hampel; * CUNA General Counsel Eric Richard; * CUNA Senior Vice President for Regulatory Advocacy Mary Dunn; * CUNA Senior Vice President for Legislative Affairs John Magill; * CUNA Vice President for Legislative Affairs Ryan Donovan; and * CUNA Senior Vice President for Political Affairs Richard Gose.
The one-hour audio conference is scheduled for noon (ET), 11 a.m. (CST), 10 a.m. (MST) and 9 a.m. (PST). CUNA asks, as a measure to control cost, please only one credit union per line. Using a “theater style” approach with speaker phones to maximize the audience is encouraged. Use the resource link below to register.

Webcast NCUA assesses impact of corporate plan

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ALEXANDRIA, Va. (2/13/09)—During a 90-minute webcast Thursday, National Credit Union Administration (NCUA) Chairman Michael Fryzel underscored that the agency continues to examine alternate approaches to funding the corporate stabilization program the agency announced last month. The program provided $1 billion in capital to U.S. Central FCU and a guarantee for all corporate deposits through this month; the guarantee will be provided through December 2010 for corporates that sign an agreement with NCUA. In announcing the program in January, NCUA said it would fund it through an insurance premium to federally insured credit unions and a partial replenishment of their 1% National Credit Union Share Insurance Fund deposit. In introductory remarks, Fryzel said the agency is working with stakeholders to determine if there are other approaches that are “responsible and realistic” and meet statutory requirements. The NCUA’s formal presentation focused largely on accounting issues and its insurance fund reserving methodology, with most of the session reserved for questions. Not surprisingly, the regulator’s session on one of the credit union system’s hottest current topics drew broad interest. At the end NCUA Executive Director Dave Marquis noted the agency had received 1200 questions from webcast listeners. The program’s participants were allowed to submit questions during the webcast via the Internet. Speakers, including Marquis, Acting Examination and Insurance Director John Kutchey, and Loss/Risk Analysis Officer Steve Farrar, discussed the accounting and reserve issues related to stabilization. Marquis said that after considering the available options, the NCUA elected the stabilization program it believed would be least expensive for credit unions while offering the most flexibility for a future dividend. The NCUA, he said, evaluated the impact of the corporate stabilization plan on the net worth of the credit union system. With an average net worth of 11.1%, the NCUA estimates that less than 175 credit unions will be “significantly impacted” by the impairment to the NCUSIF. The Credit Union National Association (CUNA) continues to urge the NCUA to consider alternate funding options. CUNA has maintained that there is no "silver bullet" approach—no single answer—to the challenge of providing adequate money for the agency’s corporate liquidity program. CUNA has warned that the current plan to assess a 2009 share insurance premium on credit unions could put too much pressure on a system that is already coping with tough economic conditions. (See related story: Corporate CU Task Force backs CUNA alternatives) For the webcast’s Q-and-A session, Central Liquidity Facility President Owen Cole, Deputy Executive Director Larry Fazio, and Office of Corporate Credit Union Director Scott Hunt joined in to help address listeners’ concerns. Use the resource links below for the NCUA’s document related to its corporate CU plan and to access CUNA’s resources.

Regulators to offer info on new credit card rule

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WASHINGTON (2/13/09)—Credit unions, banks and thrifts are invited to sign up for regulators’ free audio briefing on new unfair credit card practices rule. The joint National Credit Union Administration (NCUA), Office of Thrift Supervision (OTS), and Federal Reserve Board event will take a look at the Fed rule intended to crack down on abusive or deceptive card practices. The rule established such things as certain restrictions on increasing interest rates, allocations of payments to balances with different interest rates, timeframe for cardholders’ payments, and also banned double-cycle billing and limited the fees charged for opening an account. The OTS is hosting the two-hour Feb. 24 briefing and call-in, and the NCUA and Fed are participating. Speakers will respond live to participants’ questions. Speakers are scheduled to include:
* Moisette (Tonya) Green, NCUA; * Benjamin Olson, the Fed; and * April Breslaw, OTS.
Submit early questions to consumer.regulations@ots.treas.gov. Use the resource link below to register for the session.

SBA eases some line-of-credit refinancings

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WASHINGTON (2/13/09)—The U.S. Small Business Administration (SBA) has revised its procedures to make it easier for its lenders to refinance existing lines of credit. The SBA Thursday released the first revision to its procedural guidance governing lender participation and loan processing for its two major loan guarantee programs: 7(a) and 504. The revisions to the Standard Operating Procedure (SOP), the agency release said, reflect suggestions made by participating lenders and include a modification to SBA’s policy on refinancing existing lines of credit. The change is intended to make it easier for lenders to use the 7(a) loan guarantee program to refinance an existing line of credit, especially as a part of a complete refinancing of a small business borrower’s debt. Last August, the SBA implemented its the first major SOP (SOP 50 10)overhaul in ten years. It included streamlining from 1,000 pages to 400 and making it more logically organized and user friendly. The SBA also has made a commitment to update the document semi-annually.

Inside Washington (02/12/2009)

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* WASHINGTON (2/13/09)--Lisa J. McCue has been named the new vice president of editorial communications at the Credit Union National Association (CUNA), where she will head CUNA’s News Now and NewsWatch, as well as develop other projects. McCue joined CUNA as a communication specialist in 2005. Her responsibilities included writing, editing and producing News Now and NewsWatch, and working on other special projects such as CUNA’s Power of Association brochure. McCue replaces Dave Klavitter, who now serves as senior vice president of marketing and public relations at Dupaco Community CU, Dubuque, Iowa. McCue previously worked as a writer and editor for the National Council of Savings Institutions, a reporter for American Banker and a writer for newsletters on issues of international finance, as well as general circulation publications ... * WASHINGTON (2/13/09)—U.S. Treasury Secretary Timothy Geithner rejected criticism that the Obama administration’s new post-Troubled Asset Relief Program Financial Stability Plan lacks sufficient detail at this point. He told lawmakers (The New York Times Feb. 12) at a hearing Wednesday he understood Wall Street’s appetite for detail. But he argued that it would be far more costly, as well as less effective, to rush a plan that might need expensive revisions at a later date. Geithner has been in office just two weeks, and administration officials and lawmakers have said he wants to avoid repeated course changes that ultimately challenged the credibility of his predecessor’s actions under the Bush administration … * WASHINGTON (2/13/09)--A seven-hour hearing on Wednesday with eight CEOs of large banking institutions and members of the House Financial Services Committee focused on how bankers were using Troubled Asset Relief Funds (TARP) and how quickly they planned to repay them. Lawmakers asked the CEOs if they were charging the government appropriate fees for their help. Bank of America and Citigroup CEOs appeared baffled when asked that question (American Banker Feb. 12). House Financial Services Committee Chairman Barney Frank (D-Mass.) also asked bankers to show that they are on taxpayers’ sides. Bankers must be willing to cooperate or make sacrifices, Frank told the CEOs. The bankers said they supported Frank’s efforts to create a systemic risk regulator and streamline supervision ... * WASHINGTON (2/13/09)--The second half of the Troubled Asset Relief Program (TARP) will not be enough to revive the financial sector, lawmakers said after a hearing Wednesday. Treasury will need another $500 billion on top of the $350 billion from TARP, Senate Budget Committee Chairman Kent Conrad (D-N.D.) said. Conrad said he encouraged Treasury Secretary Timothy Geithner to ask for more money. The Treasury has said it plans to inject more capital into banks, use $50 billion to create a foreclosure mitigation plan, and use up to $80 billion to expand the Federal Reserve Board’s Term Asset-Backed Securities Loan Facility ... * WASHINGTON (2/13/09)--Bank regulators’ roles may expand as hundreds of examiners are beginning to stress-test JPMorgan Chase, Bank of America and Citigroup and other large financial institutions to assess their financial health. The new test, which also could be applied to small and mid-sized banks, likely contains tougher requirements than previous standards used by regulators to decide which banks could receive money under the Troubled Asset Relief Program (TARP). Regulators are expected to assess the losses a bank could incur during the next two years instead of one year. They also will analyze banks’ exposure to assets and derivatives, check for capital cushions, and require institutions to raise more capital if they fail the tests. The exams could nationalize banks that fail the tests, analysts say. Companies may not want to get involved with a government-run bank, said Jaret Seiberg, policy analyst, Stanford Group ...

Inside Washington (02/11/2009)

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* WASHINGTON (2/12/09)--A program that would create a new lending facility for the Small Business Administration’s (SBA) secondary market by allowing investors to borrow money to buy securities through the Term Asset-Backed Securities Loan Facility (TALF) has spurred criticism from market observers. They say the program needs to be tweaked before its implementation (American Banker Feb. 11). Market observers say that haircuts of 5% for SBA pool holders and the interest rates the Federal Reserve board plans to charge for a TALF loan are too high. Observers indicated that the Fed appears to be responsive to their concerns ... * WASHINGTON (2/12/09)--Included in the Senate’s $838 billion economic stimulus package--which was approved Tuesday--are provisions to limit executive compensation and help struggling homeowners. Under the Senate’s version of the bill, institutions using federal bailout money for bonuses would have to repay the cash portion or pay an excise tax of 35% on what is not repaid to the Treasury. Another measure in the plan would require that $50 billion of Troubled Asset Relief Program funds be used to implement a loan modification program to stem foreclosures. The program would have to implemented within 15 days of the bill’s enactment ... * WASHINGTON (2/12/09)--The Obama administration should use part of the second half of the Troubled Asset Relief Program funds to boost capital of private mortgage insurance companies so Freddie Mac and Fannie Mae can help more homebuyers, Federal Housing Finance Agency Director James Lockhart said at a conference this week (National Mortgage News Feb. 11). Stress on mortgage insurance companies’ capital has affected negatively the enterprises’ market share, causing it to fall about 30% in third quarter 2008, Lockhart said ... * ALEXANDRIA, Va. (2/12/09)--National Credit Union Administration (NCUA) Chairman Michael Fryzel said he intends to restate his earlier requests to the Treasury Department to make money available to credit unions through its asset purchase program, and to ensure that rules are written to enable credit unions the ability to take advantage of any newly created aspects of the government’s reponse to the financial crisis. Fryzel also commended Treasury Secretary Timothy Geithner for his focus on helping banks improve their lending. “Credit unions have continued to exhibit strong loan growth, but I realize that all sectors of the financial services industry must do their part for the American consumer if the nation is to regain strong financial footing,” he said ...

OTS urges foreclosure suspension

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WASHINGTON (2/12/09)—In the wake of the Obama administration’s announcement Tuesday that its initiative to help homeowners facing foreclosure will not be unveiled for at least a week, the Office of Thrift Supervision (OTS) urged its institutions to suspend foreclosures. “OTS-regulated institutions would be supporting the national imperative to combat the economic crisis by suspending foreclosures until the new (p)lan takes hold,” OTS Director John Reich said in a release. U.S. Treasury Secretary Timothy Geithner, while announcing the administration’s widely reported Financial Stability Plan's to boost the financial sector yesterday, said a $50 billion initiative will help troubled homeowners avoid foreclosure by reducing monthly payments. The OTS regulates the national thrift industry.

Senate Democrats meet with CUNA financial services

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WASHINGTON (2/12/09)—The Credit Union National Association (CUNA) took part in a meeting Wednesday with members of the Senate Democratic Caucus and leading financial industry trade associations. According to CUNA Senior Vice President of Legislative Affairs John Magill the discussion focused on the economic stimulus bill, financial recovery plan, and the future needs of the financial industry to help the economy recover, and also included health care reform. Magill said many of the financial services participants, including representatives from banking, the securities industry, and the Realtors, had the same types of concerns as have credit unions. He said topics ranged from: How to thaw credit markets, how to restore consumer confidence, what are the post-stimulus, post-TARP-announcement issues that need to be addressed next by lawmakers? "We were very pleased to be invited to participate in this meeting. The exchange of ideas about how to get the economy going again was very positive," Magill said. Ryan Donovan, CUNA vice president of legislative affairs, added that there also was recognition that there is a lot of work ahead. “We all know there is no easy, quick solution, but I think there was general agreement that the stimulus bill combined with the Treasury (TARP) action were big steps in the right direction," Donovan said. Those present included Democratic Sens. Debbie Stabenow (Mich.), Thomas Carper (Del.), Amy Klobacher (Minn.) , Michael Bennett (Colo.), Mark Begich (Ark.), Benjamin Cardin (Md.), Ted Kaufman (Del.), Sheldon Whitehouse (R.I.), Jack Reed (R.I.), Kay Hagen (N.C.), Ben Nelson (Neb.), Bill Nelson (Fla.), Jeanne Shaheen (N.H.), Jon Tester (Mont.), Daniel Akaka (Hawaii), Evan Bayh (Ind.), John Rockefeller (W.V.), Roland Burris (Ill.), Frank Lautenberg (N.J.), Mark Warner (Va.), Claire McCaskill (Mo.), Sherrod Brown (Ohio) and Tom Udall (N.M.).

CUNA Clarification needed to Fed emergency term

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WASHINGTON (2/12/09)—The Federal Reserve Board needs to provide “significant additional” examples to clarify the term “financial emergency” under its proposed revision to Regulation Z mortgage disclosure requirements, according to the Credit Union National Association (CUNA). The Fed’s proposed Reg Z changes implement provisions of the Mortgage Disclosure Improvement Act (MDIA), which was enacted last July and amends certain provisions of the Truth in Lending Act (TILA). Even prior to the 2008 legislation, the Fed had been in the process of reviewing Reg Z mortgage disclosure requirements in their entirety. Significant additional revisions are expected in 2010. The Fed Reg Z proposal would allow a consumer to modify or waive the timing requirements for loan disclosures if requested due to a bona fide personal financial emergency. In a recent comment letter, CUNA urged the Fed to clarify what situations may qualify under this exception. CUNA also urged the agency to limit the term to cover “unusual and unforeseeable circumstances.” Furthermore, CUNA wrote, the burden should be on the borrower to provide an explanation, in writing, of a circumstance that may qualify as a financial emergency to the lender, as opposed to the borrower signing a statement that is prepared by the lender. “We believe these parameters for exercising the ‘financial emergency’ exception are needed to both ensure that the right of cancellation is preserved for the borrower and to protect lenders who may be challenged if they grant a modification or waiver from these timing requirements,” the CUNA letter said. The 2008 The MDIA imposes timing requirements, such as when consumers must receive certain disclosures. For instance, borrowers would have to receive mortgage disclosures at least seven days before a mortgage settlement and receive corrected disclosures, if needed, at least three days before settlement. Use the resource link below to read more of the Fed proposal and the complete CUNA comments.

Administration backs higher SBA guarantee in new TARP

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WASHINGTON (2/11/09)—The Obama administration Tuesday backed a statutory change that would increase the federally guaranteed portion of Small Business Administration (SBA) loans, a change that could take some pressure off the credit union member business lending (MBL) cap. As expected, U.S. Treasury Secretary Timothy Geithner Tuesday detailed the administration’s new strategy for executing its Trouble Asset Relief Program---or TARP. Under the original TARP, the Treasury was authorized to spend $700 billion to buy troubled assets from financial institutions, although the department had been criticized for how it has spent the money thus far. Others criticized TARP as a misnomer, claiming it did little to reach troubled assets—and Geithner said Tuesday that the administration will scrap that name and call its new approach the “Financial Stability Plan.” Regarding SBA loans, Geithner said “because small businesses are so important to our economy, we're going to take additional steps to make it easier for them to get credit…” “By increasing the federally guaranteed portion of SBA loans, and giving more power to the SBA to expedite loan approvals, we believe we can turn around the dramatic decline in SBA lending we have seen in recent months,” he added. The Credit Union National Association (CUNA) has noted that an increase in the guaranteed portion of an SBA loan could benefit credit unions engaged in SBA 7(a) and 504 lending because the guaranteed portions of such loans do not count towards the credit union 12.25% of assets MBL cap. CUNA also backs an improved timeframe within which SBA would be required to approve applications for loan guarantees. The House economic stimulus plan passed early this month carried both provisions. Another element of Geithner’s announcement of potential importance to credit unions was the creation of a public-private investment fund. Treasury, in conjunction with federal bank regulators and the private sector, will create an “aggregator” of bad assets—already labeled a “bad bank”--to help financial institutions take pressure off their balance sheets. CUNA General Counsel Eric Richard said the investment fund seems to hold some potential for credit unions, including corporates. “We will have to wait for details on who will be eligible to sell assets to this fund, how prices will be set, and so on. CUNA will be pushing for standards and procedures that will give credit unions some long-overdue options," Richard said. Two other primary elements of the Financial Stability Plan outlined by the Treasury secretary briefly are:
* Financial Stability Trust: Requires rigorous “stress test” examinations of institutions applying for new capital investments from the Treasury under the plan; and * Consumer and Business Initiative: To include an expansion of the Federal Reserve’s announced, but not yet implemented, Term Asset-Backed Securities Loan Facility (TALF).
Geithner noted that the Obama administration intends to have its plan for a restructured U.S. financial regulatory system ready to present at the G20 Summit in London April 2. After introducing the Financial Stability Plan in the morning, Geithner testified before the Senate Banking Committee reiterating and expanding his remarks.

Inside Washington (02/10/2009)

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* ALEXANDRIA, Va. (2/11/09)--The National Credit Union Administration (NCUA) has appointed Region V Director Melinda Love as its new director of the Office of Examination and Insurance (OEI) at agency headquarters here. The appointment is effective March 16. Love has served as Region V director for five and a half years, and she also served as director of the former Chicago regional office. Love is a past NCUA deputy executive director. She also has served as deputy director of OEI. Her NCUA career began in 1986 as an examiner in northern California. She is a former principal examiner, problem case officer, supervision analyst, supervisory examiner and acting director of special actions. NCUA Chairman Michael Fryzel said Love’s experience in supervising, assessing and mitigating problems encountered by credit unions in some of the most volatile markets in the country will serve NCUA and the credit union system well … * WASHINGTON (2/11/09)--The Credit Union National Association’s (CUNA) final analysis of Regulation Z is now available. The comprehensive analysis provides additional information on amendments the Federal Reserve Board issued to open-end credit rules under Reg Z. The changes apply to credit cards and merchant-specific credit plans. The final rule includes changes to the format, timing and content requirement for five types of open-end credit disclosures under Reg Z, the Truth in Lending Act ... * WASHINGTON (2/11/09)--The Obama administration met with regulators last week on a plan to provide guidance for a national standard on loan modifications, with details expected to be released later this week (American Banker Feb. 10). President Barack Obama met with Sheila Bair, Federal Deposit Insurance Corp. chairman; James Lockhart, Federal Housing Finance Agency director; John Dugan, Comptroller of the Currency; and Ben Bernanke, Federal Reserve Board chairman. Treasury Secretary Timothy Geithner also is expected to meet with banking companies and Housing and Urban Development Secretary Shaun Donovan Wednesday ...

CDCUs call for stabilization funding options

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WASHINGTON (2/11/09)—The cost and structure of federal regulators’ current plan to stabilize corporate credit union liquidity could wreak havoc on community development credit unions (CDCUs), according to a national group representing those low-income credit unions. The National Federation of Community Development Credit Unions (Federation) said this week that CDCUs are concerned that the plan could result in reduction of their services, loss of staff, and “the outright demise of many low-income credit unions.” Writing to the National Credit Union Administration (NCUA) about its intention to fund its corporate stabilization plan by assessing a share insurance premium, President/CEO Clifford Rosenthal of the Federation said his members recognize the gravity of the corporate’s situation. However, he argued that CDCUs are particularly vulnerable to the cost of the NCUA’s plan because they serve “those hardest hit by the recession…people who under the best of circumstances have meager financial reserves, few resources, and limited access to affordable credit from the banking system.” The Federation said it favors allowing corporate credit unions to access the Cental Liquidity Facility (CLF) directly but suggested better solutions may yet be devised. According to Federation analysis, under the NCUA’s funding plan:
* Approximately 62% of CDCUs would have negative income in 2009; and * An estimated 18% would fall below the “well capitalized threshold of 7% net worth, while 10.1% would fall below the “adequately capitalized” threshold of 6%.
“While the economic impact of the NCUA proposal is not unique to CDCUs, damage that would be sustainable for other credit unions could prove irreparable or fatal for many CDCUs,” Rosenthal wrote. “Unless and until a better solution can be devised – one that can avoid the harm to low-income and small credit unions -- the Federation supports the effort to allow corporate credit unions to access the Central Liquidity Facility directly,” Rosenthal wrote. The Federation maintained that the lack of access to the CLF seems “an anomaly that can no longer be sustained.” “Infusing funds into the corporates directly from the CLF is a wholly appropriate use of the federal financing system, and is likely to prove far more effective than the indirect method that NCUA has employed recently,” he added. The Credit Union National Association (CUNA) has underscored that the credit union system must pursue a range of viable solutions to address the corporate credit union problem. (See related story: Mica tells CUs range of solutions needed on corporates) CUNA recognizes a legislative solution centered on the CLF is one possibility, but advises that it is necessary to look at whether a regulatory as well as a legislative solution would address the problem. Use the resource link below to access a compilation of CUNA corporate credit union information.

Mica tells CUs range of solutions needed on corporates

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WASHINGTON (2/11/09)--Pursuing a range of viable solutions makes more
CUNA President/CEO Dan Mica gestures as he answers questions from the audience during his appearance Feb. 9 at the Washington, D.C.-based Metropolitan Credit Union Management Association's (MACUMA) monthly meeting. Mica's topics included the NCUA's Corporate Stabilization Program, congressional and administration efforts to deal with the economic and financial crisis, and CUNA priorities in the upcoming year.
Mica (left) listens to the ideas of one of the MACUMA meeting participants following the CUNA leader's remarks. (CUNA Photos).
strategic sense than focusing only on one single approach to mitigate the cost to credit unions of the National Credit Union Administration’s (NCUA’s) corporate stabilization program, Credit Union National Association (CUNA) President/CEO Dan Mica told a group of Washington, D.C.-area credit union executives this week. Mica recognized some are calling solely for a legislative solution centered on the Central Liquidity Facility (CLF) and said CUNA has also identified that as one possibility. But he advised against “putting all your eggs in one basket.” On CLF, for example, CUNA is looking at whether a regulatory as well as a legislative solution would address the problem. The CUNA leader was the featured speaker Tuesday at the Metropolitan Area Credit Union Management Association (MACUMA) monthly membership meeting. The session took the form of a Q&A with Credit Union Times Executive Editor Sarah Snell Cooke. Mica highlighted the series of solutions CUNA is exploring that would provide needed support to corporates while mitigating the costs of NCUA’s stabilization plan, including:
* Long-term deposits from CUs into corporates; * Use of Central Liquidity Facility (CLF) funds to loan to the National Credit Union Share Insurance Fund (NCUSIF), and seek legislation to allow funding directly to the corporates; * Tap the U.S. Treasury Department's Troubled Asset Relief Program (TARP) for back-up assistance to the NCUSIF; * Assess the premium assessment in stages; * Expand the "CU System Investment Program (CU SIP) to make it more attractive to credit unions; * Address accounting issues that could allow the NCUSIF to recognize the premium expense over time, thus giving credit unions some flexibility on when they must accent for these expense: and * Allow natural person CUs to purchase corporates' troubled assets.
On long-term deposits as an added corporate liquidity source, Mica said the NCUA has indicated that credit unions channeling $15 billion into corporates would do much to mitigate the problem. “I know of several CEOs who, if convinced of the data plus knowing the funds are guaranteed, would put in close to $15 billion,” he added. Explaining TARP back-up assistance to NCUSIF as a possible solution, Mica likened it to an insurance policy deductible: TARP expenditures would occur only in the event losses in the corporates exceeded a certain level, such as $500 million. It would not take the form of an infusion of TARP funds into the corporates. “We feel we would probably never have to actually use TARP under that scenario,” Mica added. Asked by CU Times’ Cooke about discussions resurfacing among credit unions of a possible merger between CUNA and the National Association of Federal Credit Unions, Mica reiterated his view that having a single trade association speaking with one voice would benefit credit unions economically and politically. “I am absolutely convinced that credit unions will never reach their full potential divided with two trade associations,” Mica stated. “You can’t have a house divided against itself with only 7% of the (financial services) market.” He also said the single association did not have to be either CUNA or NAFCU. "Have it be America's Credit Union Association--take the best of both, and move on for the good of the system."

Registration opens for NCUA corporate update

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ALEXANDRIA, Va. (2/11/09)--Registration is open for Thursday’s National Credit Union Administration (NCUA) webinar on NCUA’s corporate stabilization plan. Participants can register on NCUA’s website until 1:45 p.m. ET on Thursday. The two-hour webinar, scheduled to begin at 2 p.m. ET, will include a discussion of the National Credit Union Share Insurance Fund reserving methodology and exploration of some alternatives presented by corporate system stakeholders. Speakers will include NCUA Executive Director Dave Marquis, Acting Examination and Insurance Director John Kutchey, and Loss/Risk Analysis Officer Steve Farrar. Participants can submit questions during the webcast via the Internet. Instructions will be provided at the beginning of the webcast. Presenters will address as many of the questions as possible, NCUA said.

CUNA continues fight against cramdowns

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WASHINGTON (2/10/09)—The Credit Union National Association wrote two lawmakers regarding mortgage bankruptcy provisions that potentially enable any dissatisfied mortgage borrower to walk away from a loan—and maybe even keep the house. CUNA has been working for more than a year against “cramdown” provisions in pending legislation that would allow bankruptcy courts to modify the terms of existing mortgages. In a letter sent Monday to Sen. Evan Bayh (D-Ind.), CUNA expressed appreciation of recent comments in which Bayh stated he would seek improvements to pending legislation that would permit courts to modify the mortgages of debtors in bankruptcy. This legislation has been introduced in both the Senate (S. 61) and the House (H.R. 200). CUNA has urged that if lawmakers proceed with “cramdown” legislation at all, it must be limited specifically to loans determined to be “subprime,” with large re-sets of interest rates, loans with negative amortization, or loans a court determines were fraudulent or abusive. Adopting a limited provision would “not only provide relief to certain debtors, but would serve the important purpose of helping to ensure that these types of lending products do not re-emerge,” CUNA said in its letter to Bayh. For any loan falling within the category described above, CUNA believes a bankruptcy court could have the authority to:
* Cancel prepayment penalties; * Lower the interest rate to the current conventional fixed market rate; * Extend the maturity of the loan; and * Adjust the principal balance to no lower than the current market value of the house if, when the house is sold by the debtor – whether the sale occurs before or after discharge – the debtor and creditors share in the appreciation of the property.
However, the CUNA letters warned, H.R. 200 contains language that could encourage borrowers’ gaming of the mortgage lending system. “We have heard from credit union executives about borrowers who are not even delinquent on their mortgage loans and who have not lost their jobs, suddenly stopping payments and triggering foreclosure because they just no longer want to make large mortgage payments on houses which have dropped notably in value. “If the bankruptcy law is changed to allow modification of all loans, these borrowers could seek to have their mortgage restructured by the bankruptcy court,” the CUNA letter to Senator Bayh warned. In its letter to Rep. John Conyers (D-Mich.), CUNA identified a critical flaw with language added by the Judiciary Committee during its recent consideration of H.R. 200 with respect to the bill’s approach to “right of rescission.” According to the letter, the bill, as amended by the Committee, would allow even a nonmaterial, technical and unintentional violation of Truth in Lending rules to result in a debtor getting to keep a house with a lender being paid “absolutely nothing.” "This is clearly an unfair result, and we question if this was truly the intent of the supporters of this provision," the letter stated. CUNA indicated it was willing to assist supporters of this provision perfect the language to avoid any unintended consequences. Use the resource link below to read the complete letters.

Inside Washington (02/09/2009)

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* WASHINGTON (2/10/09)--Last week, Sen. Robert Menendez (D-N.J.), a member of the Senate Banking Committee, introduced broad credit card reforms (American Banker Feb. 9). His bill would take up some consumers’ complaints about card solicitations to young adults and require consumers under the age of 21 to opt in for card solicitations. The bill, like similar legislation in the House, would ban universal default and retroactive interest rate increases. The Menendez bill also would ban card companies from changing terms of card agreements. Along with capping penalty interest rates to an increase of seven percentage points, the bill also would require "pre-approved" offers to be legitimate, firm offers of credit with details on the interest rate, fees, and amount of credit ... * WASHINGTON (2/10/09)--The Obama administration is developing guidance for a loan modification program for loans that already are delinquent or are in danger of defaulting (American Banker Feb. 9). The guidance would serve as a national standard for modifications. Under the guidance, regulators would provide best practices guidance to servicers conducting the modifications. Specifics of the program--such as eligibility and a launch date--have not been determined. The administration has debated how a loan modification program would be shaped. One idea involves servicers partnering with the government to reduce the cost of troubled mortgages. Another would allow servicers to collect a fee from the government if they modify a loan ... * WASHINGTON (2/10/09)--The Federal Reserve Board Friday released loan rates and collateral haircuts for the Term Asset-Backed Securities Loan Facility (TALF). The new terms also include a revised definition of eligible borrowers and additional specifications regarding eligible asset-backed securities (ABS) collateral. The board authorized TALF on Nov. 24 and provided terms and conditions for the program on Dec. 19. TALF aims to increase credit availability and support economic activity by facilitating the issuance of ABS collateralized by certain consumer and small business loans. Under TALF, the Federal Reserve Bank of New York will lend up to $200 billion to eligible owners of certain AAA-rated ABS backed by new and recent originated auto loans, credit card loans, student loans and Small Business Association-guaranteed small business loans ... * WASHINGTON (2/10/09)--The U.S. Small Business Administration’s (SBA) Patriot Express Pilot Loan initiative has approved more than $250 million in loan guarantees to 2,900 veterans and their spouses. More than 20% of the loan applications have come in the first quarter of this year. Loan amounts average $88,000. About 15% of the loans have gone to military spouses, the SBA said. Patriot Express, launched June 28, 2007, builds on the more than $1 billion in loans SBA guarantees annually for veteran-owned businesses. More than 14% of businesses in the U.S. are veteran-owned ...

CUNA Corporate CU group investigates options

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WASHINGTON (2/10/09)—The Credit Union National Association (CUNA) Corporate CU Task Force will meet here this week to continue to develop and flesh out alternative funding plans for a corporate credit union stabilization plan. CUNA maintains that there is no “silver bullet” approach—no single answer—to the challenge of providing adequate money for the National Credit Union Administration’s corporate liquidity program. CUNA has warned, however, that the current plan to assess a 2009 share insurance premium on credit unions could put too much pressure on a system that is already coping with tough economic conditions. At its Thursday session, the CUNA task force will continue to flesh out a series of alternatives that CUNA has urged lawmakers and regulators to consider. These alternate funding solutions, CUNA has said, would provide the needed support to the corporates while mitigating costs to credit unions. They include:
* Long-term deposits from CUs into corporates; * Use of Central Liquidity Facility (CLF) funds to loan to the National Credit Union Share Insurance Fund (NCUSIF), and seek legislation to allow funding directly to the corporates; * Tap the U.S. Treasury Department’s Troubled Asset Relief Program (TARP) for back-up assistance to the NCUSIF; * Assess the premium assessment in stages; * Expand the “CU System Investment Program (CU SIP) to make it more attractive to credit unions; * Address accounting issues that could allow the NCUSIF to recognize the premium expense over time, thus giving credit unions some flexibility on when they must accent for these expense: and * Allow natural person CUs to purchase corporates’ troubled assets.
In addition to developing the options above, the CUNA task force will be taking a fresh look at additional options, including those proposed recently by credit unions. Use the resource links below for a CUNA compendium of resources.

Feb. vote possible for House deposit insurance bill

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WASHINGTON (2/10/09)—A House vote could come as early as this month on legislation to make permanent the $250,000 share and deposit insurance increase enacted as part of the Emergency Economic Stabilization Act of 2008, according to Ryan Donovan of the Credit Union National Association (CUNA). The CUNA vice president of legislative affairs said Monday that H.R. 786 could be considered by the House when it returns from next week’s District Work Period. “The bill is not currently scheduled for a vote this week—but even that can change at the discretion of House leadership,” Donovan noted. During the House Financial Services Committee consideration of the bill last week, the panel approved two amendments that CUNA suggested in a letter to the committee on Feb. 3. They would:
* Extend the amount of time the National Credit Union Administration (NCUA) has to restore its insurance fund to its statutorily required levels to five years from the current one year. * Increase NCUA's borrowing authority from the Treasury Department from $100 million to $6 billion.
The NCUA’s current borrowing level was set 38 years ago. CUNA believes the increased borrowing authority should give the NCUA additional resources to manage the NCUSIF and deal with problems that may arise.

Treasury to unveil new TARP strategy today

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WASHINGTON (2/9/09)--U.S. Treasury Secretary Timothy Geithner delayed by a day his intentions to speak on the Obama administration’s plans to revamp the federal government’s $700 billion bailout plan. Geithner is expected to unveil today the administration’s strategy to increase liquidity and new measures to strengthen oversight and accountability in how taxpayer dollars are spent. The plan may include new injections of taxpayer funds into banks, targeted at those regulators have determined are in deepest need of new capital. A Federal Reserve program intended to bolster consumer and small business loans may also be expanded, Bloomberg reported Monday. Under the original Troubled Asset Relief Program (TARP), the Treasury was authorized to spend $700 billion to buy troubled assets from financial institutions, although the department has been criticized for how it has spent the money thus far. Over the weekend, Obama administration officials revised their plans to reveal their TARP strategy Monday so Geithner and others could give full attention to the Senate’s consideration of the President’s economic stimulus plan.

FHFAs latest foreclosure report

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WASHINGTON (2/9/09)--The Federal Housing Finance Agency (FHFA), regulatory overseer of Freddie Mac and Fannie Mae and the 12 Federal Home Loan Banks, released its November monthly foreclosure report Friday, revealing its most recent information available on mortgage delinquencies and foreclosures. The report also makes public loss-mitigation efforts since the government-sponsored enterprises were placed in conservatorship under the FHFA. “Loan modifications for October and November, which were the first two full months of the conservatorship, increased by 50% from the previous two months,” announced FHFA Director James Lockhart. “These data reflect the increased commitment of the servicers and the GSEs to help borrowers in trouble modify their loans to keep them in their homes.” During November 2008, both Freddie and Fannie announced a suspension of foreclosure sales and evictions scheduled to occur from Nov. 26 through Jan. 9 on single-family properties. The moratorium was extended to Jan. 31. The extension, FHFA indicated, allowed servicers additional time to work with borrowers in foreclosure. Specifically, they targeted eligible borrowers for the Streamlined Modification Program (SMP), which kicked off Dec. 15. “Because only two business days of foreclosure activities in November were impacted by the suspension, it had little effect on the month’s performance. However, it is expected the impact of the suspension will be greater for performance to be reported for December and January,” the FHFA predicted in a release. The FHFA report showed that as of Nov. 30, of the government-sponsored enterprises’ (GSEs’) 30.6 million residential mortgages:
* Loans 60 days or more delinquent, including those in bankruptcy and foreclosure, as a percent of all loans increased to 2.73%, up from 1.46% as of March 31, 1.73% as of June 30, 2.21% as of Sept. 30, and 2.39% for October; and * Loans 90 days or more delinquent, including those in bankruptcy and foreclosure, as a percent of all loans increased to 1.88%, up from 1.00% as of March 31, 1.19% as of June 30, 1.52% as of Sept. 30, and 1.67% for October.
The report also showed that loans that became the subject of foreclosure proceedings dropped to 5.25% in November for loans 60 or more days delinquent. That was down from a high of 8.29%for the first quarter of the year. And for similarly delinquent loans for which foreclosure was completed, the November figure dropped to 1.73%, down from a third-quarter high of 2.56%. Loan modifications numbers also improved. Compared with the monthly average of 4,948 for the first nine months of 2008, October modifications increased by 13.2% and 67.6% for November. There were 8,291 for November. The loss mitigation ratio for November was 61.7% – the highest since June 2008, which was reported at 64.8%. The year-to-date loss mitigation ratio is 55.2%. Freddie and Fannie were place into conservatorship run by the FHFA on Sept. 7, 2008.

NCUA special closed meeting has two items

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ALEXANDRIA, Va. (2/9/09)—An agenda item has been added to a National Credit Union Administration (NCUA) special closed meeting scheduled for tomorrow. Matters to be considered at the closed session are:
* Administrative action under Section 207 of the Federal Credit Union Act. Closed pursuant to Exemptions (8) and (9)(A)(ii) and 9(B); and * A personnel matter. Closed pursuant to Exemptions (2) and (6).

Obama names economic recovery team

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WASHINGTON (2/09/09)—President Barack Obama Friday announced the members of his new Economic Recovery Advisory Board, to be led by former Federal Reserve Board Chairman Paul Volcker. The announcement followed the release of statistics that showed the economy lost another 600,000 jobs last month. In a blog posting on the White House website, Obama was quoted as saying his new board is comprised of Democrats and Republicans to ensure the policies it helps to develop “have the benefit of independent thought and vigorous debate." In addition to Volcker and Staff Director and Chief Economist Austan Goolsbee, the board will be comprised of the following members:
* William Donaldson, chairman, SEC (2003-2005); * Roger Ferguson Jr., president/CEO, TIAA-CREF; * Robert Wolf, chairman/CEO, UBS Group Americas; * David F. Swensen, CIO, Yale University; * Mark T. Gallogly, founder and managing partner, Centerbridge Partners L.P.; * Penny Pritzker, chairman and founder, Pritzker Realty Group; * Jeffrey Immelt, CEO, GE; * John Doerr, partner, Kleiner, Perkins, Caufield & Byers; * Jim Owens, chairman/CEO, Caterpillar Inc.; * Monica C. Lozano, publisher and CEO, La Opinion; * Charles E. Phillips, Jr., President, Oracle Corp. * Anna Burger, chair, Change to Win; * Richard L. Trumka, secretary-treasurer, AFL-CIO; * Laura D'Andrea Tyson, Dean, Haas School of Business at the University of California at Berkeley; and * Martin Feldstein, George F. Baker Professor of Economics, Harvard University.

Inside Washington (02/06/2009)

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* ALEXANDRIA, Va. (2/9/09)--The National Credit Union Administration
Board Member Hyland and Hiroaki, Funamoto, Deputy Governor, SIC. (NCUA Photo)
(NCUA) recently met with four representatives of the Japanese Agricultural and Fishery Cooperative Savings Insurance Corporation (SIC). SIC insures saving at agricultural and fishery cooperatives in Japan and the four representatives came to NCUA to learn more about the American credit union system. NCUA Chairman Michael Fryzel, NCUA board member Gigi Hyland, and NCUA staff discussed topics ranging from the structure of federal credit unions to share insurance and its federal backing. Fryzel said after the meeting that the SIC officials will be able to “go back to Japan and utilize the information learned to help enhance their own credit union system.” Hyland added, “These are the types of meetings that help the credit unions of the world perform to the best of their ability. At NCUA we find it important to assist the world credit union system and aid in its success via the opportunities afforded to us.”… * WASHINGTON (2/9/09)—New U.S. Treasury Secretary Timothy Geithner is expected to face some hostile questions tomorrow when he testifies before the Senate Banking Committee, (American Banker Feb. 6) Geithner is scheduled to discuss the Obama administration’s plans for improving the Treasury’s TARP—or Troubled Asset Relief Program. Both Democrats and Republicans on the committee have voiced complaints about TARP and have said that public anger targeted at the program makes it a tough bet that Treasury will get more than the $700 billion already authorized for the program … * WASHINGTON (2/9/09)—Last week the U.S. Senate approved amendments to limit compensation for executives of companies receiving funds from the government’s Troubled Asset Relief program (TARP)(Dow Jones Feb. 6). Compensation would be capped at $400,000 and bonuses would be sharply curtailed. The Senate agreed to the amendments by voice vote … * WASHINGTON (2/9/09)--Sen. Evan Bayh (D-Ind.) said Thursday that he is seeking a bipartisan compromise for Sen. Richard Durbin’s (D-Ill.) mortgage bankruptcy legislation (American Banker Feb. 6). Bayh said he could seek to reform the legislation so that it would restrict a judge’s ability to cram down primary mortgages to risky loans. Bayh said he wishes to work with Sen. Arlen Specter (R-Pa.) on the bill. Specter has supported similar legislation. The Credit Union National Association (CUNA) appreciates Bayh’s comments and looks forward to working with the senator on the issue, said Ryan Donovan, CUNA vice president of legislative affairs ...

CUNA site compiles NCUA stabilization program info

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WASHINGTON (2/6/09)--The Credit Union National Association (CUNA) has compiled information that may be useful to credit unions regarding the National Credit Union Administration’s (NCUA) Corporate Stabilization Program. A page on the CUNA website provides credit unions with links to the NCUA’s proposed rulemaking for the program, frequently asked questions and additional publications on the matter. CUNA also has provided analyses of the program’s costs on the credit union movement. Credit unions can see how the program will impact the movement as a whole, use a calculation template to see how the costs will affect individual credit unions, or download and examine an Excel file that has the cost estimates for each of the nation's 8,100 insured credit unions. The cost estimates are provided to give credit unions a general feel for the impact of the NCUA's initial plan. The estimate uses September data--the latest CUNA has--so it ignores any growth or changes in financials that occurred, or that will occur subsequently, according to Mike Schenk, CUNA senior economist. “It also assumes the NCUA's initial plan is the one that credit unions will end up with. That is uncertain because NCUA's $3.7 billion guarantee cost was estimated and CUNA, the state leagues, and credit unions are doing everything possible to change the financial equation and make this much more palatable,” Schenk said. The page also includes links to recent News Now stories on the program. News Now will continue to tag stories about the stabilization program with the keyword, “NCUA Corporate Stabilization Program,” which will be placed into an archive accessible to credit unions. For more information and to access the page, use the resource link below.

Corporate CU reform merits CU comment CUNA

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WASHINGTON (2/6/09)—Credits unions are encouraged to share all their concerns and questions regarding a possible restructuring of the corporate credit union system, the Credit Union National Association (CUNA) reminded Thursday. In a CUNA Comment Call posted Thursday, CUNA noted that the National Credit Union Administration (NCUA) asks many questions on very narrow issues in its advance notice of proposed rulemaking (ANPR) regarding the structure and operations of corporate credit unions. However, CUNA advised, credit unions should not feel required to address each question individually or to limit their comments to just the issues that NCUA has presented. “Any concerns or suggestions regarding the corporate credit union system in general are welcomed,” CUNA Deputy General Counsel Mary Dunn wrote. The ANPR was prompted, Dunn explained, by concerns over the recent decrease in the value of corporates’ investment portfolios and the virtual market freeze-up which has prevented the trading of certain investment securities. The NCUA, she noted, believes these challenges have undermined the stability of the corporate credit union system. The NCUA ANPR asks series of questions on a broad range of topics, such as:
* The role of corporates in the credit union system; * Appropriate capital requirements for corporates; * Corporate investment authority and limits; * Asset liability management; and * Corporate governance.
CUNA’s Comment Call asked credit unions to send comments on the ANPR as soon as possible. They are due to the NCUA April 6. Dunn said CUNA’s comment letter to NCUA is being developed in conjunction with its Corporate Credit Union Task Force. The task force was formed late last year to address potential concerns with the corporates and is comprised of individuals from various natural person credit unions. A meeting has been scheduled here next week. Use the resource link below to read all the NCUA’s ANPR questions and access the CUNA Comment Call.

NCUA risk summit hitting capacity

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ALEXANDRIA, Va. (2/6/09)—National Credit Union Administration (NCUA) Vice Chairman Rodney Hood said those seeking reservations for the agency’s 2009 Risk Mitigation Summit on February 19 will have to get on a wait list. Hood said all spaces are committed for the meeting scheduled at the Federal Reserve Bank of Atlanta. The upcoming summit is of particular interest, Hood said, because it will provide a public forum where the NCUA's Corporate CU Stabilization Program can be addressed with a question and answer session. Scheduled speakers include:
* Chris Brown, CFO and Director, Retail Payments Risk Forum, Federal Reserve Bank of Atlanta; * Oscar Rodriguez Ulloa, Superintendent, General of Financial Institutions for Costa Rica; * Robert Manning, Research Professor and Director of the Center for Consumer Financial Services, Rochester Institute of Technology; * Leo M. Tilman, President L.M. Tilman & Co, Adjunct Faculty, Columbia University; * Richard Dorfman, President, Federal Home Loan Bank of Atlanta; * Jack Goodwin, Senior Vice President, Commercial Insurance Division, CUNA Mutual Group; and * Owen Cole, NCUA Director of Risk Management, Director of NCUA’s Office of Capital Markets.
Use the resource link below to contact NCUA.

Inside Washington (02/05/2009)

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* WASHINGTON (2/6/09)--The House Financial Services Committee Wednesday approved a package of bills to increase liquidity and stem foreclosures. One bill, H.R. 786, would make permanent the $250,000 deposit and share insurance increase enacted as part of the Emergency Economic Stabilization Act of 2008. Currently the fund must be replenished in the year that it drops below the required level. The amended version extends the period to five years. The Credit Union National Association (CUNA) supported the measure and an amendment to increase the National Credit Union Administration’s borrowing power to $6 million (News Now Feb. 5). The bill also would triple the Federal Deposit Insurance Corp.’s borrowing power to $100 billion (American Banker Feb. 5). Another bill the committee passed would reduce the fees and required writedowns for servicers participating in the Hope for Homeowners Program. Other legislation passed in the package would protect servicers who modify loans by shielding them from investor lawsuits ... * WASHINGTON (2/6/09)--An inspector general in charge of overseeing the Troubled Asset Relief Program (TARP) said in a report this week that the Treasury needs to develop a better strategy on what to do with the portfolio it manages on behalf of taxpayers(CNNMoney.com Feb. 5). He said it will ask recipients of TARP funds how they used the government money by requiring them to provide documents and plans to comply with executive compensation restrictions. The inspector general also said the Treasury is not properly valuing assets obtained through TARP. The Treasury has spent $300 billion to stabilize the financial sector and has incurred much criticism ... * WASHINGTON (2/6/09)--Senate Banking Committee Chairman Christopher Dodd (D-Conn.) expressed doubt that the Federal Reserve Board should fill the role as a systemic risk regulator (American Banker Feb. 5). The central bank has not handled its current power very well, and acting as a systemic regulator could undermine the bank’s independence, Dodd said at a hearing Wednesday. Dodd also noted that he is thinking about molding all of the bank regulators into one, which would be preferable to the “alphabet soup” of regulators today, he said ... * WASHINGTON (2/6/09)--The challenges that small businesses face in providing health care for their employees was the topic of a House Small Business Committee hearing Tuesday. Years of double-digit premium increases have hit the business community hard, especially small firms, and the issue must be addressed, Rep. Sam Graves (R-Mo.) said at the hearing. Health care reform should make the market for health insurance more competitive, he added. Graves said he supports association health plans, where small business owners could jointly purchase insurance plans at lower rates ...

House panel OKs bill with permanent insurance increase

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WASHINGTON (2/5/09)—The House Financial Services Committee Wednesday approved H.R. 786, a bill designed to make permanent the $250,000 deposit and share insurance increase enacted as part of the Emergency Economic Stabilization Act of 2008. During consideration of the bill, the committee accepted an amendment offered by Rep. Paul Kanjorski (D-Pa.) to extend the amount of time National Credit Union Administration (NCUA) has to restore the National Credit Union Share Insurance Fund (NCUSIF) to its statutorily required levels. Under current law, the fund must be replenished in the calendar year during which it drops below the required level. The Kanjorski amendment would extend this period to five years. The Credit Union National Association (CUNA) strongly backs H.R. 786 and specifically sought such a modification to the NCUSIF restoration period, among other modifications. CUNA also backed a plan to increase NCUA's borrowing authority from the U.S. Treasury Department. Rep. Luis Gutierrez (D-Ill.) offered an amendment to increase NCUA's borrowing power from $100 million to $6 billion. The amendment was approved by voice vote. CUNA believes the increased borrowing authority should give the NCUA additional resources to manage the NCUSIF and deal with problems that may arise. The bill next must be considered by the full House.

NCUA posts accounting info on corporate plan

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WASHINGTON (2/5/09)—The National Credit Union Administration (NCUA) has posted an accounting bulletin for credit unions that addresses the corporate credit union stabilization plan, according to the agency’s deputy executive director. NCUA’s Larry Fazio told the more than 3,000 participants of a Credit Union National Association’s (CUNA’s) Wednesday audio conference that the accounting bulletin is available on the agency website. The bulletin, according to NCUA is intended to provide guidance to credit unions with less than $10 million in total assets on regulatory reporting matters related to recent NCUA Board actions to stabilize the corporate credit union system. “This guidance can be referenced by credit unions larger than $10 million in total assets in consultation with their independent accountants,” the bulletin advises. The bulletin became effective immediately upon its issuance. It will expire, according to the NCUA, when “superseded or incorporated Accounting Manual for Federal Credit Unions, whichever occurs first.” Use the resource link below to access the NCUA bulletin.

Congress to study use of TARP dollars Fed liquidity efforts

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WASHINGTON (2/5/09)—House Financial Services Committee Chairman Barney Frank (D-Mass.) has unveiled plans for two hearings next week: one spotlighting the Federal Reserve’s recent efforts to provide liquidity, another scrutinizing company’s use of TARP funds. Frank said next Tuesday, Feb. 10, the committee will conduct and examination of the Extraordinary Efforts by the Federal Reserve Bank to Provide Liquidity in the Current Financial Crisis.” For the following day’s session, the panel has called the CEOs of the first eight companies to receive TARP funds to testify on their use of the government assistance they have received. TARP is short for Troubled Asset Relief Program, which is administered by the U.S. Treasury. Also of interest to credit unions, later this month Federal Reserve Board Chairman Ben Bernanke is expected to testify Feb. 24 on monetary policy before the Senate Banking Committee. He will be presenting the Fed’s semiannual monetary policy report, which will be repeated in the House before the financial services panel.

NCUA consolidation absent from Franks agenda

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WASHINGTON (2/5/09)—Outlining his ideas for re-structuring the federal financial regulatory system, House Financial Services Committee Chairman Barney Frank (D-Mass.) did not mention consolidation of the National Credit Union Administration (NCUA) as one of his goals. "We, quite frankly, would have been very surprised to have heard the Chairman mention NCUA in the context of regulatory restructuring," said Ryan Donovan, vice president of legislative affairs for the Credit Union National Association. Donovan noted that the omission is consistent with the message he has been sending credit unions since March 2008. Frank made his comments during a news conference to outline his committee’s agenda for 2009. Also important for credit unions, Donovan noted Frank reiterated his support for credit unions to have access to Troubled Asset Relief Program (TARP) funds. He indicated a hope that the U.S. Treasury Secretary would make funds available to credit unions. On broad issues, Frank said the biggest near-term issue is to deal with systemic risk. (American Banker Feb. 4) He said his top priority will be to identify and empower a single federal entity to be the systemic risk regulator. He said his second phase of a regulatory restructuring process will involve consideration of merging various federal financial regulators and providing addition consumer protection regulation. Donovan said the agencies mentioned as possible merger candidates were the Securities and Exchange Commission with the Commodities Futures Trading Commission, and the Office of the Comptroller of the Currency with the Office of Thrift Supervision. Consumer protection issues identified by the chairman included possible legislation to curb predatory mortgage lending and abusive credit cards practices. “These bills are expected to be similar to legislation the committee considered in the 110th Congress,” Donovan said. “Also Chairman Frank said his committee would continue to focus on affordable housing, including promoting affordable rental housing,” he added.

CUNA audio conference NCUA must explore options

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WASHINGTON (2/5/09)—Credit Union National Association (CUNA) President/CEO Dan Mica told participants on an audio conference call Wednesday that while CUNA recognizes federal regulators had no choice but to take action on behalf of the corporate credit unions, CUNA opposes the means chosen to fund the corporate credit union stabilization. Close to 3,000 tuned in for CUNA’s audio conference call on issues surrounding the National Credit union Administration’s (NCUA) corporate credit union aid plan.
Click for slide show CUNA President/CEO Dan Mica opens the more-than-hour-long informational session CUNA offered to affiliated credit unions on issues surrounding the National Credit Union Administration’s corporate credit union assistance plan. Close to 3,000 callers participated. (CUNA Photo)
Mica told particpants that alternative funding approaches must be explored, and underscored CUNA is doing just that. He noted that all members of the NCUA board have encouraged CUNA to developed feasible and legal alternatives. Mica added that CUNA's Corporate Credit Union Task Force has been working on alternatives to recommend to NCUA. The CUNA leader urged credit unions to keep sending their ideas for reasonable alternatives to CUNA at Ncuacorp@cuna.com. He also urged credit unions to respond to NCUA's Advance Notice of Proposed Rulemaking on issues relating to the corporates. Comments are due to NCUA April 6, and CUNA has posted a Regulatory Action Call on its Regulatory Advocacy website. NCUA's Central Liquidity Facility (CLF) President Owen Cole reviewed the actions NCUA has taken leading up to the announcement last week that the agency was providing $1 billion in capital assistance to U.S. Central and establishing a program to guarantee all deposits in all corporates. NCUA Deputy Director Larry Fazio detailed the agency's stabilization actions and addressed the costs to the NCUSIF. He said there will be a $1 billion immediate cost for the capital provided to U.S. Central and $3.7 billion loss revenue for the deposit guarantee, resulting in a replenishment of the 1% deposit and an insurance premium for all federally insured credit unions, under the current funding mechanism. He said about 50% of the NCUSIF deposit will be impaired. He also reiterated that the premium has been declared but won't be billed until later in 2009. Both Fazio and Cole supported the development of funding alternatives for the NCUA Board to consider. Fazio also announced the issuance of the agency's accounting bulletin to provide guidance to credit unions with less than $10 million in assets on how to reflect their costs in funding the assistance to the corporates. Credit union of that size do not have to follow Generally Accepted Accounting Principles. (See related story: NCUA posts accounting info on corporate plan) Scott Waite, CFO of Patelco CU, San Francisco, and chairman of CUNA’s Accounting Task Force, provided details of the accounting treatment for credit unions regarding the insurance costs. He said the accounting guidance from NCUA is "as expected." CUNA SVP of Economics Bill Hampel discussed the costs to credit unions. He said there will be an average ROA reduction of 62 basis points and an average net worth reduction of 56 basis points, although individual results will vary. Hampel added that final expenses to credit unions will depend on the analysis of corporate credit union bonds, which the agency has requested, the probability of their sale before maturity, and the impact of NCUA's stabilization action efforts on the corporate system. The CUNA audio conference also included Terry West, president/CEO of VyStar CU and chairman of CUNA’s Corporate Credit Union Taskforce, Eric Richard, CUNA General Counsel, and Mary Dunn, CUNA Deputy General Counsel. Alternatives CUNA has been considering to date include:
* Encourage and enable capital into corporates from natural person credit unions; * Use more of the CLF; * Expand NCUA's Credit Union System Investment Program;* Facilitate the purchase of corporate credit union assets by natural person credit unions; * Allow corporates to infuse capital into the NCUSIF through capitalization investments; * Continue to address accounting issues, including ones relating to securities that are other-than-temporarily-impaired; and * Access TARP funds to back up the NCUSIF as needed.

Inside Washington (02/04/2009)

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* WASHINGTON (2/5/09)--Rep. Thaddeus McCotter (R-Mich.) honored Kensington Valley Community CU, Highland, Mich., on its 50th anniversary. The credit union was originally founded as Huron Valley Schools Employees CU and has $25 million in assets. “The Kensington Valley Community CU has become a landmark in the community it serves by providing important financial services to its members,” he said. McCotter noted the honor in Monday’s Congressional Record ... * WASHINGTON (2/5/09)--The “bad bank” model to relieve banks of bad assets will not work, Sen. Charles Schumer (D-N.Y.) told CNBC Tuesday. The model is flawed because of its high cost, and because the government would have to buy assets at a price that likely doesn’t match the value of the assets. “A better solution is for the government to guarantee the assets below the amount the banks have them in their books,” Schumer said. “The banks would not get away scot-free here. They would have to pay an insurance fee for the guarantee, but they’re not looking into the abyss. It might help them to start lending again.” The senator also noted that the government “can’t just keep saving institutions,” as it is the worst solution to dealing with the financial crisis ...

Costs of corporate stabilization plan on CUNA site

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WASHINGTON (2/5/09)--The Credit Union National Association (CUNA) has posted two pieces of information to its website that will help credit unions estimate the effects of the National Credit Union Administration’s (NCUA) Corporate Stabilization Program on their credit union. CUNA also has posted to its website homepage a link to consolidated resources addressing the agency's stabilization plan. The link includes information on the NCUA's plan, CUNA's call to action and analysis, related News Now stories, and more Regarding the effects-estimation materials, CUNA Senior Economis Mike Schenk said, "The NCUA’s recently announced corporate stabilization program raised many questions from credit unions. The most common of these seems to be ‘What does it mean for me?’ and ‘What will this cost?’ To help credit unions answer those questions, we’ve posted several Excel worksheets on the CUNA website.” One worksheet explains the proposal’s effects on the credit union movement as a whole. The other can be used as a template for credit unions to input their data and estimate program costs. NCUA’s stabilization plan consists of a $1 billion infusion and an initial estimate of $3.70 billion to guarantee corporate deposits. The $3.70 billion corporate share guarantee is an estimate of the total costs associated with a corporate deposit guarantee--it may understate or overstate the true cost of that guarantee. NCUA has engaged PIMCO to analyze corporate investments--and the results of that analysis will be used to more accurately determine the total costs, Schenk said. The final cost estimate also will depend on the stability of corporate funding. The more stable and long-term the funding, the lower the final costs will be. In any event, CUNA, state credit union leagues and others are working with the NCUA to explore alternative funding mechanisms that would ease the financial burdens of the initial plan. If the efforts are successful, the assessment rate could be reduced. For more information, use the link.

Inside Washington (02/03/2009)

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* WASHINGTON (2/4/09)--The Obama administration has proposed guaranteeing modified home loans to stem the foreclosure surge--similar to a plan backed by the Federal Deposit Insurance Corp. (Bloomberg News Feb. 3). The proposal seeks to shield lenders from borrowers who default. Comptroller of the Currency John Dugan said details on the proposal are still in the works. James Lockhart, Federal Housing Finance Agency director, said he supported the effort. The administration is also considering a proposal to help servicers rewrite loans by sharing the modification cost. Companies would cut borrowers’ monthly payments, and the government would cover the cost of cutting the payments more ... * WASHINGTON (2/4/09)--Members of the State Foreclosure Prevention Working Group said a report on loan modifications, by the Office of Thrift Supervision and the Office of the Comptroller of the Currency, is flawed (American Banker Feb. 3). The report lacks methodology information and doesn’t explain if loans re-defaulted because of weak modifications, state officials said. They also noted that nonbank subprime servicers were more successful with modifications than the report indicated. According to the report, 55% of modified loans at national banks and thrifts were more than a month past due during the first six months, while officials say 26% of loans were at the delinquency stage ... * WASHINGTON (2/4/09)--Treasury Secretary Timothy Geithner is expected to unveil the Obama administration’s plans to help solve the financial crisis (Wall Street Journal Feb. 3). Observers expect Obama to ask Congress for more money, as economists do not believe the second half of the $700 billion rescue fund is enough. The administration also is expected to crack down on executive compensation, but isn’t expected to attach new strings to healthy financial institutions that receive money through the $250 billion Capital Purchase Program ... * ALEXANDRIA, Va. (2/4/09)--National Credit Union Administration
Chairman Fryzel (left) and Ken Ross, Commissioner, Michigan Office of Financial and Insurance Regulation. (Photo courtesy of NCUA.)
(NCUA) Chairman Michael Fryzel met last week with Michigan’s Office of Financial and Insurance Regulation Commissioner Ken Ross in St. Joseph. Fryzel said the meeting gave him a chance to underscore the federal commitment to working with state regulators, particularly in times like now when stresses in the market have “real and significant effects” on credit union operations. “Commissioner Ross and I share important safety and soundness and consumer protection responsibilities,” Fryzel said …

New info required in March 2009 call report

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WASHINGTON (2/4/09)--Credit unions will be required to supply more information on delinquencies, foreclosures, and repossessions on the quarterly form 5300 “call report”-- which is no surprise given the current market pressures. In addition, the National Credit Union Administration (NCUA) has added a new page on “miscellaneous information” to collect more information on the services offered by credit unions, which implements one of the agency’s “Outreach Task Force” recommendations approved in May 2008. The quarterly call report is due by April 20. On page 9, the agency requires credit unions to now check whether they offer such services as:
* Transaction programs such as international remittances, low-cost wire transfers, or money orders; * Depository programs such as health savings accounts, individual development accounts, or no-cost share drafts; * Financial education programs such as financial counseling, literacy workshops, homebuyer programs, or in-school branches; * Credit programs such as credit builder plans, micro-business and micro-consumer programs, and payday lending-type programs; and * Member services such as bilingual services, no-cost bill payer, no-cost tax preparation services, and student scholarships.
Starting last month, NCUA examiners also are collecting certain membership data at the end of regular examinations of federal credit unions through AIRES, the agency’s automated examination system, to develop membership profile information. The collection was approved last May to implement NCUA Outreach Task Force recommendations. The March 2009 call report also calls for more detail on the delinquency rates of different types of real estate and construction loans, as well as charge-offs and recoveries. The agency is also requesting more information on loan participations by type, and the credit union’s credit and borrowing arrangements. For more information, use the link.

House considers higher SBA guarantees

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WASHINGTON (2/4/09)—The Credit Union National Association (CUNA) is watching developments with a Small Business Administration (SBA) loan guarantee increase plan, which would take some pressure off the credit union member business lending (MBL) cap. Under the economic stimulus plan passed by the House, the SBA would be permitted to guarantee up to 95 % of qualifying small business loans. This could benefit credit unions engaged in SBA 7(a) and 504 lending because the guaranteed portion of such loans do not count towards the credit union 12.25% if assets MBL cap. The bill would also improve the timeframe within which SBA would be required to approve applications for loan guarantees. A credit union or other lender would submit an application to the SBA with a proposed guarantee level and the SBA would be required to approve or deny such application within 5 business days. CUNA’s Phil Drager, however, advises that there is no SBA loan guarantee language so far in the economic stimulus package currently being debated by the Senate. Drager, senior legislative representative, said the Senate bill would reduce fees associated with 7(a) and 504 loans but does not propose to increase the SBA guarantee.

Changes needed to share insurance laws CUNA

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WASHINGTON (2/4/09)—The U.S. Congress should take an important step to maintain depositor confidence in credit unions and banks and make permanent higher deposit insurance limits, the Credit Union National Association (CUNA) said Tuesday. As the House Financial Services Committee conducted a hearing on three bills, CUNA sent a letter to the panel’s top members, Chairman Barney Frank (D-Mass.) and ranking Republican Rep. Spencer Bachus of Alabama. CUNA strongly supported H.R. 786, which would permanently set federal share and deposit insurance at the higher levels authorized under the 2008 Emergency Economic Stabilization Act (EESA). EESA increased both credit union and bank and thrift insurance coverage from $100,000 to $250,000, effective the moment the president signed the bill into law. However, the increase is temporary and is set to expire Dec. 31 this year. CUNA maintains it would undermine an already shaky financial sector if Congress were to turn back time to the lower insurance levels. Frank reflected this concern in his statement opening the hearing. He said depositors could easily find themselves in a situation where a CD was covered by insurance when it was opened, but not covered as its term progresses. He said it was a “bad idea” to approve higher limits “on a yo-yo basis.” While strongly endorsing H.R. 786, CUNA asked for modifications to the bill that would be of key importance to credit unions. First CUNA recommended a statutory change that would establish a longer time period for the National Credit Union Administration (NCUA) to replenish its share insurance fund. Currently, the Federal Credit Union Act requires NCUA to replenish the National Credit Union Share Insurance Fund within the year that the fund drops below 1.2% of insured deposits. The FDIC is currently permitted five years to replenish it fund, and section 2 of H.R. 786 would extend this period of time to eight years. The NCUA should have the same authority, the CUNA letter said. That change is particularly important, CUNA noted, in light of the NCUA’s current intention to fund a corporate credit union aid plan through a premium on natural person credit unions. CUNA also sought:
* Increasing the NCUA’s borrowing authority to around $10 billion, so the agency can lend effectively to credit unions affected by the financial crisis; and * Similar risk authority for the NCUA that is authorized for the FDIC. Without specific statutory language defining its authority, CUNA wrote, the NCUA has been reluctant to provide unlimited deposit insurance coverage for non-interest bearing transaction accounts an action already taken by the FDIC.
The NCUA, late afternoon, released a similar letter to Frank, also seeking increased borrowing authority from Treasury and expanded authority to use the NCUSIF to address systemic risk “under extreme circumstances.” The agency also sought a broader timeframe for NCUSIF restoration –suggesting a period of up to five years. The financial services committee hearing also addressed H.R. 787, a bill to make improvements in the Hope for Homeowners Program, and H.R. 788, a bills provide a safe harbor for mortgage servicers who engage in specified mortgage loan modifications, and for other purposes. Much of the panel’s questions targeted the Hope for Homeowners Program, which critics have said has failed to produce the kind of foreclosure mitigation help for which it was intended. The House Financial Services Committee is scheduled to mark up all three bills today.

Inside Washington (02/02/2009)

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* ALEXANDRIA, Va. (2/3/09)--The National Credit Union Administration (NCUA) sent a Letter to Credit Unions (No. 09-FCU-02) reminding them that the agency last November approved an increased 2009 operating fee scale. The scale is used by the agency to determine the operating fee assessed to federal credit unions. The change increased the operating fee scale by 6.77%. The letter also noted that credit unions will be receiving in March an NCUA invoice for their 2009 operating fee and, if required, for the amount needed to adjust National Credit Union Share Insurance Fund (NCUSIF) capitalization deposits to 1% of insured shares. The fee, assessed based on assets as of Dec. 31, is due to NCUA no later than April 15 … * WASHINGTON (2/3/09)--Financial institutions, including credit unions, may have a long road ahead of them as they comply with new federal credit card regulations. The Office of Thrift Supervision, the National Credit Union Administration and the Federal Reserve Board approved unfair and deceptive credit card regulations Dec. 18 that are slated to go into effect July 1, 2010. The new rules prohibit double-cycle billing and universal default, and prevent institutions from raising interest rates on pre-existing balances unless payments are past due 30 days. The new rules also will prevent credit unions and other financial institutions from treating a payment as late unless a reasonable time is provided from the time a periodic statement is mailed until the payment is due. In addition, when different annual percentage rates (APR) apply to different balances on a credit card account, such as purchases, balance transfers, or cash advances, the final rules require that payments exceeding the minimum payment be allocated to the balance with the highest APR or pro rata among all the balances. Credit unions also are required to comply with recently finalized rules for open-end credit under Regulation Z by July 1, 2010, according to Mike McLain, Credit Union National Association assistant general and senior compliance counsel. The changes are “massive,” and it will likely take credit unions and their vendors all 18 months to comply with both rules, he said ... * WASHINGTON (2/3/09)--Sen. Claire McCaskill (D-Mo.) introduced a bill Friday that would cap the compensation for Wall Street executives so that their pay is no more than $400,000--which is what President Barack Obama makes, the senator said (CNN.com Feb. 2). Under the bill, salaries, bonuses and stock options would be limited. “You can’t use taxpayer money to pay out $18 billion in bonuses,” she said. Obama has said he would limit executive compensation for financial companies that receive assistance from the Troubled Asset Relief Program ... * WASHINGTON (2/3/09)--The Government Accountability Office (GAO) recommended in a report Friday that the Treasury expand its efforts to monitor how recipients of capital infusions from the Troubled Asset Relief Program (TARP) are using the money. The GAO noted that the Treasury has taken important steps to implement the agency’s previous recommendations, but that it has “made limited progress in formatting, articulating and communicating an overall strategy for TARP” ...

New CUNA tool for the CU difference

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WASHINGTON(2/3/09)—The Credit Union National Association (CUNA) has released a new report to back credit unions in their campaign to help the economy by providing more credit to small businesses. As part of its “Straight Talk” series, CUNA produces timely “Straight to the Point” brochures--a series of reports that elaborate on key credit union issues. In its latest effort, CUNA highlights that credit unions “do things differently” by listening to Main Street while “others” listened to Wall Street. “Credit unions are locally based and since they serve their members rather than line the pockets of few, they do things differently,” the new publication boasts. It displays a chart showing that credit unions held onto to 75% of their mortgages while others bundled them into mortgage-backed securities. A second chart illustrates that National Credit Union Share Insurance Fund balances “haven’t faltered” and reminds that the NCUSIF “is not a burden to the American taxpayer. The two-pager notes that a current statutory cap on credit union member business lending is “arbitrary” and was set after close to 100 years of successful business lending by the credit union movement. Removal of the cap in these tough economic times, CUNA and credit unions suggest, would allow credit unions to do even more to help small business members struggling under difficult economic conditions. In fact, “Straight to the Point” notes, a change in the statute could inject $10 billion into the economy the first year the arbitrary ceiling was removed. “This economic stimulus would not cost taxpayers a dime,” the brochure adds. “Let credit union serve their 90 million members.” CUNA has distributed this piece to a coalition of small business interests and will distribute it on Capitol Hill. It will also be available at the CUNA Governmental Affairs conference in Washington Feb. 22-28, and widely available for use by credit unions and the leagues for their Hike the Hill efforts.

Congress Stimulus vote reg restructuring hearing

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WASHINGTON (2/3/09)—The Credit Union National Association (CUNA) will be monitoring legislative action on the floors of both chambers of the U.S. Congress. In the Senate, debate is expected to begin on the House-passed economic stimulus bill. In the House, the stimulus package was opposed by Republicans. The Senate bill is expected to contain changes that give it more of a bi-partisan flavor, however passage is expected still to take some time. This week CUNA also will be following:
* Senate Banking Committee hearing to examine modernizing the U.S. financial regulatory system on Wednesday. Among those expected to testify is Paul Volcker, who heads the President’s Economic Recover Advisory Board and is a former Federal Reserve Board chairman; * Senate Banking Committee hearing to examine TARP-- the Troubled Asset Relief Program, focusing on oversight of the financial rescue program Thursday; and * House Financial Services Committee hearing today on “Promoting Bank Liquidity and Lending Through Deposit Insurance, Hope for Homeowners and Other Enhancements.”
In addition to these hearings, the House Financial Services Committee is expected to consider legislation to make permanent the $250,000 deposit insurance coverage limits that were enacted on a temporary basis in October 2008 as part of the Emergency Economic Stabilization Act. No action is likely this week on H.R. 200, the “Helping Families Save Their Home Through Bankruptcy Act” though it appears to be edging closer to a final vote. This so-called “mortgage cram-down” bill was approved by the House Judiciary Committee last week. Some amendments were adopted at that time, but CUNA remains opposed to the proposal, and continues to encourage sponsors in the House and Senate to narrow the scope and duration of the program.

CUNA Feb. 4 webinar Corporate CU rescue

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WASHINGTON (2/3/09)—Affiliated credit unions can register for a free webinar on the National Credit Union Administration’s (NCUA) corporate credit union rescue plan. Sponsored by the Credit Union National Association (CUNA), the webinar will include CUNA’s assessment of the impact of the NCUA plan on natural person credit unions, as well as the group’s ideas for mitigating those costs. This 90-minute event will feature CUNA and credit union experts on regulation, law, accounting, and other areas. Last week the NCUA announced a plan to bolster the corporate credit union system’s liquidity and said it would be funded via a credit union share insurance premium. Use the resource link below to sign up now for the webinar.

GAC performer Lt. Dans Band in IAmerican ProfileI

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WASHINGTON (2/3/09)--The musical performer at this year’s Credit Union National Association Governmental Affairs Conference (GAC), the Lt. Dan Band, was featured in a cover story this week in American Profile. The Lt. Dan Band is slated to play Feb. 22 at the GAC. The band was formed by Chicago composer Kimo Williams and Gary Sinise, actor/musician and star of “CSI New York,” a TV show on CBS. “Lieutenant Dan” is the character Sinise played in the 1994 film, "Forrest Gump.” The band has completed six tours for the USO and performs regularly for troops. Much like the credit union philosophy of people helping people, Sinise told the magazine that he’s always looking for ways to give back. “People have paid a price for us to have the life we have here,” he told American Profile. “You look at people who live in war zones, where their countries are always fighting and they never seem to get out of it. We’re lucky with the number of people who are willing to volunteer for service here. We should be thankful to them. We can never do enough for our veterans.”