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CUNA posts positive financial results for 2010

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WASHINGTON (3/1/11)--Credit Union National Association (CUNA) Treasurer Dennis Pierce, president/CEO of Community CU, Lenexa, Kan., offered a positive review of the CUNA’s 2010 financial results during the association’s Annual General Meeting at the 2011 Governmental Affairs Conference (GAC) in Washington D.C. Both operating revenues and expenses were higher in 2010 than in 2009, but revenues increases outstripped expenses. Revenues from operations increased nearly $2 million, or 4% more than in 2009, while expense increases were less than 2% from 2009. Net assets increased to $11.6 million in 2010. CUNA’s operating margin was $2.2 million in 2010, exceeding the $1 million average of the previous six years. CUNA’s assets total $25.8 million, of which 69.8% is in cash and investments. Working capital is $10.8 million and net assets totaled $11.6 million at the end of 2010. For 2011, CUNA is budgeting $51.5 million in revenues and $50 million in expenses for an operating margin of $1.5 million. Pierce noted that 100% of member dues revenues are used for advocacy and advocacy-related functions. The financial information Pierce offered is unaudited and subject to change. Finalized financial statement will be posted on CUNA’s website. The GAC runs through Wednesday.

CU action can change conversation on Capitol Hill

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WASHINGTON (3/1/11)--Credit Union National Association (CUNA) Chairman Harriet May, president/CEO of GECU, El Paso, Texas, and CUNA President/CEO Bill Cheney offered highlights of “the most active year legislatively” in four decades for credit unions at CUNA’s Annual General Meeting during its Governmental Affairs Conference (GAC) Monday. They urged credit union leaders to “change the conversation” in Washington in 2011.
Click for slide show CUNA President/CEO Bill Cheney welcomes the more-than 4,000 participants who have come to Washington, D.C. for the 2011 Governmental Affairs Conference, as well as for Capitol Hill visits to discuss key credit union issues with federal lawmakers. Cheney told credit unions that their presence in Washington will make a difference on issues such as protection of the credit union tax status, interchange rules, supplemental capital and more. (CUNA Photo)
The CUNA GAC runs through Wednesday. Among the highlights of last year that May pointed to was the selection of Cheney as CUNA’s new leader. “The board said in July when choosing Bill that he was the right man for the right time for CUNA,” May said. “That has proven to be the case. We needed an experienced leader who could hit the ground running, and effect a sure and smooth transition. Bill has demonstrated strong leadership right from the start in the advocacy arena and in his management of the association.” Dan Mica retired from the leadership position after 13 years at the helm. May also noted CUNA’s role in facing regulatory, legislative and economic challenges in 2010. She emphasized CUNA’s role as a thought leader in tackling critical issues facing the credit union movement. “As your national trade association, CUNA can be a catalyst that helps bring the movement together to devise solutions to meet its many challenges,” May said. Cheney offered a list of credit union highlights for 2010. Among the successes was the continued independence of the National Credit Union Administration (NCUA). “We persuaded Congress to maintain the NCUA as the independent regulator of credit unions, and keep the National Credit Union Share Insurance Fund separate from the Federal Deposit Insurance Corp.,” Cheney said. Credit unions also limited the impact of the Consumer Financial Protection Bureau, formed under the Dodd-Frank Act. Of significance was credit union representation on the council that oversees the bureau’s rules. “That’s a mandate that the impact on credit unions must be considered in any rulemaking done by the bureau,” Cheney said. Cheney noted that 14 members of Congress (11 House members, three senators) now hold their seats thanks to special electoral programs of CUNA and state leagues. Eight were elected in the past year. Other highlights: the preservation of the $250,000 share insurance level for credit union members, positive press for credit unions, a strong blow against unrelated business income tax, and progress on the corporate credit union crisis. But challenges remain, Cheney said. Two areas where CUNA will continue to push hard: business lending and interchange. Although credit unions did not win expanded lending authority, they achieved considerable congressional support on both sides of the aisle, he added. As for interchange, CUNA and the leagues generated more than one million contacts with Capitol Hill to voice credit union opposition to the legislation, Cheney said. Their message to Congress: Stop, study--and start over. "This legislation is a train wreck for consumers,” Cheney said. “We're gaining traction, but we're going to need your help." Cheney cited the continued tax exempt status of credit unions, alleviating credit unions’ regulatory burden, and supplemental capital as other challenges for 2011. It’s important that credit unions strive to form a unified vision, he said. In his remarks earlier at the GAC’s opening general session, Cheney urged credit unions to “change the conversation” in Washington with a collective voice that serves 93 million consumers and has a solid-track record of serving consumers during a recession when many banks turned customers away. Between December 2007 and September 2010, business lending by credit unions grew by more than 39%, while bank business lending declined by more than 18%. Overall lending by credit unions, for that period, expanded 7.6% while banks’ overall lending declined by 6.5%. “We’re here to stay,” Cheney said. “We have a big voice; let’s put it work. We have served, prudently, when others wouldn’t. We can continue getting the good press we have received; we just have to continue to tell our story.” As evidence of the credit unions’ ability to influence the conversation, Cheney cited a GAC speaker slate that includes House Speaker John Boehner (R-Ohio.), Sen. Mark Udall (D-Colo.), Rep. Spencer Bachus (R-Ala.), Sen. Roy Blunt (R-Mo.), Rep. Debbie Wasserman Schultz (D-Fla.), Sen. Mike Crapo (R-Idaho), Rep. Shelley Moore (R-W. Va.), Sen. Jon Tester (D-Mont.), and House Majority Whip Kevin McCarthy (R-Calif.). Also, outgoing CUNA Chief of Staff Rich McBride was honored with a board resolution recognizing his 14 years of service with CUNA.

Hudson miracle recounted by Capt. Sully

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WASHINGTON (3/1/11)--Airline Capt. Chesley B. “Sully” Sullenberger III mesmerized the Monday session of the Credit Union National Association Governmental Affairs Conference with his vivid description of the crash landing in the Hudson River Jan. 15, 2009, that made him a national hero. He attributed the positive outcome and rescue to the training of his
Click to view larger image Capt. "Sully" Sullenberger (left) is greeted by CUNA President/CEO Bill Cheney just before the captain recounts the ordeal that made him a national hero. (CUNA Photo)
crew, and the cooperation of the passengers. Sullenberger, who opened his presentation by describing himself as a “30-year proud member of a credit union,” described the crash and rescue in an approximate 45-minute speech. Standing in the middle of the stage, and speaking without notes, Sullenberger made these points:
* Because the plane went down in 43 seconds, there was virtually no time for himself or his co-pilot to communicate. “Everything we did, we did intuitively,” he said. “Before the landing, there was no sound in the plane. You could hear a pin drop.” * “The forced calm that is part of our profession was the result of a lifetime of training. It resulted in imposing order where there could have been chaos.”
Sullenberger said despite the tension, there were lighter moments during the ordeal. When the plane landed in the water, he dialed his airline office on his mobile phone, and told the person who answered that the plane was down, he said. He said the staffer was in obvious high state of agitation, and could only blurt into the phone, “I can’t talk to you now. We have a plane down in the Hudson River.” The GAC will continue until Wednesday.

CUNA warns ad rule change could have consequences

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WASHINGTON (3/1/11)--The additional cost of complying with the National Credit Union Administration's (NCUA) proposed changes to advertising requirements could force some credit unions to reduce or eliminate some of their current marketing practices, the Credit Union National Association (CUNA) said in a recent comment letter. The NCUA at its December meeting approved a proposed rule that extends the NCUA's official advertising statement rule to all radio and television advertisements, annual reports, and statements of condition. In addition, for print advertisements, the official advertising statement must be “no smaller than the smallest font size used in other portions of the advertisement intended to convey information to the consumer.” NCUA board member Gigi Hyland was the lone dissenting vote and expressed concerns over the additional costs and totality of regulatory burdens for credit unions. NCUA board member Gigi Hyland was the lone dissenting vote and expressed concerns over the additional costs and totality of regulatory burdens for credit unions. Radio and television advertisements that are under 30 seconds long were previously exempted from including the NCUA's advertising statement requirement. "While we fully support appropriate, effective disclosure aimed at informing and protecting consumers, we strongly oppose many of the board's proposed changes and believe they will have negative unintended consequences if adopted as proposed," the CUNA letter said. The NCUA has claimed that adding additional disclaimers to these ads would increase consumer confidence, but CUNA noted that the NCUA statement could be "ineffective" and could "cause confusion and lead to a decrease in consumer confidence." CUNA said that additional disclosures may be ineffective because many consumers are not aware of the NCUA, and added that the burden of educating consumers about the agency should be "properly placed on NCUA and not individual credit unions." One credit union representative cited in the letter said that the NCUA disclaimer, which lasts for two seconds of a standard 30-second radio ad, cost the credit union over $3,100 last year. Revising and re-recording portions of existing ads to add the NCUA disclaimer would cost an additional $1,000, the representative said. For the full comment letter, use the resource link.

Treasury official thanks CUs for helping working families

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WASHINGTON (3/1/11)--Speaking before the Credit Union National Association’s (CUNA) 2011 Governmental Affairs Conference, U.S. Treasury Undersecretary Jeffrey Goldstein thanked credit unions for providing working families with access to critical financial services, noting that those who lack access to credit unions are often forced into using higher-cost financial options. The Treasury official also praised credit unions for working with the Treasury on several key initiatives. One such initiative was the development of the Obama administration’s housing market reform plan, and Goldstein noted that CUNA was one of many groups that met with administration officials as they developed their plan. The Obama administration last month proposed nearly eliminating the government's role in the mortgage market as one of several solutions to the current predicament caused by the government's 2008 conservatorship of mortgage market entities Fannie Mae and Freddie Mac. The administration has also proposed limiting the government's intervention in the mortgage market to times of financial distress and using a system of reinsurance to backstop private mortgage guarantors to a targeted range of mortgages. Goldstein said that the administration would proceed carefully and balance the pace of housing finance reform with the pace of market recovery. A vital part of these reforms is ensuring that credit unions have much needed access to the secondary mortgage market, Goldstein added. He added that the administration is committed to allowing the private market to serve as the main source of mortgage credit.

Senate Banking head credits CU loyalty during crisis

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WASHINGTON (3/1/11)--Credit unions have faced their own share of difficulties during the recent economic crisis, but stayed loyal to the communities they serve and their membership throughout their financial troubles, Senate Banking Chair Tim Johnson (D-S.D.) said in remarks made on Monday. In a pre-taped message delivered to the Credit Union National Association's 2011 Governmental Affairs Conference, Johnson said that credit unions are an essential part of the economy, and added that special care was taken to ensure that credit unions were treated fairly as the Dodd-Frank financial regulatory package was developed last year. Johnson pledged to continue to monitor Dodd-Frank's impact on credit unions as portions of the legislation continue to be implemented. Johnson closed by saying that he has enjoyed working with credit unions, and encouraged credit unions to continue to inform him on how he can help them fulfill their mission. In related news, Johnson and his colleague Sen. Thad Cochran will soon introduce a Senate resolution that would name 2011 as the international year of cooperatives.

Matz Aggressive actions saved CUs from 1.5B loss

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WASHINGTON (3/1/11)--Though some of the National Credit Union Administration’s (NCUA) recent regulatory actions did not help the agency win "any popularity contests" with credit unions, NCUA Chairman Debbie Matz has said that those actions saved the credit union system from $1.5 billion in total losses.
Click to view larger image NCUA Chairman Debbie Matz told credit union representatives at CUNA's GAC that while some recent regulatory actions may not have won the agency "any popularity contests" among credit unions, failing to act would have meant dozens of high-profile failures. (CUNA Photo)
Matz made her remarks before the Credit Union National Association’s 2011 Governmental Affairs Conference Monday, and she was followed on the program by fellow board member Michael Fryzel. NCUA board member Gigi Hyland is scheduled to speak at the GAC on Wednesday morning. Matz cited the NCUA’s decision to increase administrative actions on some troubled credit unions and to ramp up its examination frequency from once every 18 months to once a year as the type of “tough love” that helped the credit union system continue to move forward in troubled economic times. The agency also "used very prescriptive Letters of Understanding and Agreement to commit certain credit unions to specific performance targets with very close supervision" and worked to find merger partners for troubled credit unions “that simply could not survive on their own," Matz added. The NCUA also worked to find new leadership for troubled credit unions and temporarily conserved some credit unions to help stabilize them in tough times, she said. This type of aggressive regulation reduced the total number of 2010 natural person credit union failures to 28 and dropped the total amount of related losses to $221 million, Matz said. These losses were five times lower than the losses incurred by the banking industry during that same period, Matz added. “For most credit unions, there is no need to fear a tough regulator. In fact, a tough regulator can protect you,” she said. Matz also made the case for continued strong regulation going forward and said that she would rather the NCUA “be tough today” than “fail to prevent catastrophe tomorrow.” Legislators should also do their part to ensure the continued health of the credit union system by allowing credit unions to raise supplemental capital and by lifting the current 12.25% of assets cap on credit union member business lending, Matz said. Matz’s NCUA colleague Michael Fryzel emphasized the importance of direct contact with legislators in remarks delivered later in the day. Fryzel said that members of Congress must constantly be reminded of all the good things that credit unions do, and that credit unions are the financial services provider for 90 million Americans. The face-to-face contact that credit union representatives make with their legislators during this year's GAC will be felt by the credit union system for years to come, Fryzel added. Overall, credit unions now should focus on putting in the work needed to keep the credit union movement going for the next generation and concentrate on growth, learn lessons, and "make acts, large and small, every day, to move forward," Fryzel said. "If we continue to think of ourselves as a cooperative movement, as a selfless effort for the benefit of members, people will use us in even greater numbers, and our problems will fade as we grow," he added.

Inside Washington (02/28/2011)

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* WASHINGTON (3/1/11)--A U.S. Treasury Department official said recently that while new financial regulations can help decrease the impact of a future financial crisis, they cannot prevent its occurrence. David Miller, chief investment officer for Treasury's Office of Financial Stability, called it “folly” to think a future crisis can be avoided or that threat of a future recession can be eliminated. Miller’s division oversees the Troubled Asset Relief Program (American Banker Feb. 28) … * WASHINGTON (3/1/11)--Representatives from the finance industry and D.C.-based think tanks will testify alongside Credit Union National Association (CUNA) President/CEO Bill Cheney at a Wednesday hearing on the Dodd-Frank Act’s impact on credit unions, small financial institutions, and other small businesses. In a Monday statement, House financial institutions and consumer credit subcommittee leader Rep. Shelley Moore Capito (R-W. Va.) noted that she is hearing “concerns from small institutions about the unintended consequences that could adversely affect them.” Capito said that the Wednesday hearing will give small issuers and small businesses alike a chance to shed some light on how Dodd-Frank implementation is impacting their business practices. The hearing will start at 2 p.m. (ET) ...

Game Change authors offer political insights

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WASHINGTON (3/1/11)--President Barack Obama needs to move toward the political center to get re-elected, but Republicans still must broaden their appeal to Hispanic and younger voters to make it a close race: So say two of the nation’s top political reporters, Mark Halperin and John Heilemann. Halperin and Heilemann, authors of “Game Change,” a best-selling book on the 2008 presidential election, were among the speakers during the Monday sessions of the Credit Union National Association’s Government Affairs Conference, held here through Wednesday. Heilemann said Obama was elected with a campaign that appealed to all voters, but has ended up governing in a more partisan way. He added, "The president also proved to be less of a communicator." Heilemann said that when Republican Scott Brown stunned Democrats by winning the seat so long held by Democrat Sen. Edward Kennedy of Massachusetts, Obama’s advisers urged him to begin adjusting his strategy. Co-author Halperin told the audience he questions whether Republicans can take advantage of Obama’s vulnerability in 2012. Halperin said despite political problems, Obama remains a charismatic and skilled politician. He said so far, there is no Republican frontrunner with comparable political talent.

Compliance collaboration hot topics at small CU roundtable

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WASHINGTON (2/28/11)--Collaboration and compliance were among the hot topics addressed during the first-ever, half-day Small Credit Union Roundtable at the Credit Union National Association’s (CUNA) 2011 Governmental Affairs Conference (GAC) in Washington, D.C., which kicked off Sunday. The conference runs through Wednesday. The small credit union session included three roundtables panels. CUNA President/CEO Bill Cheney also addressed the group. Cheney explained that CUNA’s role is to create a better environment for credit unions to operate within, but, he underscored, the association’s strength ultimately lies with its members. As evidence, he cited the list of Congress members slated to speak at this week’s GAC, an indication that credit unions had represented themselves well with both consumers and in Washington during the recent financial crisis. “I can’t tell you how far you’ve come and distinguished yourselves in a short amount of time,” Cheney said. “Congress has taken notice.” Regarding collaboration, George Hofheimer, chief research officer at the Filene Research Institute, said during the roundtable discussions that it makes sense for small credit unions because scale matters in financial services. “It’s very simple: The higher your volume, the lower your costs,” Hofheimer said. Credit unions have a common value--lowering costs to serve their members better--to rally around, Hofheimer said. The question for credit unions is how to collaborate. The problems are human as much as tactical. Hofheimer cited trust, vision and conflict as issues that all collaborative efforts must proactively address. “I find that when it comes to collaboration you have to give a little to get a lot,” said roundtable participant Frank Michael, CEO of Allied CU Stockton, Calif. “I think we need to think in terms of giving up control for something that is beneficial to every one of us.” One of the areas credit unions have begun to collaborate is compliance. Roundtable participant Veronica Madsen, director of compliance and general counsel for the Michigan Credit Union League (MCUL), discussed how league dues helps the MCUL field two compliance officers that help credit unions throughout the state. Madsen said the compliance officers are “booked solid” throughout the year. “They enable people who were many hats to remove one of those hats once in a while,” Madsen said. Another resource is League InfoSight, an online compliance resource created by the Florida, Georgia, Michigan, Ohio and Texas Credit Union leagues in 2003. Since its development, InfoSight has established partnerships with CUNA's compliance staff and expanded, and now also provides compliance service to 31 states. Roundtable participant Lucy Ito, senior vice president of credit union growth/development at the California and Nevada Credit Union League, said she encourages members of her league to use it because those who do access it on average more than 100 times a year. Also, Jon Hernandez, president/CEO of Mattel FCU, El Segundo, Calif., shared a story of why collaboration is a good fit for the credit union model. While vacationing in Hawaii, Hernandez was waiting in a long line for a rental car at the airport, when he noticed that an employee from a competing rental car company helped out the rental car company where he was standing in line. When Hernandez asked her why she would help out a competitor, the agent responded, “In Hawaii we just want to be sure the people that come here are being served. We want them to feel good about coming to Hawaii.” “Collaboration isn’t just about driving down your prices; it’s about offering your members ervices you couldn’t otherwise offer them,” Hernandez said. The three panels and participants included:
* Collaboration: Hofheimer, Ito, and Jamie Chase, principal and institgator of goodness at CU Strategic Planning; * Regulatory Compliance: Madsen; Joetta Heck, credit union compliance expert and CEO, Kemba Charleston FCU, Charleston, W. Va.; and Kathy Thompson, CUNA senior vice president and associate counsel for compliance and legislative analysis; and * Open Forum: Michael; Bob Hoel, senior scholar Filene Research Institute and professor emeritus of business and Colorado State University; and Jennifer Simmons, interim CEO/chief member officer, Maryland and District of Columbia Credit Union Association.
News Now will provide further coverage of the small credit union issues later this week.

Community group asked Fed to withdraw interchange rule

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WASHINGTON (2/28/11)—Adding its voice to growing concern regarding the Federal Reserve Board’s implementation plan for interchange fee provisions contained in the Dodd-Frank Act, the National Community Reinvestment Coalition (NCRC) asked the Fed to withdraw its proposed rule. The NCRC, which represents more than 600 community-based organizations nationwide, was formed in 1990 to “promote access to basic banking services including credit and savings, to create and sustain affordable housing, job development and vibrant communities for America's working families.” In its letter to the Fed, NCRC noted that the economics of interchange fees are “complicated,” and said the group is concerned “with a rule that would inadvertently reduce access to debit cards and other basic banking services to low- and moderate-income borrowers.” “It is therefore imperative to subject this proposal to careful study and analysis. Despite the statutory (July) deadline, we believe that members of Congress would appreciate careful study before implementing this provision of Dodd-Frank,” NCRC said in its public comment letter signed by its president/CEO, John Taylor. The public comment period ended Feb. 22. “We ask you to withdraw or at least stop this rulemaking until such an assessment can be completed. Thank you for consideration of our views,” the letter concluded. The Credit Union National Association urges Congress to “stop, study, and start over” on the interchange law that requires the Fed to set up a framework to limit what card issuers can charge for use of their debit card services. CUNA has warned that unintended consequences of the Fed’s proposed implementation could drive up debit card costs to consumers, or even make it difficult for some consumers to gain the services. CUNA President/CEO Bill Cheney is scheduled to testify at a House hearing Wednesday on the impact of Dodd-Frank on small financial institutions, and the interchange provision is expected to receive more close scrutiny from the legislative panel.

2011 CUNA GAC kicks off today

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WASHINGTON (2/28/11)--The 2011 edition of the Credit Union National Associations (CUNA) Governmental Affairs Conference (GAC), which will give over 4,000 credit union representatives from across the country access to high profile government speakers and high minded discussion of credit union issues, officially kicks off today. Todays conference program includes CUNA CEO Bill Cheney, Treasury Under Secretary for Domestic Finance Jeffrey Goldstein, and National Credit Union Administration (NCUA) Board Chairman Debbie Matz. NCUA Board Member Michael Fryzel, the two authors of the political bestseller Game Change, John Heilemann and Mark Halperin, and Miracle on the Hudson pilot Chesley B. Sully Sullenberger III will also appear later today. CUNA will also hold its 77th Annual General Meeting, the associations yearly business meeting, on Monday, whose guest speaker is actor John Schneider, co-founder with Marie Osmond of Childrens Miracle Network. Speakers later in the week include House Speaker John Boehner (R-Ohio)the first time a Speaker of the House has addressed a national credit union conference since 1998and Consumer Financial Protection Bureau architect Elizabeth Warren, plus House Majority Whip Kevin McCarthy (R-Calif.), House Financial Services Committee Chairman Rep. Spencer Bachus (R-Ala.) and a video message from Senate Banking Committee Chairman Tim Johnson (D-S.D.). Also appearing on this years lineup will be:
* Rep. Ed Royce (R-Calif); * Sen. Jon Tester (D-Mont.); * Rep. Shelley Moore Capito (R-W.Va.); * Sen. Roy Blunt (R-Mo.); * Sen. Mike Crapo (R-Idaho); * Rep. Debbie Wasserman Schultz (D-Fla.); * Sen. Mark Udall (D-Colo.); * Rep. Steve Stivers (R-Ohio); and * Rep. Ed Perlmutter (D-Colo).
The GAC's Tuesday program will feature a political point/counterpoint discussion between liberal media leader Arianna Huffington and conservative commentator Mary Matalin and a panel discussion on corporate credit unions. Breakout sessions on debit interchange, housing finance reform, compliance issues, and credit union advocacy are also on the schedule. The 2011 GAC will be at the Washington Convention Center, its fourth year there since the conference outgrew its long-time locale at the Hilton Washington. Use the resource link below for more GAC information.

30- 15-year mortgage rates drop from recent highs

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WASHINGTON (2/28/11)--Thirty-year fixed-rate mortgages continued their fall from recent highs, averaging 4.95% during the week ended Feb. 24. Those same mortgage rates averaged 5.05% during the week ended Feb. 10, the highest average mortgage rate recorded since April 2010. Thirty-year fixed rate mortgages averaged 5% last week. Freddie Mac Vice President/Chief Economist Frank Nothaft said that the continued reduction was tied to mixed inflation data reports. Fifteen-year fixed rate mortgages also fell during the week, averaging 4.22%.Fifteen-year mortgage rates averaged 4.27% last week and 4. 4% this time last year. Five-year and one-year adjustable rate mortgages (ARM) averaged 3.8% and 3.4%, respectively. Five-year ARMs averaged 4.16% this time last year, while one-year ARMs averaged 4.15%.

Inside Washington (02/25/2011)

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* WASHINGTON (2/28/11)--House Republicans, intent on reigning in spending and calling for less government control, have targeted the Consumer Financial Protection Bureau (CFPB) with several recent measures (CNNMoney.com Feb. 25). Starting July 21, the bureau will regulate credit cards, mortgages and other financial products, including payday loans. In a bill that included more than $60 billion in budget cuts to avoid a government shutdown, lawmakers cut the bureau’s funding from the Federal Reserve to $80 million. The bureau estimates it needs $143 million this year, and the law provides for as much as $500 million when it’s up and running. Rep. Randy Neugebauer, (R-Texas) has proposed a bill to give Congress more oversight of the CFPB by moving it to the Treasury Department. Also, a House Financial Services subcommittee is scheduled for March 16 to discuss oversight of the CFPB, including concerns that the bureau could stifle the flow of credit …

Treasury issues new garnishment procedures

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WASHINGTON (2/28/11)--The U.S. Treasury and several other federal agencies have published for public comment an interim rule that establishes procedures that credit unions must follow when they receive a garnishment order against an account holder who receives certain federal benefit payments by direct deposit. The Office of Personnel Management, the Railroad Retirement Board, the Social Security Administration, and the Department of Veteran Affairs are also listed on the joint release. The rule prohibits the garnishment of certain “protected” benefits, but does not impact garnishments obtained by the United States and child support garnishment orders. Credit unions will still be allowed to process the garnishment against protected funds in these cases. Under the rule, credit unions will need to provide notification to the account holder when a garnishment order is received. The credit union will also need to briefly outline what a garnishment order is and explain the account holder’s rights with regard to garnishment in this notification. The notice will not be required if the account balance is zero or reflects a negative balance on the date of account review. Once they have received the garnishment order, credit unions will generally have two days to perform an account review. This account review must determine the amount of federal benefit payments that have been deposited to the member’s account within the last two months. Credit unions must then ensure that the member has access to this so called “protected” amount or the current balance of the account, whichever is lower. Credit unions may not charge garnishment fee against these protected funds and are prohibited from charging a fee after the date of the account review. However, credit unions may levy garnishment fees against any unprotected funds in the account. The rule is scheduled to come into effect on May 1, and comments will be accepted until May 24. For the proposal, as published in the Federal Register, use the resource link.

CUNA blog offers constant coverage of 2011 GAC

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WASHINGTON (2/28/11)--Up-to-the-minute coverage of the latest news and notes from the Credit Union National Association's (CUNA) 2011 Governmental Affairs Conference (GAC), from its kickoff today to its conclusion on Thursday, will be available on its GAC news blog, CUNA NewsWire. Readers can access NewsWire via a linking button on News Now's headlines page. More than 4,500 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, Web Assistant Editor Ron Jooss, and Communications Specialist Darryl Tait will provide the latest news from GAC sessions, including key breakout sessions. For full coverage, read CUNA's daily online news service News Now, keep up with NewsWire, and follow News Now’s twitter feed, NewsNowLiveWire. Find all these news resources on the News Now headlines page at www.cuna.org. Use the resource link below to access the GAC Blog.

Corp. CU chartering rule is effective March 28

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WASHINGTON (2/28/11)--The first updates to corporate credit union chartering rules approved by the National Credit Union Administration (NCUA) in 30 years go into effect March 28. The rule changes were adopted as an Interpretive Ruling and Policy Statement by the agency at its Feb. 17 open board meeting and set to go into effect 30 days after publication in the Federal Register, which has now occurred. The regulator's interpretation not only describes the requirements for charter applicants, it also includes the NCUA's standards for reviewing the feasibility of a new corporate charter. While the final IRPS largely reflects the proposed guidance issued by the NCUA last September, there were a few changes made based on comments submitted by the Credit Union National Association and others. Use the resource links below to view the NCUA IRPS and CUNA's complete comment on the proposed statement.

House panel looks to end Obama mortgage-aid programs

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WASHINGTON (2/25/11)—The House Financial Services Committee on March 3 will begin markup of legislation that would end funding of the Home Affordable Modification Program (HAMP), the Neighborhood Stabilization Program (NSP), the Federal Housing Administration (FHA) Refinance Program, and the Emergency Homeowner Relief Fund. The panel’s subcommittee on insurance, housing and community opportunity will hold a hearing on the four mortgage programs on March 2. HAMP, which has the largest amount of funding of the four programs, aims to aid homeowners facing foreclosure by reducing monthly payments to sustainable levels. Despite record levels of new foreclosures--2.9 million in 2010 and a projected 3 million in 2011-- only 522,000 homes were still undergoing permanent modifications via HAMP as of late December. More than 792,000 trial modifications have been cancelled, and 152,000 trial modifications have yet to be upgraded to permanent status. A 2010 Treasury report found that HAMP was having difficulties in part because mortgages are more complicated than a one-to-one relationship between borrower and lender. However, the Treasury has also said that HAMP permanent modifications perform well over time, with lower delinquency rates than those reported by the industry at large. The administration has earmarked $29 billion for HAMP, $7 billion for the NSP and $8 billion for the FHA Refinance Program. The NSP provides grants to state and local governments that wish to purchase foreclosed or abandoned homes to prevent neighboring homes from incurring significant losses in resale value. The Emergency Mortgage Relief Program authorized the Department of Housing and Urban Development to make emergency mortgage relief payments to homeowners facing foreclosure for up to 12 months, with a possible extension of another 12 months, according to the release. The FHA Refinance Program seeks to aid mortgageholders who owe more than their home is currently worth. The committee release noted that only 35 individuals had applied for assistance through the FHA program as of Dec. 13.

CUNAs Cheney to testify on Dodd-Frank Act impact

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WASHINGTON (2/25/11)--Credit Union National Association (CUNA) President/CEO Bill Cheney is scheduled to testify Wednesday before a House Financial Services subcommittee, which is studying the impact of the Dodd-Frank Act on small financial institutions and small businesses. The Dodd-Frank financial regulatory reform package, which was signed into law last year, contains numerous changes to current financial laws, but little in the over 2000 pages of new laws directly impacts credit unions. CUNA has noted that while credit unions are still going to experience burdens related to the regulations, there are not many "wholesale" changes. CUNA continues to work with the Fed to shield credit unions from any unneeded regulatory burdens. Bank and other regulators are supposed to develop around 170 new rules and regulatory amendments by July, some early as April. Credit unions will be subject to far fewer rules but CUNA has nonetheless made it a priority to minimize the burden to credit unions of any new regulation, including those under Dodd-Frank. Many rules that are the responsibility of a single agency have already been adopted, but those involving multiple agencies remain a concern, according to observers. Some have suggested that regulators could extend the rulemaking process beyond the current July deadline if a substantive proposal is released soon. The Senate Banking Committee last week held its own hearing on Dodd-Frank implementation. That committee examined regulators' implementation progress at the half-year mark, and substantial concern was expressed by lawmakers regarding the Federal Reserve's proposed implementation of an interchange fee cap. Several lawmakers have called for a delay in interchange implementation, and CUNA has suggested that the Federal Reserve work with Congress to delay implementation by up to two years to allow greater time to consider the interchange changes potential impact. The House Financial Services Committee has planned hearings on government-sponsored enterprise reform, the National Flood Insurance Program, oversight of the Consumer Financial Protection Bureau, monetary policy, and other issues during March. The committee has also scheduled a March 2 hearing and a March 3 markup session that will address the Obama Administration’s various home market and mortgage assistance programs.(See related story: House panel looks to end Obama mortgage-aid programs.)

CU burden must be measured in NCUA insurance proposal

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WASHINGTON (2/25/11)--The National Credit Union Administration should clarify differences between its own proposal and the Federal Deposit Insurance Corporation’s (FDIC) final regulation for noninterestbearing accounts and should provide credit unions with additional examples of both interest-bearing and non-interest bearing accounts, the Credit Union National Association said in a recent comment letter. The NCUA, as required by the Dodd-Frank financial reform package, has released a proposed rule that defines noninterest-bearing accounts as traditional, noninterest-bearing checking or share draft accounts that allow for an unlimited number of deposits and withdrawals. The proposal also allows some reserve sweeps to be considered noninterest-bearing transaction accounts. CUNA in its letter said that this proposal is consistent with the new Dodd-Frank requirement. However, CUNA said that the NCUA should work to minimize any further regulatory burdens caused by the proposal. The NCUA should also clearly state on its website that the new temporary unlimited share insurance for noninterest-bearing transaction accounts will be separate from other share insurance coverage. For the full comment letter, use the resource link.

Auto enrollment in ID theft prevention could be UDAP

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ALEXANDRIA, Va. (2/25/11)—Automatically enrolling new members with free checking accounts into for-pay identity theft prevention programs, “while only using an opt-out option, appears to be an unfair or deceptive practice and may present problems” under National Credit Union Administration (NCUA) regulations, the NCUA said in a recently released legal opinion. A credit union should not assess account-related charges “unless it is clearly within its contractual rights and has met all the relevant requirements of applicable laws,” the NCUA Associate General Counsel Hattie Ulan added. The letter was in response to an inquiry by Schwartz & Ballen LLP partner Gilbert Schwartz. The credit union’s proposed practice of enrolling members into id theft programs “without their request or express consent” and charging those members an optional monthly fee of $1, while providing them with the option of opting out, could be considered a violation of the Federal Trade Commission’s unfair and deceptive acts and practices (UDAP) provisions. The NCUA said that UDAP states that a financial practice is deceptive if there is a material representation or omission of information “that is likely to mislead a consumer acting reasonably under the circumstances.” Attaching a for-pay service to a so-called “free” checking account would also likely violate portions of the Truth in Savings Act and the NCUA’s own rules on the accuracy of advertising. Overall, credit unions that offer identity theft protection services from third party vendors “should structure or modify their policies, practices, and advertising to avoid or eliminate these types of potential violations,” the NCUA said. For the full legal opinion, use the resource link.

NCUA liquidates NYC OTB FCU

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ALEXANDRIA, Va. (2/24/11)--The National Credit Union Administration (NCUA) on Wednesday placed NYC OTB FCU into liquidation after the credit union was judged to be insolvent. The New York, N.Y.-based credit union was chartered in 1972 and held $1.45 million in assets from 868 members. The credit union served employees of the New York City Off Track Betting Corporation, which shut down late last year. The corporation laid off 1000 workers and closed 50 betting parlors throughout New York City in early December after the N.Y. State Senate did not pass legislation that would have saved it, The New York Times reported on Dec. 8. The NCUA said that it’s Asset Management and Assistance Center would issue checks to individuals holding verified share accounts in NYC OTB FCU within one week. There have been two other liquidations and one federal credit union conservatorship so far this year.

CUs legislators alike wary of interchange changes

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WASHINGTON (2/24/11)—By the time the Federal Reserve’s comment period for its interchange fee regulation proposal closed on Feb. 22, over 5,200 credit unions and credit union backers had contacted the Fed via the Credit Union Nation Association’s Operation Comment to express their concerns with the proposal. The Fed's interchange provisions, which were released for public comment late last year, would cap debit card interchange fees that are paid by merchants to large debit card issuers at no more than twelve cents per transaction. By law, issuers with under $10 billion in assets are entitled to be exempted from the interchange fee rate setting provisions. Credit union comments on the interchange proposal included criticisms of the proposal’s arbitrary cap, which many said does not fully account for the costs of running debit card programs. One respondent said that his credit union would be forced to increase some fees, eliminate certain products and services, and could go so far as cutting staff members or closing down branches. These drastic actions would reduce the level of service provided to members and could prevent some current credit union members from having access to the banking system in general, the letter adds. Legislators, including Sen. Claire McCaskill (D-Mo.), commented on the interchange proposal when it was first released late last year. The most recent comments from members of Congress came in a Tuesday letter from Sens. Charles Grassley (R-Iowa) and Tom Harkin (D-Iowa). In that letter, Grassley and Harkin, both of whom supported Sen. Richard Durbin’s (D-Ill.) interchange proposal when it was added to the Dodd-Frank Act last year, encouraged the Fed to ensure that the small institution exemption works as intended. House Financial Services Chair Spencer Bachus (R-Ala.), Senate Banking Committee ranking minority member Richard Shelby (R-Ala.) , Rep. Barney Frank (D-Mass.) and other legislators have also expressed concern over the potential issues that the interchange changes could cause small issuers. Fed Chairman Ben Bernanke in testimony submitted last week said that he could not ensure that the planned small issuer exemption would work as planned. Several legislators during a pair of recent House and Senate hearings said that the interchange regulations, which would come into effect in July, should be delayed to allow for further consideration. CUNA this week suggested that the Fed should work with Congress to delay interchange regulation implementation by up to 24 months to allow more time for discussion and consideration of how the interchange regulations would impact credit unions. (See related Feb. 23 story: CUNA: Two-year delay needed for interchange study)

CUNA seeks transparency in tech assistance program

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ALEXANDRIA, Va. (2/24/11)--The Credit Union National Association (CUNA) urged the National Credit Union Administration (NCUA) to further improve the transparency of its supervisory and examination appeals process in a Tuesday comment letter. CUNA added that it supports giving the NCUA’s Supervisory Review Committee the authority to review TAG denials, as credit unions previously had no forum to appeal these NCUA decisions. However, the NCUA could clarify how credit unions can appeal other supervisory and examination matters outside of the Supervisory Review Committee’s review, CUNA said. CUNA also approved of the NCUA’s move to allow committee decisions to be appealed from the date that the credit union receives their decision. The proposal, which combined two other previously published IRPS’s, also updates some titles and explains that Supervisory Review Committee meetings will be held on an as-needed basis going forward. TAGs are used to assist low-income credit unions under NCUA’s Community Development Revolving Loan Fund. The NCUA’s TAG proposal, Interpretive Ruling and Policy Statement (IRPS) 11-1, came into effect on January 20. For the full comment letter, use the resource link.

Directors fin. lit. requirements may be extensive

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WASHINGTON (2/24/11)--Larger, more complex federal credit unions may need to demonstrate a higher level understanding of financial risk to be in compliance with the National Credit Union Administration’s (NCUA) newly adopted director fiduciary duties rule, Credit Union National Association (CUNA) Senior Vice President of Compliance Kathy Thompson has said. The NCUA late last year established a new set of financial literacy guidelines for federal credit union directors which held that those directors should have the ability to examine their credit union's balance sheet and understand specific financial activities that their credit union takes part in. The NCUA will not test individual directors to assess their financial literacy, but will examine the training programs that federal credit unions have set up for their directors. The NCUA has specifically said that directors should have complete knowledge of risks, including credit risk, liquidity-related risks, and interest rate, compliance, strategic, transaction, and reputation risks. The NCUA’s Office of Small Credit Unions will be conducting board training workshops this spring, and the material covered in those sessions will be appropriate for credit unions that aren’t into more complex business lines, Thompson said. However, Thompson added that it appears that credit unions will need to develop training on more complex issues on their own. Thompson suggested that training policies for more complex credit unions should include specifics on more unconventional activities, and should specifically state that their board will be trained on the financial risks raised by those activities and the steps that the credit union takes to “limit and control” those risks. A credit unions training policy should also reflect a commitment to additional training to address new situations that may arise if and when that credit union adds a new product or service that is expected to impact its business practices. Directors may gain the needed financial understanding through their own in-house credit union training, external training, on the job experience, or online training, the NCUA said. Directors may also train through CUNA's own Center for Professional Development. For the full NCUA letter and more on CUNA's training sessions, use the resource links.

FinCEN reports on outreach to small FIs

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VIENNA, Va. (2/24/11)--The Financial Crimes Enforcement Network (FinCEN), in a newly released report, unveiled the findings of its outreach initiative to smaller depository institutions, defined as those with less than $5 billion in assets. FinCEN’s report is the third in a series on the agency’s outreach effort and is based on information gathered from FinCEN’s individual visits and town hall-style meetings with more than 70 depository institutions including credit unions and community banks. Among its key findings, FinCEN reported that:
* Depository institutions are increasingly integrating their anti-fraud and anti-money laundering efforts. Even in cases where the two functions may not be housed in the same department, there is close collaboration on fraud and money laundering issues; * There is significant engagement with law enforcement, but many institutions do not take full advantage of existing information sharing enabled by Section 314(b) the USA PATRIOT Act to share information with their business peers; and * Institutions expressed comfort with their procedures and ability to promptly search and respond to FinCEN inquiries with respect to investigations of terrorist financing and significant money laundering.
Overall the report noted similarities between the observations of credit unions and other depository institutions that participated in the outreach events, and observations by credit unions are mentioned throughout the report. However, one unique circumstance discussed by credit unions highlighted a number of ongoing Bank Secrecy Act (BSA) compliance concerns with regard to shared branching, such as being able to track and aggregate multiple transactions at different credit unions for Currency Transaction Report purposes. Credit unions have asked that the National Credit union Administration and FinCEN provide additional guidance on BSA responsibilities in the shared branching context. Credit unions also advised FinCEN of the difficulties of expelling members that have engaged in suspicious activity that results in Suspicious Activity Report filings. Credit unions request that FinCEN and/or their regulators provide additional guidance on this issue. Use the resource link for FinCEN’s report.

Inside Washington (02/23/2011)

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* WASHINGTON (2/24/11)--Observers are divided on whether the financial system reforms outlined by the Dodd-Frank Act will be undermined by missed regulatory deadlines (American Banker Feb. 23). Regulators are required to complete roughly 170 new rules by July, one year after Dodd-Frank’s enactment, but many still-unfinished rules must be done by April. Many rules that are the responsibility of a single agency have already been adopted, but those involving multiple agencies remain a concern, according to observers. Seven agencies, for example, are writing the risk-retention rule, and they remain deadlocked on whether it should include national servicing standards. Regulators have indicated they may fail to meet many deadlines. John Walsh, the acting comptroller of the currency, said that a joint rule curbing risky incentive-based compensation structures may not make its April deadline, and it is not the only rule in such jeopardy. Observers said regulators may be able to extend the process if they can at least issue a proposal before the deadline for a final rule … * WASHINGTON (2/24/11)--The Federal Deposit Insurance Corp (FDIC) has issued letters to former executives of the failed bank Washington Mutual (WaMu), advising them of possible legal action (American Banker Feb. 23). Among the purposes of such letters, which can be a precursor to a lawsuit, is to encourage executives to reach a settlement under their directors’ and officers’ liability insurance. The FDIC has reportedly talked about potential damages of $1 billion in a lawsuit against WaMu, according to a person familiar with a matter. The size of such a claim would likely be announced in the next month, the person said. The executives who would be charged in any legal action have not been identified. WaMu was largest institution to be seized by regulators during the financial crisis, and the largest-ever U.S. bank failure …

CFA urges Feds close attention to small FIs especially CUs

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WASHINGTON (2/24/11)--While raising concerns about how the current interchange system affects consumers and supporting the general intent of legislation passed last year, the Consumer Federation of America (CFA) also urged the Federal Reserve Board to “pay close attention to the effect” that parts of its implementation plan could have “on smaller depository institutions, especially credit unions." CFA in a comment letter urged the Fed to ensure that financial institutions be reimbursed for legitimate incremental costs associated with debit card services, as required by the statute. If the Fed requires an interchange rate scheme too low to cover incremental debit card program costs, it could harm consumers by leading financial institutions to “significantly increase costs for debit card or other banking services.” The consumer group added it is particularly concerned about the effects on (low- and moderate-income) accountholders of such increases, “especially if the increases lead some accountholders to leave their bank or credit union entirely.” The Fed interchange plan offers a dual framework for determining interchange fees. One plan would provide issuers with a safe harbor of seven cents per transaction, and set a maximum interchange fee cap of 12 cents per transaction. A second alternative framework would cap the maximum interchange fee at 12 cents per transaction. These safe harbors and/or caps would be reevaluated by the Fed every two years. Citing data from Navy FCU that the seven-to-12 cent rate won't cover all incremental costs, the CFA letter recommended that the Fed "broaden its pricing standard.” The Credit Union National Association (CUNA) also had multiple dialogues with CFA on interchange issues, as has Doug Fecher, president/CEO of Wright-Patt CU, Inc. in Fairborn, Ohio, who serves on the CFA board. CFA said pricing could include, for example, network processing fees for each transaction processed, charge-backs involving billing errors, and fraud losses over which the Fed determines the issuers had no ability to prevent. As noted, the consumer group urged the Fed to "pay close attention to the effects of particular options on smaller depository institutions, especially credit unions," which often have higher incremental costs. The Fed has proposed an exemption to the interchange rule for credit unions and small institutions with under $10 billion in assets, but CUNA and others have questioned whether it would be effective in the marketplace. The CFA letter noted that the exemption has prompted VISA to indicate it will bifurcate interchange rates. “If smaller institutions receive higher interchange rates, it could help them cover the higher incremental costs they normally pay because they lack economies of scale,” noted CFA. “However,” the CFA letter continued, “Federal Reserve Chairman (Ben) Bernanke has stated that market competition might nonetheless cause these institutions to receive lower interchange income. “We urge the Federal Reserve to closely monitor how the debit interchange market for small institutions develops and how the financial viability of these institutions is affected. Credit unions especially often provide a safe, lower-cost alternative for many Americans.” The CFA called on the Fed to launch "a broad, balanced study of the effects of the rule it implements upon implementation.” This study should evaluate a number of factors, including its impact on the following:
* Whether, and to what extent, retailers pass through interchange savings to the cost of goods and services paid by all consumers. * The cost of debit card and all banking services. * The structure and practices of payment card networks. * The financial viability of smaller financial institutions, “especially credit unions."
The CFA letter did criticize the current interchange fee system, for instance saying there is poor competition among payments networks, and alleging hidden interchange pricing and cross-subsidies being paid by low and moderate income (LMI) consumers who generally don't use debit cards to the more affluent ones who do. The comment period on the Fed interchange rule ended Tuesday and the agency received more than 4,000 communications from interested parties, including CUNA, state leagues, and credit unions. News stories have characterized the letters as predominately negative. CUNA, noting a myriad of problems with the Fed’s implementation plan, is seeking a delay from the anticipated July implementation date so Congress can “stop, study, and start over” on the interchange issue.

CUNA Two-year delay needed for interchange study

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WASHINGTON (2/23/11)—The U.S. Congress intended that small debit card issuers be protected from the rate regulations in the interchange law yet the Federal Reserve Board’s implementation proposal fails to accomplish that goal, the Credit Union National Association (CUNA) said in its comment letter to the Fed filed yesterday. CUNA was commenting on the board’s proposal to implement the interchange provisions of the Dodd-Frank Act. CUNA also said that given the number and nature of the issues unresolved by the proposal, the Fed should work with Congress to delay interchange regulation implementation by up to 24 months to allow more time for discussion and consideration of how the interchange regulations would impact credit unions. CUNA noted that interchange fee regulation is the most significant regulatory issue facing credit unions that offer debit cards, and said that credit unions are concerned about the impact that the interchange proposal could have on their members, debit card programs, and day-to-day operations. The Fed's interchange provisions, which were released for public comment late last year, would cap debit card interchange fees that are paid by merchants to large debit card issuers at no more than twelve cents per transaction. By law, issuers with under $10 billion in assets are entitled to be exempted from the interchange fee rate setting provisions. The deadline for public comment on the interchange changes passed yesterday, and the Fed received comments from more than 4,000 stakeholders, including credit unions. Dodd-Frank directs the Fed to issue a final rule by April 21. If approved, the rule would become effective in July, without the delay that has been urged by CUNA and others. Although CUNA strongly backs an implementation delay, in its absence CUNA urged the board to made substantial changes in the proposal, which CUNA said would not withstand judicial review as issued for comments. Among those changes, CUNA recommended the Fed include provisions to implement the statutory small issuer exemption. CUNA also advocated that the Fed replace its proposed interchange fee rate caps, which were not required by Congress. They should be replaced with standards for assessing the “reasonableness and proportionality of interchange fees, which Congress require. CUNA also suggested amending routing provisions and ensuring that debit card issuers would not have to belong to more than two independent payment card networks. CUNA also joined its many Electronic Payments Coalition (EPC) colleagues in a joint comment letter that urged the Fed to fundamentally revise its proposed rule on debit card interchange fees. The EPC comment letter noted that the new interchange fees, which would be determined by the Fed’s rule and imposed on financial institutions, would be 80% below current interchange fees. Frank Michael, who appeared before the House Financial Services Committee last week on behalf of CUNA and his $18 million-asset credit union, Stockton, Calif.-based Allied CU, said that the interchange changes could mean increasing members' existing debit card fees or introducing new fees and lowering deposit rates. Michael added that the interchange regulations could harm low-income consumers by restricting their access to free checking accounts. Fed Chairman Ben Bernanke, during last week’s Senate Banking Committee hearing, said that the interchange fee regulation exemption included in the Dodd-Frank Act for credit unions and small institutions with under $10 billion in assets may not be effective in the marketplace, and admitted that there may be no way to ensure that small issuers are exempt from new interchange fee rules. Federal Deposit Insurance Corporation Chairman Sheila Bair speculated that the interchange changes could harm small financial institutions far more than they would help merchants. Sens. Charles Grassley (R-Iowa) and Tom Harkin (D-Iowa) in a Tuesday letter to the Fed urged the regulator to ensure that the small institution exemption works as intended. Several lawmakers also have questioned whether the Fed had taken the time needed to consider the impact that the interchange changes could have on credit unions and other small issuers. Fed Governor Sarah Bloom Raskin in House testimony last Thursday said that the Fed would delay its rulemaking process if directed to do so by Congress. For the CUNA and EPC comment letters, use the resource links.

NCUA should detail added low income info says CUNA

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WASHINGTON (2/23/11)--The National Credit Union Administration’s proposed changes to the low income credit union application process could be improved if the agency provided credit unions with a more detailed explanation of what should be covered in a credit union’s narrative and supporting materials, the Credit Union National Association (CUNA) said in a Tuesday comment letter. This explanation could be provided through a letter to credit unions, CUNA suggested. The NCUA proposal would permit federal credit unions to use "statistically valid" random samples of member income data to prove their low-income status to the agency. That member income data could be drawn from loan files or surveys. Credit unions would also include an analysis of these member data samples along with their applications. This is an alternative to the current approach, which uses the agency’s geocoding software. Current NCUA regulations require a credit union to show actual income data from a minimum of 50% of its membership, plus one additional credit union member as an alternative basis for qualifying as low-income. Under the proposal, NCUA would continue to use its geocoding software to determine a credit union’s low-income status; the software uses census data to determine the average income of a membership area. However, for credit unions that do not qualify as low-income according to the software, the proposal would provide them with the alternative option of providing sample member income data. CUNA said that it approved of the majority of the NCUA's plans, and added that including a timeframe for the NCUA to review submissions could be very useful to the review process and to the credit unions seeking NCUA’s decision. However, the timeframe should be both sufficient for NCUA to undertake a reasonable review and short enough to be responsive to the credit union, CUNA said.

Warren charts next CARD Act moves at CFPB meeting

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WASHINGTON (2/23/11)--Though the Credit Card Accountability Responsibility and Disclosure (CARD) Act has brought “major changes” to the way the credit card industry operates, Consumer Financial Protection Bureau (CFPB) architect Elizabeth Warren said that there is still substantial work to be done.
Click to view larger image Elizabeth Warren addresses attendees at the CFPB's Tuesday CARD Act conference. Warren has said the CFPB will work to reduce the regulatory burdens faced by credit unions. (U.S. Treasury photo)
Hosting a conference on the anniversary of the CARD Act, Warren noted that examining its regulatory approach and determining how to “improve markets without an overreliance on rules” would be “the next challenge” for the CFPB. CFPB staff will next begin work on “further clarifying price and risk and making it easier for consumers to make direct product comparisons,” Warren added. The Credit Union National Association’s (CUNA) Senior Assistant General Counsel Michael Edwards was one of many finance industry representatives at the CFPB conference. Edwards following the meeting said that CUNA looks forward to working with the CFPB and other stakeholders on making clear credit unions’ concerns about the impact of the CARD Act and improving government policy on this issue. Representatives from Affinity Plus FCU, Virginia Credit Union, and other credit unions were also present. The CFPB will take over a number of regulatory roles from the Federal Reserve and other agencies on July 21. The National Credit Union Administration (NCUA), however, will remain mostly independent, and credit unions holding under $10 billion in assets will not be examined by the CFPB. CUNA has outlined credit union CARD Act concerns, and the credit union point of view on other financial issues, during recent meetings with the CFPB and other Treasury officials, and Warren has recently said that the CFPB will work to reduce some regulatory burdens faced by credit unions and other financial institutions and will review the impact of its own rules on credit unions.

Inside Washington (02/22/2011)

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* WASHINGTON (2/23/11)--The Federal Reserve Board and Office of the Comptroller of the Currency (OCC) are seeking dismissal of TCF Financial Corp.’s lawsuit to block implementation of the Durbin amendment. In a motion filed Friday in U.S. District Court for South Dakota, the Fed and OCC moved for dismissal because of TCF’s failure to “state a claim upon which relief can be granted” and lack of subject matter jurisdiction (American Banker Feb. 22). In its lawsuit, filed in October, TCF seeks to stop implementation of the Dodd-Frank Act’s Durbin amendment, under which the Fed set interchange rates in proportion to issuers’ costs. In its memorandum to dismiss the lawsuit, the Federal Reserve said TCF failed to identify any statute, regulation or contract that guarantees the bank should receive the current level of debit interchange it receives … * WASHINGTON (2/23/11)--The permanent headquarters of the Consumer Financial Protection Bureau (CFPB) will be located across the street from the White House at 1700 G Street NW in Washington, D.C., the Treasury Department announced last week. The building will contain about 300,000 useable square feet. Before the CFPB moves in, major renovations are needed to use space more efficiently and to update the building to current energy and environmental standards. Although planning is still in its early stages, the building will include a first floor that is open for regular educational programs, and will include interactive kiosks and 21st century learning centers …

SARs advisory target financial abuse of elderly

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VIENNA, Va. (2/23/11)--Credit unions and other financial institutions often can play a key role in uncovering instances of financial exploitation of the elderly, and the Financial Crimes Enforcement Network (FinCEN) Tuesday released an advisory on filing Suspicious Activity Reports (SARs) on this type of elder abuse. FinCEN noted an “upward trend” of federal financial institutions filing SARs to report suspected financial exploitation of elderly members or customers, and the agency said that trend is consistent with increased attention the problem is receiving on the state level as well. The new FinCEN advisory contains examples of behavior that should send up "red flags" of concern. The “red flags” are based on activity identified by various state and federal agencies and, FinCEN said, provide a “common narrative” that will assist law enforcement in “better identifying suspected cases of financial exploitation of the elderly reported in SARs.” The warning sign can include erratic or unusual banking transactions, or changes in banking patterns, such as:
* Frequent large withdrawals, including daily maximum currency withdrawals from an ATM; * Sudden Non-Sufficient Fund activity; * Uncharacteristic nonpayment for services, which may indicate a loss of funds or access to funds; * Debit transactions that are inconsistent for the elder; * Uncharacteristic attempts to wire large sums of money; or, * Closing of certificate or other accounts without regard to penalties.
Certain interactions with members or customers, or their caregivers, can also set off alarms. These suspicious behaviors can include:
* A caregiver or other individual shows excessive interest in the elder's finances or assets, does not allow the elder to speak for himself, or is reluctant to leave the elder's side during conversations; *The elder shows an unusual degree of fear or submissiveness toward a caregiver, or expresses a fear of eviction or nursing home placement if money is not given to a caretaker; * The financial institution is unable to speak directly with the elder, despite repeated attempts to contact him or her; *A new caretaker, relative, or friend suddenly begins conducting financial transactions on behalf of the elder without proper documentation; * The customer moves away from existing relationships and toward new associations with other "friends" or strangers; * The elderly individual's financial management changes suddenly, such as through a change of power of attorney to a different family member or a new individual; or, * The elderly customer lacks knowledge about his or her financial status, or shows a sudden reluctance to discuss financial matters.
The FinCEN advisory noted that elder abuse, including financial exploitation, is generally reported and investigated at a local level, with Adult Protective Services, District Attorney's offices, sheriff's offices, and police departments taking key roles. “We emphasize that filers should continue to report all forms of elder abuse according to institutional policies and the requirements of state and local laws and regulations, where applicable,” FinCEN said. The advisory adds that financial institutions may wish to consider how their anti-money laundering programs can complement their policies on reporting elder financial exploitation at the local and state level. Financial institutions with questions or comments regarding the FinCEN elder-abuse advisory may contact FinCEN's regulatory Helpline at 800-949-2732. Use resource link for FinCEN advisory.

Two added to power-packed GAC lineup

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WASHINGTON (2/22/11)--Two new names have been added to the power-packed Credit Union National Association (CUNA) 2011 Governmental Affairs Conference (GAC) lineup--House credit union champion Rep. Ed Perlmutter (D-Colo) and Treasury Domestic Finance Undersecretary Jeffrey Goldstein. Perlmutter is a member of the House Financial Services Committee and has previously spoken at the GAC. He has publicly backed lifting the cap on credit union member business lending, and was one of several legislators that maintained their seat for the 112th Congress with the help of credit union-backed mailing campaigns. Treasury Domestic Finance Undersecretary Jeffrey Goldstein has also been added to the GAC lineup. Goldstein’s department addresses several vital credit union issues. House Speaker Rep. John Boehner (R-Ohio), House Majority Whip Kevin McCarthy (R-Calif.), House Financial Services Committee Chairman Rep. Spencer Bachus (R-Ala.), finance committee member Rep. Ed Royce (R-Calif.) and Senate Banking Committee member Sen. Jon Tester (D-Mont.) are also among the long list of legislative luminaries on the GAC lineup. Rep. Shelley Moore Capito (R-W.Va.), Sen. Roy Blunt (R-Mo.), Sen. Mike Crapo (R-Idaho), and Reps. Barney Frank (D-Mass.), Debbie Wasserman Schultz (D-Fla.), Sen. Mark Udall (D-Colo.) and Steve Stivers (R-Ohio) are also set to speak at the GAC. Consumer Financial Protection Bureau architect Elizabeth Warren and co-authors of The New York Times No. 1 best-seller "Game Change" Mark Halperin and John Heilemann are also scheduled to address GAC attendees. The GAC will also feature keynote speeches from actor and Children's Miracle Network Hospitals co-founder John Schneider and "Miracle on the Hudson" pilot Captain Chesley B. "Sully" Sullenberger III. The GAC will take place in Washington, D.C. from Feb. 28 until March 3. To register for the 2011 GAC, use the resource link.

Two added to power-packed GAC lineup (02/21/2011)

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WASHINGTON (2/22/11)--Two new names have been added to the power-packed Credit Union National Association (CUNA) 2011 Governmental Affairs Conference (GAC) lineup--House credit union champion Rep. Ed Perlmutter (D-Colo) and Treasury Domestic Finance Undersecretary Jeffrey Goldstein. Perlmutter is a member of the House Financial Services Committee and has previously spoken at the GAC. He has publicly backed lifting the cap on credit union member business lending, and was one of several legislators that maintained their seat for the 112th Congress with the help of credit union-backed mailing campaigns. Treasury Domestic Finance Undersecretary Jeffrey Goldstein has also been added to the GAC lineup. Goldstein’s department addresses several vital credit union issues. House Speaker Rep. John Boehner (R-Ohio), House Majority Whip Kevin McCarthy (R-Calif.), House Financial Services Committee Chairman Rep. Spencer Bachus (R-Ala.), finance committee member Rep. Ed Royce (R-Calif.) and Senate Banking Committee member Sen. Jon Tester (D-Mont.) are also among the long list of legislative luminaries on the GAC lineup. Rep. Shelley Moore Capito (R-W.Va.), Sen. Roy Blunt (R-Mo.), Sen. Mike Crapo (R-Idaho), and Reps. Barney Frank (D-Mass.), Debbie Wasserman Schultz (D-Fla.), Sen. Mark Udall (D-Colo.) and Steve Stivers (R-Ohio) are also set to speak at the GAC. Consumer Financial Protection Bureau architect Elizabeth Warren and co-authors of The New York Times No. 1 best-seller "Game Change" Mark Halperin and John Heilemann are also scheduled to address GAC attendees. The GAC will also feature keynote speeches from actor and Children's Miracle Network Hospitals co-founder John Schneider and "Miracle on the Hudson" pilot Captain Chesley B. "Sully" Sullenberger III. The GAC will take place in Washington, D.C. from Feb. 28 until March 3. To register for the 2011 GAC, use the resource link.

2011 NCUSIF premium not a definite (02/21/2011)

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ALEXANDRIA, Va. (2/22/11)—The National Credit Union Administration said it may not need to assess a National Credit Union Share Insurance Fund (NCUSIF) premium on credit unions in 2011. Credit Union National Association (CUNA) Chief Economist Bill Hampel has predicted that the 2011 NCUSIF premium would total between 5 and 10 basis points (bp). The NCUA’s Office of Examination and Insurance Director Melinda Love during a Thursday NCUA virtual town hall said that although the agency must ensure that it can still handle its cash management needs, it is delaying the NCUSIF assessment for as long as it possibly can. The NCUSIF premium, if assessed, will be released in the fall, she added. The NCUA last week reported that the NCUSIF’s reserve balance stood at over $1.26 billion. (See related story: The agency transferred $54.8 million from the NCUSIF to its reserves as an insurance loss expense late last year. The NCUA will assess a Temporary Corporate Credit Union Stabilization Fund (TCCUSF) premium this summer, Love said. Hampel said that credit unions would be charged around 9 bp in assessments to cover the cost of corporate stabilization. The NCUA has predicted a 2011 TCCUSF assessment of 20 to 25 bp. NCUA Deputy Executive Director Larry Fazio during the town hall added that the agency would need to charge between $7 billion and $9 billion in future assessments to stabilize the corporates. Fazio said that he could not predict how long the NCUA would need to continue charging TCCUSF assessments. The NCUA late last year proposed implementing "voluntary" TCCUSF assessments to privately insured credit unions and non-credit unions, such as credit union leagues, that are members of a corporate. CUNA urged the NCUA to further consider this proposal before it moves forward. The NCUA was recently given the authority to make TCCUSF payments without borrowing from the U.S. Treasury.

2011 NCUSIF premium not a definite

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ALEXANDRIA, Va. (2/22/11)—The National Credit Union Administration said it may not need to assess a National Credit Union Share Insurance Fund (NCUSIF) premium on credit unions in 2011. Credit Union National Association (CUNA) Chief Economist Bill Hampel has predicted that the 2011 NCUSIF premium would total between 5 and 10 basis points (bp). The NCUA’s Office of Examination and Insurance Director Melinda Love during a Thursday NCUA virtual town hall said that although the agency must ensure that it can still handle its cash management needs, it is delaying the NCUSIF assessment for as long as it possibly can. The NCUSIF premium, if assessed, will be released in the fall, she added. The NCUA last week reported that the NCUSIF’s reserve balance stood at over $1.26 billion. (See related story: The agency transferred $54.8 million from the NCUSIF to its reserves as an insurance loss expense late last year. The NCUA will assess a Temporary Corporate Credit Union Stabilization Fund (TCCUSF) premium this summer, Love said. Hampel said that credit unions would be charged around 9 bp in assessments to cover the cost of corporate stabilization. The NCUA has predicted a 2011 TCCUSF assessment of 20 to 25 bp. NCUA Deputy Executive Director Larry Fazio during the town hall added that the agency would need to charge between $7 billion and $9 billion in future assessments to stabilize the corporates. Fazio said that he could not predict how long the NCUA would need to continue charging TCCUSF assessments. The NCUA late last year proposed implementing "voluntary" TCCUSF assessments to privately insured credit unions and non-credit unions, such as credit union leagues, that are members of a corporate. CUNA urged the NCUA to further consider this proposal before it moves forward. The NCUA was recently given the authority to make TCCUSF payments without borrowing from the U.S. Treasury.

Matz encourages CU participation in America Saves

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WASHINGTON (2/22/11)--National Credit Union Administration (NCUA) Chairman Debbie Matz came out ahead of America Saves and Military Saves Week and encouraged credit unions to participate in this week’s ongoing national savings campaign. America Saves/Military Saves Week began on Sunday and will run through Feb. 27. The motto for the 2011 program is simple: "Start Small, Think Big." Matz said that the week gives credit unions the perfect opportunity to highlight the importance of financial education, access to affordable financial services, and saving. More than 1,800 organizations in 47 states are participating in the 2011 program, which will emphasize the benefits of saving automatically through automated contributions to employer-sponsored retirement plans, signing up for regular transfers from checking to savings accounts and taking advantage of new rules that allow tax refunds to directly purchase U.S. savings bonds. The NCUA said that credit unions can partner with local America Saves campaigns to offer a number of resources, including motivational workshops, posters, and brochures. Participating credit unions can set their own goals for increasing the number of new accounts and deposits and can work to increase member participation in automatic savings, IRA share, certificate share, and other savings and investment accounts, the NCUA added. America Saves Week is coordinated by the nonprofit Consumer Federation of America (CFA) in partnership with the American Savings Education Council. The CFA also coordinates Military Saves Week, which lists 33 credit unions, including a number of defense credit unions, among its participants. Military saves week aims to “persuade, motivate, and encourage military families to save money every month, and to convince leaders and organizations to be aggressive in promoting automatic savings,” the CFA said. For the NCUA release and more information on the America Saves and the Military Saves programs, use the resource links.

Matz encourages CU participation in America Saves (02/21/2011)

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WASHINGTON (2/22/11)--National Credit Union Administration (NCUA) Chairman Debbie Matz came out ahead of America Saves and Military Saves Week and encouraged credit unions to participate in this week’s ongoing national savings campaign. America Saves/Military Saves Week began on Sunday and will run through Feb. 27. The motto for the 2011 program is simple: "Start Small, Think Big." Matz said that the week gives credit unions the perfect opportunity to highlight the importance of financial education, access to affordable financial services, and saving. More than 1,800 organizations in 47 states are participating in the 2011 program, which will emphasize the benefits of saving automatically through automated contributions to employer-sponsored retirement plans, signing up for regular transfers from checking to savings accounts and taking advantage of new rules that allow tax refunds to directly purchase U.S. savings bonds. The NCUA said that credit unions can partner with local America Saves campaigns to offer a number of resources, including motivational workshops, posters, and brochures. Participating credit unions can set their own goals for increasing the number of new accounts and deposits and can work to increase member participation in automatic savings, IRA share, certificate share, and other savings and investment accounts, the NCUA added. America Saves Week is coordinated by the nonprofit Consumer Federation of America (CFA) in partnership with the American Savings Education Council. The CFA also coordinates Military Saves Week, which lists 33 credit unions, including a number of defense credit unions, among its participants. Military saves week aims to “persuade, motivate, and encourage military families to save money every month, and to convince leaders and organizations to be aggressive in promoting automatic savings,” the CFA said. For the NCUA release and more information on the America Saves and the Military Saves programs, use the resource links.

Jan. insurance losses well below 54M estimate

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ALEXANDRIA, Va. (2/22/11)--The National Credit Union Administration (NCUA) last week reported that it did not write off any of the National Credit Union Share Insurance Fund’s (NCUSIF) assets as insurance loss expenses in January. The NCUA had budgeted for as much as $54.2 million in insurance fund losses. Overall, the NCUSIF gained $11.4 million during the month due to $19.4 million in investment income. The NCUSIF was budgeted to lose $46.7 million during January, but only lost $8 million in operating expenses during that month. NCUA Chief Financial Officer Mary Ann Woodson during her monthly report on the status of NCUA insurance funds said that the NCUSIF’s equity ratio stood at 1.28% as of January 31, 2010. NCUSIF reserves stood at $1.2 billion, and only $181.4 million of these reserves were allocated for expected losses related to specific, troubled natural-person credit unions. (See related story: 2011 NCUSIF premium not a definite) Woodson said that there are currently 369 CAMEL 4 and 5 credit unions, which represent 5.0% of insured shares, or $38.2 billion. She also noted that there are 1,819 CAMEL 3 credit unions, which represent 17.8% of insured shares, or $136.5 billion. Combined, insured shares in CAMEL 3, 4, and 5 credit unions represent approximately 23% of total insured shares, Woodson added. The Temporary Corporate Credit Union Stabilization Fund (TCCUSF) total liabilities and net position stood at $377.1 million as of January 31, Woodson added.

Jan. insurance losses well below 54M estimate(1)

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ALEXANDRIA, Va. (2/22/11)--The National Credit Union Administration (NCUA) last week reported that it did not write off any of the National Credit Union Share Insurance Fund’s (NCUSIF) assets as insurance loss expenses in January. The NCUA had budgeted for as much as $54.2 million in insurance fund losses. Overall, the NCUSIF gained $11.4 million during the month due to $19.4 million in investment income. The NCUSIF was budgeted to lose $46.7 million during January, but only lost $8 million in operating expenses during that month. NCUA Chief Financial Officer Mary Ann Woodson during her monthly report on the status of NCUA insurance funds said that the NCUSIF’s equity ratio stood at 1.28% as of January 31, 2010. NCUSIF reserves stood at $1.2 billion, and only $181.4 million of these reserves were allocated for expected losses related to specific, troubled natural-person credit unions. (See related story: 2011 NCUSIF premium not a definite) Woodson said that there are currently 369 CAMEL 4 and 5 credit unions, which represent 5.0% of insured shares, or $38.2 billion. She also noted that there are 1,819 CAMEL 3 credit unions, which represent 17.8% of insured shares, or $136.5 billion. Combined, insured shares in CAMEL 3, 4, and 5 credit unions represent approximately 23% of total insured shares, Woodson added. The Temporary Corporate Credit Union Stabilization Fund (TCCUSF) total liabilities and net position stood at $377.1 million as of January 31, Woodson added.

Inside Washington (02/21/2011)

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* WASHINGTON (2/22/11)--The U.S. Department of the Treasury announced the hiring of senior leadership for the Consumer Financial Protection Bureau (CFPB) implementation team. Elizabeth Vale will serve as assistant director for community banks and credit unions. Previously, Vale served as the White House business liaison and executive director of the White House business council. Prior to her career in public service, Vale was a managing director at Morgan Stanley. Also, Raj Date has been named associate director for research, markets and regulations. Patricia McCoy will head the mortgage and home equity markets team and Corey Stone will lead the credit information markets team. Zixta Martinez will serve as assistant director for community affairs.

Inside Washington (02/21/2011)

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* WASHINGTON (2/22/11)--The U.S. Department of the Treasury announced the hiring of senior leadership for the Consumer Financial Protection Bureau (CFPB) implementation team. Elizabeth Vale will serve as assistant director for community banks and credit unions. Previously, Vale served as the White House business liaison and executive director of the White House business council. Prior to her career in public service, Vale was a managing director at Morgan Stanley. Also, Raj Date has been named associate director for research, markets and regulations. Patricia McCoy will head the mortgage and home equity markets team and Corey Stone will lead the credit information markets team. Zixta Martinez will serve as assistant director for community affairs.

Dodd-Frank among House Fin. Services March hearing topics

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WASHINGTON (2/22/11)--A March 2 subcommittee hearing on the impact of the Dodd-Frank Act on smaller financial institutions is among the items on a just-released, tentative House Financial Services Committee hearing schedule for March. The financial institutions subcommittee hearing will follow by two weeks a Senate Banking Committee hearing that also had Dodd-Frank as its subject. That panel looked at regulators’ implementation progress at the half-year mark, and substantial concern was expressed by lawmakers regarding the Federal Reserve Board’s proposed implementation of a Dodd-Frank cap on interchange fees. Concurrently, CUNA testified at a House Financial Services Committee hearing on implications of the Fed plan and urged Congress to stop, study, and start over on the interchange issues. At both the House and Senate hearings, bi-partisan concern was expressed over the Fed plan in two key areas of credit union concerns: One is potential costs to consumers if card issuer costs are driven up by the government cap on fees merchants pay for using the card system; the other is whether a small-issuer exemption contained in the law will truly protect small-issuers in practice. Also, on the House Financial Services tentative March hearing schedule (times noted are Eastern Time):
* March 1: Full committee hearing on government-sponsored enterprise reform at 10 a.m. (ET); full committee hearing on the fiscal year U.S> Housing and Urban Development budget at 2 p.m. ; * March 2: Full committee hearing to receive the Federal Reserve Board’s semi-annual monetary policy report to the U.S. Congress, as required under the Humphrey-Hawkins Act, at 10 a.m. ; Financial Institutions Subcommittee hearing on Dodd-Frank Act impact at 2 p.m.; * March 3: Full committee mark up of bills to be determined, at 10 a.m.; * March 9: International Monetary Policy Subcommittee hearing on the Export-Import Bank at 10 a.m.; Insurance, Housing and Community Opportunity Subcommittee hearing on reauthorization of the National Flood Insurance Program at 2 p.m.; * March 10: Capital Markets Subcommittee hearing on the SEC’s budget at 10 a.m.; * March 11: Capital Markets Subcommittee hearing on covered bonds at 10 a.m.; * March 15: Full committee mark up of budget views and estimates at 10 a.m.; * March 16: Capital Markets Subcommittee hearing on the Risk Retention Securitization Rule at 10 a.m.; Financial Institutions Subcommittee hearing on oversight of the Consumer Financial Protection Bureau at 2 p.m.; and * March 17: Domestic Monetary Policy Subcommittee hearing on monetary policy and rising prices at 10 a.m..

Dodd-Frank among House Fin. Services March hearing topics(1)

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WASHINGTON (2/22/11)--A March 2 subcommittee hearing on the impact of the Dodd-Frank Act on smaller financial institutions is among the items on a just-released, tentative House Financial Services Committee hearing schedule for March. The financial institutions subcommittee hearing will follow by two weeks a Senate Banking Committee hearing that also had Dodd-Frank as its subject. That panel looked at regulators’ implementation progress at the half-year mark, and substantial concern was expressed by lawmakers regarding the Federal Reserve Board’s proposed implementation of a Dodd-Frank cap on interchange fees. Concurrently, CUNA testified at a House Financial Services Committee hearing on implications of the Fed plan and urged Congress to stop, study, and start over on the interchange issues. At both the House and Senate hearings, bi-partisan concern was expressed over the Fed plan in two key areas of credit union concerns: One is potential costs to consumers if card issuer costs are driven up by the government cap on fees merchants pay for using the card system; the other is whether a small-issuer exemption contained in the law will truly protect small-issuers in practice. Also, on the House Financial Services tentative March hearing schedule (times noted are Eastern Time):
* March 1: Full committee hearing on government-sponsored enterprise reform at 10 a.m. (ET); full committee hearing on the fiscal year U.S> Housing and Urban Development budget at 2 p.m. ; * March 2: Full committee hearing to receive the Federal Reserve Board’s semi-annual monetary policy report to the U.S. Congress, as required under the Humphrey-Hawkins Act, at 10 a.m. ; Financial Institutions Subcommittee hearing on Dodd-Frank Act impact at 2 p.m.; * March 3: Full committee mark up of bills to be determined, at 10 a.m.; * March 9: International Monetary Policy Subcommittee hearing on the Export-Import Bank at 10 a.m.; Insurance, Housing and Community Opportunity Subcommittee hearing on reauthorization of the National Flood Insurance Program at 2 p.m.; * March 10: Capital Markets Subcommittee hearing on the SEC’s budget at 10 a.m.; * March 11: Capital Markets Subcommittee hearing on covered bonds at 10 a.m.; * March 15: Full committee mark up of budget views and estimates at 10 a.m.; * March 16: Capital Markets Subcommittee hearing on the Risk Retention Securitization Rule at 10 a.m.; Financial Institutions Subcommittee hearing on oversight of the Consumer Financial Protection Bureau at 2 p.m.; and * March 17: Domestic Monetary Policy Subcommittee hearing on monetary policy and rising prices at 10 a.m..

House hearing hints of interchange rule delay

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WASHINGTON (2/18/11)—Several legislators called for a delay of implementation of the Federal Reserve’s interchange fee proposal during a Thursday House financial institutions and consumer credit subcommittee hearing. Also prompting legislator concern about the impact on small issuers were comments from a Fed governor and earlier remarks by the Fed’s chairman, as well as testimony from the Credit Union National Association’s (CUNA) witness.
Click to view larger image Allied CU of Stockton, Calif., President/CEO Frank Michael urges lawmakers to stop, study and start over with the interchange rulemaking process. Several lawmakers also promoted delaying interchange regulation implementation during the House hearing. (CUNA Photo)
Fed Governor Sarah Bloom Raskin in testimony delivered early in the day said that the Fed would delay its rulemaking process if directed to do so by Congress. Raskin also noted that portions of the Dodd-Frank Act that instruct the Fed to ensure that interchange fees are “reasonable and proportional” to the costs of maintaining a debit card system were difficult for the Fed to interpret. The hearing also featured the testimony of Allied CU of Stockton, Calif., President/CEO Frank Michael. Michael, appearing on behalf of both his credit union and CUNA, reiterated CUNA’s urging for Congress to stop the implementation of the interchange standards and study the potential impact that the changes would have on credit unions and consumers. Congress could then restart the process of writing these potential regulations, Michael said. The Fed's interchange provisions could cap debit card interchange fees that are paid by merchants to card issuers at as little as seven cents per transaction. Issuers with under $10 billion in assets would be exempt from the interchange changes. Lawmakers questioned whether the Fed had been given the time needed to fully consider the impact that these interchange changes could have on financial institutions, merchants, and consumers, and Michael in his testimony noted a recent CUNA survey that found that 91% of CUNA’s member credit unions would be forced to change their current practices if the interchange proposal became law. These changes could mean increasing members’ existing debit card fees or introducing new fees and lowering deposit rates, he said. Michael added that the interchange regulations could harm low-income consumers by restricting their access to free checking accounts. He told committee members that his credit union would lose money on every debit card transaction made by one of its members if the Fed’s interchange proposal stands. “The only real question is how much” his credit union would lose, he added. Michael also questioned whether the Fed proposal would be able to enforce its proposed exemption for credit unions and other small issuers with under $10 billion in assets. Raskin during questioning said that the Fed’s plan to shield small issuers could be “eroded by market forces.” Fed Chairman Ben Bernanke also admitted this possibility in separate Senate testimony delivered on Thursday. (See related story: Senate Banking scrutiny of interchange questions exemption) CUNA President/CEO Bill Cheney said that CUNA was encouraged by the tenor of the hearing, and added that the combined comments of key legislators, regulators and our witness Frank Michael will increase pressure on Congress and the Fed to put on the brakes and rethink their approach. “That certainly will be the message we’ll be reinforcing when 4,000 of our folks are in town for the Governmental Affairs Conference later this month,” he added. The Fed proposal will remain open for public comment until Feb. 22, and, if approved, could come into effect in July.

Senate Banking scrutiny of interchange questions exemption

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WASHINGTON (2/18/11)--Federal Reserve Chairman Ben Bernanke on Thursday said that a planned interchange fee regulation exemption for credit unions and small institutions with under $10 billion in assets may not be effective in the marketplace, and admitted that there may be no way to ensure that small issuers are exempt from new interchange fee rules. The Fed chairman spoke during a Senate Banking Committee hearing on the progress of Dodd-Frank Wall Street Reform Act implementation. Bernanke in his testimony added that merchants could reject more expensive cards that would be offered by credit unions and other small financial institutions, and that debit card issuers may be forced to pass on the costs of debit card systems to their members and customers. Bernanke could not ensure that merchants would pass on their interchange fee savings to their consumers. The Credit Union National Association aired similar concerns in recent meetings with Fed representatives and legislators. Federal Deposit Insurance Corporation (FDIC) Chairman Sheila Bair, who also testified during the hearing, shared many of Bernanke’s views, and speculated that the interchange changes could harm small financial institutions far more than they would help merchants. Bair added that credit union members and community bank customers could replace their current cards with less secure prepaid cards if smaller issuers are forced out of the debit card business. Bair also called for the Fed’s interchange rulemaking process to be delayed. (See related story: House hearing hints of interchange rule delay) Acting Comptroller of the Currency John Walsh said his group is also examining the Federal Reserve’s interchange provisions. Committee Chairman Sen. Tim Johnson (D-S.D.) and Sen. Jon Tester (D-Mont.) also raised concerns on interchange’s impact on credit unions and other small institutions, and Sen. Michael Bennet (D-Colo.) cited practical concerns with the proposed $10 billion interchange exemption. Other committee members offered their own takes on the interchange proposal and financial regulation in general during the hearing:
* Sen. Bob Corker (R-Tenn.) said he did not see how small institutions could not be impacted by the interchange changes, and questioned the fairness of price controls; * Sen. Mike Johanns (R-Neb.) called the Fed’s interchange proposal “draconian."
Sen. Jerry Moran (R-Kan.) said that many financial institutions in his district have complained that they are overburdened by financial regulations, and ranking committee member Sen. Richard Shelby (R-Ala.) said that overall, the amount of work required to implement the Dodd-Frank rules is “staggering.” For video of the Senate hearing, use the resource link.

NCUA takes control of small Pa. CU

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ALEXANDRIA, Va. (2/18/11)-- The National Credit Union Administration (NCUA) assumed control of operations at Greensburg Community FCU, Greensburg, Pa., on Thursday and assured service to its 983 members continues uninterrupted. In its release announcing the action, the NCUA noted that the decision to conserve a credit union enables the institution to continue normal operations with expert management in place correcting previous service and operational weaknesses. The Federal Credit Union Act authorizes the NCUA board to appoint itself conservator when necessary to conserve the assets of a federally insured credit union, protect members’ interests or protect the federal share insurance fund. Greensburg Community members can continue to conduct normal financial transactions--including depositing and accessing funds, make loan payments and use share drafts. Greensburg Community has assets of $2.2 million, and provides financial services to persons who live, work, worship, or go to school in, and business and other legal entities within a radius of three miles of the U.S. Post Office in Greensburg. This is the first federal credit union conservatorship of 2011. There have been two liquidation so far this year.

Inside Washington (02/17/2011)

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* WASHINGTON (2/18/11)--The Federal Reserve’s Consumer Advisory Council will hold its next meeting on March 10. The meeting will take place in Dining Room E, Terrace Level, in the Fed Board’s Martin Building. The session will begin at 9 a.m. ET and is open to the public. For security purposes, anyone planning to attend the meeting should register no later than March 8, by completing the form found online. Time permitting, the council will discuss foreclosure issues, neighborhood stabilization and real-estate owned issues, and proposed rules regarding debit card interchange fees and routing. The Board's notice can be viewed online … * WASHINGTON (2/18/11)--Small businesses facing maturity of commercial mortgages or balloon payments before Dec. 31, 2012, may be able to refinance their mortgage debt with a 504 loan from the U.S. Small Business Administration (SBA) under a new, temporary program announced Thursday. The new refinancing loan is structured like SBA’s traditional 504, with borrowers committing at least 10% equity and working with third-party lending institutions and SBA-approved certified development companies in the standard 50% /40% split. A key feature of the new program is that it does not require an expansion of the business in order to qualify. SBA will begin accepting refinancing applications on Feb. 28. The program, authorized under the Small Business Jobs Act, will be in effect through Sept. 27, 2012. The SBA initially will open the program to businesses with immediate need due to impending balloon payments before Dec. 31, 2012. SBA will revisit the program later and may open it to businesses with balloon payments due after that date or those that can demonstrate strong need in other ways … * WASHINGTON (2/18/11)--A House Financial Services Committee hearing Wednesday on the inconclusive Financial Crisis Inquiry Commission (FCIC) report, like the report itself, was fractured along party lines. Republicans on the House committee criticized the panel for not reaching consensus on its findings (American Banker Feb. 17). But the chairman of the FCIC, Phil Angelides (D-Calif.) defended the report. Only the six Democrats on the 10-member panel supported the findings, which cast blame among regulators, corporate executives and consumers for the crisis. The majority report concluded that human error was to blame. It faulted to some degree virtually every actor, including financial institutions, regulators and investors; products that encouraged unsustainable homeownership levels; the credit bubble; and circumstances like excessive leveraging and risk concentration. But the commission published three reports: one written by the Democratic commissioners, a second written by three Republican commissioners, and a third by the fourth Republican commissioner. Republicans questioned why the commission issued three reports, asking if GOP perspectives had been left out of the process … * WASHINGTON (2/18/11)--Federal banking agencies will level formal enforcement actions against several large servicing companies after finding deficiencies during a regulatory review of mortgage servicer practices, (American Banker Feb. 17). Of the 14 mortgage servicers reviewed by regulators after foreclosure problems surfaced in the media last year, most if not all are expected to be charged. Bank regulators are investigating bank servicers in the wake of revelations about foreclosure-documentation errors at big banks and a stalled application process for many troubled borrowers seeking to modify their mortgages. Though the orders would effectively establish de facto standards for the largest servicers, they are not expected to replace efforts by agencies to issue a formal set of servicing rules. Regulators are still divided on how to set such standards …

Credit rating equivalents proposed under Dodd-Frank

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ALEXANDRIA, Va. (2/18/11)--The National Credit Union Administration (NCUA) adopted a proposal Thursday that would replace or remove references to credit ratings in NCUA’s regulations as specified by a provision in the Dodd-Frank Wall Street Reform Act. The proposal would affect credit rating references for investments, counterparty transactions, as well as other uses of such references. Essentially, the agency proposal would replace references to credit ratings such as “AA” with equivalent terms like “very strong capacity to meet its financial commitments.” The proposal would also revise the NCUA’s liquidation rules (12 C.F.R. part 709) to state that the agency will use its statutory power to repudiate contracts with respect to transactions involving investments transferred by a failed credit union. Use the resource link below to see the NCUA proposal.

First updates in 30 years OKd for Corp. CU charter policy

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ALEXANDRIA, Va. (2/18/11)--For the first time in 30 years, the National Credit Union Administration approved updates to its chartering rules for corporate credit unions. At its open board meeting Thursday, the NCUA adopted a final Interpretive Ruling and Policy Statement (IRPS) that not only describes the requirements for charter applicants, it also includes the NCUA’s standards for reviewing the feasibility of a new corporate charter. Under the regulator’s interpretation, effective 30 days after publication in the Federal Register, a corporate charter application will need to be submitted by a group of at least seven people that represent different natural person credit unions. The application must satisfy the NCUA that the new institution would be viable. That assessment would be based on assessment of the proposed field of membership and other factors. It must also be determined that the new corporate would provide needed services to its members. The NCUA Office of Corporate Credit Unions (OCCU) will conduct an independent investigation of the corporate credit union’s charter application to assess economic and long-term viability. While the final IRPS largely reflects the proposed guidance issued by the NCUA in September, there were a few changes made based on comments submitted by the Credit Union National Association and others. The changes included:
* Clarification on the timeframe for a newly chartered corporate credit union to meet certain capital requirements; * Assurance from the agency in the rule’s supplementary information that the mandatory Letter of Understanding and Agreement required for a new corporate charter will take into consideration the future success of the corporate; and * Adding the right of charter applicants to petition the NCUA directly for a vote on an application where either: the OCCU director determined the application does not merit approval, or the applicants believe the OCCU has moved too slowly on the application.
Use the resource links below to view the NCUA IRPS and CUNA’s complete comment on the proposed statement.

FCU loan-rate cap continues at 18

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ALEXANDRIA, Va. (2/18/11)--Acknowledging that its action takes place at “an interesting time for credit unions,” the National Credit Union Administration (NCUA) voted to continue the federal credit union (FCU) loan interest-rate ceiling at 18%. Without the regulators’ action Thursday, the rate cap would have reverted to 15% as of March 11. The Credit Union National Association encouraged the agency to maintain the higher ceiling. Fifteen percent is the default ceiling set for FCUs by the 1980 Depository Institutions Deregulation and Monetary Control Act. If the NCUA approves a higher cap, as is allowed by that law, the agency is required to re-visit the rate ceiling within 18 months. An NCUA document recommending the continuation noted that trends in money market rates, which are starting to increase again, in part justifies the higher ceiling. Moreover, it added, a significant number of FCUs “depend on loans with interest rates that would be affected by any reduction in the ceiling.” “Indeed, as of (the third quarter of 2010), 122 FCUs had volumes of 15-18% loans exceeding 10% of assets,” the NCUA noted.

NCUA proposes enhanced incentive-compensation rules

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ALEXANDRIA, Va. (2/18/11)--The National Credit Union Administration (NCUA) Thursday issued for a 45-day comment period a plan that would require enhanced disclosure and reporting requirements for compensation arrangements, as well as prohibit incentive-based payment plans that can serve to encourage “inappropriate risk taking.”
Click to view larger image At the NCUA meeting Thursday, board members consider new rules for incentive-based compensation as required by the Dodd-Frank Wall Street Reform Act. In the foreground from left to right are board member Michael Fryzel, Chairman Debbie Matz, and board member Gigi Hyland. (CUNA Photo)
The NCUA proposal seeks to implement a provision of the Dodd-Frank Wall Street Reform Act, which requires all the federal financial institutions regulators to adopt a rule to weed out incentive-based compensation practices that could expose an institution to great losses. Dodd-Frank defines incentive-based compensation to mean any variable compensation, in any form, that serves as an incentive for performance. Under the NCUA proposal, all credit unions with more than $1 billion in assets would have to disclose executive incentive plans annually. There are further requirements for credit unions with greater than $10 billion in assets, termed “larger covered financial institutions” by the NCUA. Larger-covered financial institutions must meet certain provisions on deferral of incentive-based compensation for executive officers. For instance, they must require a 50% deferral of all cash bonuses for at least three years. At the end of that period, the credit union must adjust the bonus to reflect any losses suffered by the institution. Credit union above $10 billion-in-assets also must identify additional personnel, other than executive officers, “who have the ability to expose the institution to possible losses that are substantial.” During the NCUA comment period, credit unions could conceivably focus on the lack of equal treatment the NCUA rule poses for credit unions compared to banks. While the NCUA proposes to apply the deferral rules to $10-billion institutions, a Federal Deposit Insurance Corp. rule for banks, unveiled earlier this month, proposes to apply the stricter rules to institutions of $50 billion in assets or greater. Credit Union National Association General Counsel Eric Richard said of the discrepancy, “This is an area that the NCUA needs to consider further. Credit unions are not known to have engaged in the kind of sketchy incentive-compensation practices that the Dodd-Frank law seeks to address. “Does it make sense then to hold credit unions, which represent greater adherence to safe and sound practice, to more stringent standards than the perpetrators of the problem?” The NCUA, in its proposal document, maintained that the rule’s burden would be minimized by granting “covered financial institutions” flexibility to use “a variety of means to mitigate the risks posed by their current incentive-based compensation programs.” For more on the proposed rule, use the resource link below.

CUNA to attend CFPB CARD Act conference

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WASHINGTON (2/17/11)—The Credit Union National Association (CUNA) will be one of many groups discussing credit card interest rates, re-pricing, and other issues during an upcoming Consumer Financial Protection Bureau (CFPB)-led conference on the Credit Card Accountability, Responsibility and Disclosure (CARD) Act. The conference will take place next week at the U.S. Treasury offices in Washington D.C. and will “bring together academics, industry leaders, consumer advocates, and voices from within government,” CFPB architect Elizabeth Warren said. The CFPB will take over a number of regulatory roles from the Federal Reserve and other agencies on July 21. The National Credit Union Administration (NCUA), however, will remain mostly independent, and credit unions holding under $10 billion in assets will not be examined by the CFPB. Warren in a speech delivered earlier this week said that the CFPB would use the meeting to gain insight into the real world impact of the CARD Act. Meeting participants will “look at the data from multiple directions” and “analyze how the industry has reacted and how consumers are responding” to the CARD Act, Warren said. This information will help the CFPB understand how it can “make credit markets work better,” Warren added. The CFPB had not released a list of summit guests at press time. The CARD Act prohibits and restricts a number of credit card practices and imposes limits on certain fees. CUNA has outlined credit union CARD Act concerns, and the credit union point of view on other financial issues, during recent meetings with the CFPB and other Treasury officials. Warren in a statement released earlier this month said that the CFPB will work to reduce some regulatory burdens faced by credit unions and other financial institutions and will review the impact of its own rules on credit unions. CUNA also wrote the Fed earlier this year to express concern at portions of the CARD Act that would require creditors to consider only an individual credit applicant's ability to make payments, and not other household income, when determining an individual's creditworthiness. For the comment letter and more on the CARD Act, use the resource links.

NCUA seeks small-issuer interchange exemptions

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ALEXANDRIA, Va. (2/17/11)--The Federal Reserve should add “meaningful exemptions for smaller card issuers” to its current interchange fee proposal, National Credit Union Administration (NCUA) Chairman Debbie Matz said in a letter to Fed Chairman Ben Bernanke. Credit Union National Association (CUNA) President/CEO Bill Cheney called Matz’s comments “a good step” into the interchange fee discussion. Matz in the letter also called on the Fed to reflect portions of the Dodd-Frank Wall Street Reform Act that address small institution pricing issues. Matz added that Dodd-Frank explicitly exempts card issuers with total assets under $10 billion from any interchange fee regulation, and said that credit unions should be exempted from requirements related to network exclusivity and routing restrictions as well. Failure to exempt credit unions from these requirements “could significantly increase both fixed and variable costs for these small institutions, resulting in an inability to remain competitive with larger card issuers,” Matz said. Cheney also noted Matz’s “well-considered remarks with regard to routing and exclusivity,” and commended the NCUA for the timeliness of the remarks. The House financial institutions and consumer credit subcommittee has scheduled a hearing on the economic impact of interchange fee changes for later today. Allied CU President/CEO Frank Michael will testify on behalf of his Stockton, Calif.-based credit union and CUNA during the hearing. (See related story: CUNA to Congress: Stop, study, start over on interchange) For the NCUA release, use the resource link.

Stop study start over on interchange CUNA

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WASHINGTON (2/17/11)--Allied CU, Stockton, Calif., President/CEO and Credit Union National Association (CUNA) witness Frank Michael today will urge Congress to halt the progress of the Federal Reserve’s interchange proposal and study the impact that interchange changes would have on financial institutions and consumers alike before the interchange rulemaking process can continue. Michael will testify alongside representatives from several financial institutions, a small business, vand nationwide convenience store chain 7-11 during the House financial institutions and consumer credit subcommittee’s hearing on the economic impact of interchange fee changes. Federal Reserve Governor Sarah Raskin will also testify during the hearing, which begins at 10:00 a.m. ET and will be led by subcommittee head Rep. Shelley Moore Capito (R-W. Va.).
Click to view larger image House Financial Institutions Subcommittee Chairman Shelly Moore Capito (R-W.Va.) enjoys a lighter moment during her discussion about Interchange with (from left) Ken Watts, president/ CEO of the West Virginia Credit Union League, and Bill Cheney, president/CEO of the Credit Union National Association. The three met Tuesday to discuss the interchange issues prior to today’s hearing. (CUNA Photo)
The credit union CEO’s testimony is expected to focus on the benefits that the current payment system provides to consumers, merchants, and financial institutions, and the issues that the proposed interchange changes, if enacted, could cause credit unions. Michael is expected to address flaws in the statute, as well as in the Fed’s implementation plans, specifically focusing on how the Fed’s proposed implementing regulation could render the proposed exemption for institutions with under $10 billion in assets meaningless. The interchange plan offers a dual framework for determining interchange fees. One plan would provide issuers with a safe harbor of seven cents per transaction, and set a maximum interchange fee cap of 12 cents per transaction. A second alternative framework would cap the maximum interchange fee at 12 cents per transaction. These safe harbors and/or caps would be reevaluated by the Fed every two years. Merchants have claimed that the resulting savings will be passed on to consumers, but CUNA has repeatedly questioned that assumption, noting that moving forward with the interchange provisions could force credit unions to cease offering debit card programs to their members. CUNA and its Electronic Payments Coalition partners have also opposed the interchange changes through a 30-second television ad that is currently airing in the Washington D.C. media market. (See related Feb. 14 story: Interchange ads launches by CUNA and partners) House colleagues, including Financial Services Committee Chairman Spencer Bachus (R-Ala.) and ranking minority party member, Rep. Barney Frank (D-Mass.), have in recent months commented on the potential impact that interchange changes could have on consumers and financial institutions. Finance committees in both the House and Senate have stated that review of interchange fee changes would be a priority in the 112th Congress, but additional hearings have not yet been planned. The Fed is accepting comment on the interchange provisions until Feb. 22, but does not expect the changes to be implemented until after April. The new rules would become effective in July, if approved.

Senate Banking looks at Dodd-Frank six months in

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WASHINGTON (2/17/11)--The Senate Banking Committee is slated to conduct an oversight hearing today, which has as its title “Dodd-Frank Implementation: A Progress Report by the Regulators at the Half-Year Mark.” The hearing is the first by the banking panel since Sen. Tim Johnson (D-S.D.) has taken the reins as its new chairman, and the session is expected to provide a broad study of regulators’ efforts to draft the rules that will put into practice the more-than-2,000 pages of the Wall Street Reform Act. Credit unions may be interested to watch whether the Dodd-Frank provision ordering the Federal Reserve to set interchange fees comes under scrutiny. There is a concurrent hearing, a 10 a.m. (ET), on that topic alone in the House as the Financial Services Committee conducts its session, “Understanding the Federal Reserve’s Proposed Rule on Interchange Fees: Implications and Consequences of the Durbin Amendment.” Frank Michael, president/CEO of the Stockton, Calif.-based Allied CU, is scheduled to testify on behalf of the Credit Union National Association (see related story: CUNA to Congress: Stop, study, start over on interchange). Witnesses for the Senate Banking Dodd-Frank hearing include:
* Ben S. Bernanke, chairman, Federal Reserve Board; * Sheila Bair, chairman, Federal Deposit Insurance Corporation; * Mary Schapiro, chairman, U.S. Securities and Exchange Commission; * Gary Gensler, chairman, U.S. Commodity Futures Trading Commission; and * John Walsh, acting Comptroller of the Currency.

Examiners handbook InfoBase gets redesign

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WASHINGTON (2/17/11)--In a move that could conceivably improve communications between federal financial regulators and their examiners, the Federal Financial Institutions Examination Council (FFIEC) announced an improvement in its information distribution process. The FFIEC, comprised of the National Credit Union Administration (NCUA) and the federal bank and thrift agencies, announced the launch of its redesigned IT Examination Handbook InfoBase. The IT InfoBase is the primary distribution method for the IT Examination Handbook. “The new IT InfoBase is expected to have a beneficial impact on the user experience and will enable more timely updates to the IT Handbook in the future. This update does not implement any changes to the content of the IT Handbook, or related guidance,” said a release distributed by the NCUA. Credit unions have voiced increasing frustration with the federal examination process, and the Credit Union National Association (CUNA) regularly advocates for improved examiner training. Also, in January, after an exhaustive look at credit unions' problems with the process, CUNA unveiled a bill of "examination rights," developed by its Supervisory Issues Working Group, which is detailed and cross-referenced to the NCUA own examiner guide. Within a 64-page guidance document titled "Supervisory Issues and Examinations: Guidance For Credit Unions During The Current Economic Times And Beyond," CUNA lists 24 "examination rights," which include such things as the right of credit unions to "manage risk without being directed by examiners to eliminate it," and "appeal examiner findings, conclusions, or directives without retaliation from their regulator." To read the CUNA document, and for an electronic version of the FFIEC IT Examination Handbook Series, use the resource links below. www.ffiec.gov/guides.htm.

Incentive-based comp. plan leads NCUA discussion

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ALEXANDRIA, Va. (2/17/11)—Unsafe and unsound incentive-based compensation will be a main focus of today’s National Credit Union Administration (NCUA) monthly board meeting, and corporate federal credit union chartering guidelines, Credit ratings and interest-rate ceilings are also on the agenda. The Credit Union National Association’s Deputy General Counsel and Senior Vice President for Regulatory Advocacy Mary Dunn has said that the incentive-based compensation guidelines will not require reporting of executive salaries. Rather, the guidelines will seek to discourage credit unions from giving bonuses for risky financial activity by directors. Dunn said that the NCUA regulation would be substantively similar to a recent joint federal regulator proposal that, according to a Federal Deposit Insurance Corporation (FDIC) release, “prohibits incentive-based compensation arrangements that encourage inappropriate risk taking by covered financial institutions and are deemed to be excessive, or that may lead to material losses.” Credit unions with over $1 billion in assets will be subject to the regulation. The NCUA and other federal regulators are required to write joint regulations on executive compensation by the Dodd-Frank Wall Street Reform Act. The NCUA last year banned awarding so-called "golden parachute" executive compensation packages to executives of troubled corporates, and introduced new rules that require corporates to disclose their executive compensation packages. A final vote on a corporate federal credit union chartering proposal is scheduled to take place during the meeting. The NCUA late last year proposed new chartering guidelines that would help the agency’s Office of Corporate Credit Unions (OCCU) to judge whether a proposed corporate credit union would uphold the provisions of the Federal Credit Union Act, promote safety and soundness within the credit union industry, and provide quality services to members. The NCUA's monthly report on the status of its insurance funds will also be delivered during the open portion of the meeting, and a creditor claim, insurance appeals, and supervisory matters will be discussed during the closed portion of the meeting. For the full NCUA meeting agenda, use the resource link.

CU reps named to new Fed advisory panel

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WASHINGTON (2/17/11)—Tinker FCU President/CEO Michael Kloiber and Randolph-Brooks FCU President/CEO Randy Smith will represent the interests of credit unions on the Federal Reserve’s Community Depository Institutions Advisory Council (CDIAC) when it meets for the first time later this year. Tinker FCU is based in Oklahoma City, Oklahoma. Universal City, Texas’s Randolph-Brooks FCU currently holds $3.7 billion in assets. The Fed announced the establishment of the CDIAC in October. The CDIAC, which will include credit union, bank and thrift representatives, "will provide input to the (Fed) on the economy, lending conditions, and other issues." The Fed has selected one member from each of its 12 Fed local advisory councils to serve on the CDIAC. The CDIAC replaces the Thrift Institutions Advisory Council, which was established by the Fed in 1980 and advised the Fed on thrift institutions, mortgage finance, and regulations. Both Kloiber and Smith were TIAC members. For the full Fed release, use the resource link.

Inside Washington (02/16/2011)

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* WASHINGTON (2/17/11)--Elizabeth Warren, the Obama administration official in charge of setting up the Consumer Financial Protection Bureau (CFPB), on Tuesday lashed out at Republican critics of the agency’s funding (American Banker Feb. 16). She also previewed credit card disclosure reforms aimed at curbing hidden fees and unfair rate hikes. Currently, the CFPB receives its funding from the Federal Reserve, which gives the agency an independent funding stream outside of the appropriations process in Congress. But Warren said critics are trying to “chip away” at the bureau's independence. Rep. Randy Neugebauer (R-Texas) has introduced a legislated proposal that would subject the bureau’s funding to congressional scrutiny amid growing concerns about government spending. Warren said such threats threaten the agency's independence. She also previewed a credit card summit she is hosting on Feb. 22. Warren has advocated simpler credit card agreements, but the industry has argued such changes come too soon after passage of the Credit Card Accountability, Responsibility and Disclosure Act. Warren said she hopes to establish “a fact base” upon which the CFPB can develop a better understanding of the CARD Act … * WASHINGTON (2/17/11)--House Republicans and Democrats on Tuesday traded jabs about the the economic impact of derivatives regulations in a prelude to a broader fight over agency budgets that will be needed to write and enforce the new rules during a House Financial Services Committee hearing (American Banker Feb 16). GOP lawmakers maintain derivatives restrictions were creating fear in the markets, potentially driving U.S. capital offshore and possibly resulting in lost jobs. Republicans also argued derivatives did not cause the financial crisis. “Let’s be clear up-front, right at the beginning of this hearing, end users of derivatives did not cause the financial crisis,” said House Financial Services Committee Chairman Spencer Bachus in his opening statement. “They were among its victims. Although the 2,300-page Dodd-Frank Act was promoted as being directed at Wall Street, as we are coming to understand more clearly, it is the end users of derivatives who will bear so much of the regulatory brunt of this law. As a result, hundreds of American companies could take their capital and jobs elsewhere. One study, released just yesterday, concludes that upward of 130,000 jobs could be lost if U.S. regulators impose new restrictions on derivatives transactions too broadly,” Bachus added. But Democrats--backed by the testimony of regulators--maintain that the new rules would only increase transparency, make discovery easier and boost confidence in the markets, which would feed economic growth …

Texas CU purchasesassumes assets liabilities members of Utah CU

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ALEXANDRIA, Va. (2/17/11)--A $119 million-asset Utah credit union was liquidated Tuesday by the National Credit Union Administration (NCUA), and a San Antonio, Texas-based credit union purchased and assumed its assets, liabilities and members. The Utah institution, Family First FCU, Orem, was serving about 18,000 members when it was closed. Last July 30, the NCUA assumed control of its operations with a stated goal of “continuing credit union service to the members at a safe, sound credit union.” Former Family First members become members of the purchasing Security Service FCU with no interruption in credit union service. Security Service is a full-service institution with $6 billion in assets and 800,000 members. This is the second federally insured credit union liquidation in 2011.

Cheney in iThe Hilli CU message will shine in D.C.

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WASHINGTON (2/16/11)—Members of Congress will soon be hearing personally from more than 4,000 credit union representatives as they voice their deep concerns on possible debit interchange fee changes, Credit Union National Association (CUNA) President/CEO Bill Cheney noted Tuesday in The Hill newspaper’s online Congress Blog. Cheney in his blog post told legislators that “credit unions are coming.” The throng of more than 4,000 will be one of the largest crowds to ever attend CUNA’s Governmental Affairs Conference (GAC), which will take place from Feb. 28 until March 3. The interchange law and related restrictions proposed by the Federal Reserve will be a focal point of Hill visits, Cheney said. The proposal, which was released earlier this year and remains open for comment until Feb. 22, could cap interchange fees at as low as 7 cents. Cheney in his blog post said that the proposed fee limits will likely force credit unions to charge their members for access to debit card programs. Cheney added that while the Fed proposal does exempt credit unions with under $10 billion in assets from the interchange changes, the new rules will affect how credit unions serve their members, because the law and rules do not give the Fed authority to enforce the exemption. Another key focus of credit union advocacy during the GAC will be the positive benefits of the federal tax exemption for credit unions. The tax exemption is central to the structure of individual credit unions and the larger credit union system, and its loss would likely mean the demise of most credit unions, which Cheney called a huge loss to consumers. Credit union backers will also speak in support of changing current supplemental capital rules. Allowing credit unions to raise supplemental capital would help them more effectively meet any unexpected changes, such as a slow economic recovery, Cheney said in his blog post. The ongoing economic recovery could also be helped by giving credit unions greater authority over member business lending. Raising the current 12.25% of assets cap on member business lending to 27.5% of assets will add over $10 billion in new funds into the economy and create over 100,000 new jobs, and credit union supporters will tout these benefits during the GAC. Credit union representatives will also advocate for the rights of their members, working to protect those members from rising costs and to ensure that credit union members will have access to their institutions for a long time to come, Cheney added. “The overall message they will deliver: Credit unions are the consumers’ best option for conducting financial services,” Cheney said. For the full blog post, use the resource link.

CLF CDRLF addressed in 2012 budget

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WASHINGTON (2/16/11)—The maximum loan limitation of the National Credit Union Administration's (NCUA) Central Liquidity Facility (CLF) will continue at its fiscal 2011 level under the Obama administration’s proposed budget for fiscal 2012. The CLF is authorized by the Federal Credit Union Act to lend up to 12 times its paid-in capital. The CLF loan cap was lifted to its maximum amount allowable in late 2008, and the NCUA in 2009 used $10 billion in borrowed CLF funds to stabilize two now failed corporate credit unions, U.S. Central FCU and Western Corporate FCU. The $10 billion, which was borrowed from the U.S. Treasury, was repaid, with interest, by the NCUA in October. Under the Obama administrations proposed 2012 budget, funding for the NCUA’s Community Development Revolving Loan Fund (CDRLF) program would remain at $2 million, equal to 2011’s requested funding level. The CDRLF provides loans and technical assistance to federal and state credit unions that are designated as a low-income credit union, as defined by NCUA regulations. Though the CDRLF was approved for $2 million this year, that amount could decrease substantially if H.R. 1, which was introduced by House Republicans last week, is approved. H.R. 1 would cut $1.5 million from the CDRLF’s requested fiscal 2011 budget of $2 million. If the Republican proposal is not accepted by both legislative branches and approved by the President, then the CDRLFs current funding level will likely be extended for a short period of time. Under a continuing resolution, the U.S. government will be funded through March 4. If a new agreement is not reached, a temporary agreement to continue to fund the government at current levels beyond March 5 is expected to be passed. The 2012 budget, which was released on Monday, also suggests cuts to Small Business Administration programs and Community Development Financial Institution Fund programs. (See related Feb. 15 story: $3.7 trillion budget brings deficit to record $1.6 trillion)

CUNAs Smarterchoice to help consumer CU awareness

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WASHINGTON (2/16/11)--aSmarterChoice.org, a new website developed by the Credit Union National Association and associated state credit union leagues, will offer information on credit unions to potential members and press professionals alike when it formally debuts on Feb. 28.
Click to view larger image Click for larger view
CUNA President/CEO Bill Cheney noted that the website gives the credit union movement a sustainable presence that can continually drive membership growth – without the overhead and logistical challenges that a national branding campaign can present. “New technology can give us an affordable opportunity to be as equally effective as a brand campaign,” he added. A central piece of the new website will be the first consolidated and comprehensive Web-based credit union locator. The tool will allow users to view the location of any credit union they choose, regardless of their charter, affiliation, size or business model. The website will also include basic information about credit unions and the latest national, regional and local news coverage of credit unions The release of the website is aimed to coincide with CUNA’s 2011 Governmental Affairs Conference, which will take place between Feb. 28 and March 3 in Washington, D.C. The site is free of charge for individual users and credit unions.

Inside Washington (02/15/2011)

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* WASHINGTON (2/16/11)--Washington (2/16/11)--The Federal Housing Finance Agency (FHFA) on Jan. 18 announced a joint initiative to consider alternatives for a new mortgage servicing compensation structure. As part of that effort, FHFA has established dedicated web links for posting information and accessing background materials, it announced Tuesday … * Washington (2/16/11)--Neil Barofsky, the U.S. Department of the Treasury’s special inspector general for the Troubled Asset Relief Program (SIGTARP), has announced his resignation, effective March 30. Christy Romero, who serves as Barofsky’s deputy, will succeed him. Barofsky is the first person to hold the position, which was created in 2008. In his role, he has provided quarterly updates to Congress on TARP-related programs. Under Barofsky, SIGTARP has published 13 audits and nine quarterly reports. His office currently is coordinating 140 investigations of financial fraud. In his resignation letter, Barofsky said: “When it began, I had three goals for SIGTARP: to build a robust law enforcement agency to bring to justice those who sought to profit criminally from TARP and to deter those considering such misconduct; to ensure transparency in the operation of TARP so that taxpayers could better understand how the government was utilizing the unprecedented investment of taxpayer funds that TARP represented; and to provide effective oversight over the government’s decision-making process to minimize instances of waste, fraud and abuse. I believe that SIGTARP has met each of these goals” …

2011 HMDA requirements outlined by NCUA

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ALEXANDRIA, Va. (2/16/11)—The National Credit Union Administration (NCUA) in its Regulatory Alert No. 11-RA-02 is reminding credit unions that engage in residential mortgage lending of their 2011 reporting obligations under the Home Mortgage Disclosure Act (HMDA). Credit unions with over $40 million in assets that have originated or refinanced one or more mortgages secured by a first lien and have a home or branch office in defined metropolitan statistical areas will be subject to HMDA in 2011, the NCUA said. All other credit unions will be exempt from HMDA reporting requirements, the agency added. All 2011 information must be reported to the Federal Reserve no later than March 1, 2012. The Fed will examine this data to determine whether financial institutions are complying with fair lending laws. The Credit Union National Association (CUNA) last year recommended that the Fed take a "bright line" approach to HMDA reporting, limiting the need for HMDA reports to situations in which there is a lien on a given home. CUNA also suggested that HMDA requirements only be applied to the largest mortgage lenders that make the vast majority of mortgage loans. The Fed is currently considering whether some portions of its HMDA regulations should be altered. For the full NCUA regulatory alert, use the resource link.

House panel to look at repeal of Form 1099-MISC changes

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WASHINGTON (2/16/11)—The House Ways and Means Committee has scheduled a look Thursday at a growing push to repeal a tax provision that would force companies to send 1099-MISC forms to any entity that has provided $600-worth of goods. The Credit Union National Association (CUNA) backs the repeal efforts. CUNA has said the requiring 1099-MISC forms on goods is an extremely burdensome reporting concept. It will require businesses to gather tax identification numbers and generate many millions of new tax forms that, CUNA maintains, will have questionable value in actually increasing federal revenue. Credit unions and other businesses have long been required to report to the on Form 1099-MISC certain payments of $600 or more that will be considered income by the IRS. As a "pay-go" effort to offset the cost to taxpayers of the new healthcare reform law, Congress extended the 1099-MISC reporting provisions to cover payments for goods valued over $600. Sen. Debbie Stabenow (D-Mich.) earlier this month successfully added a repeal provision to a pending Senate bill when she and 80 of her colleagues voted in favor of her amendment to S. 223. That bill is expected to pass the Senate this week. In the House, a repeal bill sports 271 cosponsors, representing enough backing to pass the measure when it come to a full House vote. The Obama administration also favors repeal. The hearing will begin at 9 a.m. (ET), and will be led by committee chairman, Rep. Dave Camp (R-Mich.). For more information on the hearing, use the resource link.

Funding continuance has deep cuts for CDRLF CDFI

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WASHINGTON (2/15/11)--House Republicans late last week introduced a continuing resolution to fund the government through the end of the fiscal year. H.R. 1 includes dramatic cuts for such programs as the Community Development Revolving Loan Fund (CDRLF) for credit unions and the U.S. Treasury Department’s Community Development Financial Institutions (CDFI) Fund. A current funding extension expires March 4, and H.R. 1 would approve government spending from March 5 to Sept. 30. The proposal carries a $750,000 reduction from FY 2010 for the National Credit Union Administration’s CDRLF. It would appropriate $500,000 for that program, which is a whopping $1.5 million less than the $2 million requested by the Obama administration. The CDRLF provides loans and technical assistance to federal and state credit unions that are designated as a low-income credit union, as defined by NCUA regulations. H.R. 1 also proposes $50 million for the CDFI Fund, which is a cut of about $197 million from the FY2010 level of just less than $247 million. The administration sought $250 million in CDFI funding for FY 2011. The Treasury's CDFI Fund helps locally based financial institutions offer small business, consumer and home loans in communities and populations that lack access to affordable credit. According to the Treasury Department in January, credit unions represent 13% of the total applicant pool for the 2011 round of the CDFI Fund program. It is important to note that the House resolution addresses FY 2011 funding and is separate from the FY 2012 budget proposal released Monday by the President. While providing a good blueprint for Republican spending priorities, compromise will likely be the necessary path for a version of H.R. 1 to be accepted by the Senate, with its Democratic majority, and signed by the President. It is unlikely that the House and Senate would be able to come to agreement on these spending priorities by March 4, so it is likely that Congress will adopt another short-term extension of current funding levels.

Witnesses for House private-mortgage-market hearing announced

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WASHINGTON (2/15/11)--Rep. Judy Biggert (R-Ill.), leader of the House Financial Services Committee’s subcommittee on insurance, housing, and community development, announced the lineup for the subcommittee’s Feb. 16 hearing on ways to facilitate private sector participation in the mortgage market. Biggert in a Monday release said that the hearing will “explore how the government may be driving private capital away from housing while impeding market recovery.” The subcommittee will also examine options for promoting long-term stability and removing barriers to private investment in the housing market, she added. The first panel will be comprised of:
*U.S. Department of Housing and Urban Development Assistant Secretary for Housing David Stevens; *Ginnie Mae President Theodore Tozer; and *U.S. Treasury Homeownership Preservation Office Chief Phyllis Caldwell.
Former Congressional Budget Office Director Douglas Holtz-Eakin, Annaly Capital Management, Inc. President/CEO Michael Farrell, HOPE Now Director Faith Schwartz, and Center for Responsible Lending Senior Policy Counsel Julia Gordon will sit on the second panel. The Obama administration on Friday proposed nearly eliminating the government’s role in the mortgage market as one of several solutions to the current predicament caused by the government’s 2008 conservatorship of Fannie Mae and Freddie Mac. The administration has also proposed limiting the government’s intervention in the mortgage market to times of financial distress and using a system of reinsurance to backstop private mortgage guarantors to a targeted range of mortgages. (See related coverage: Fannie/Freddie portfolios down amid GSE debate)

FannieFreddie portfolios down amid GSE debate

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WASHINGTON (2/15/11)—The size and amount of guaranteed loans and the size of investment portfolios held by government-sponsored entities (GSEs) Fannie Mae and Freddie Mac will be reduced under the Obama administration’s fiscal 2012 budget. The budget also notes that the government conservatorship of these entities, which began in 2008 and has cost taxpayers $150 billion so far, will be gradually ended. The budget also addresses the Small Business Administration, 7(a) loans, and the Community Development Financial Institutions Fund, all topics of interest to credit unions. (See related story: $3.7 trillion budget brings deficit to record $1.6 trillion) Similar ideas on treatment of the GSEs were proposed in the Obama administration's Friday release on the GSEs. That release set forth a trio of potential outcomes, including almost completely privatizing the housing finance system, limiting the government’s intervention in the mortgage market to times of financial distress, and using a system of reinsurance to backstop private mortgage guarantors to a targeted range of mortgages. The document does not propose specific legislative solutions, and notes that reducing conforming loan limits, increasing guarantee fees, and requiring higher down payments from potential homeowners could be handled through internal regulatory changes. The White House and legislators will soon begin work on the future of the GSEs, and CUNA will watch closely for any future developments. A breakout session on GSE reform will be held March 1, in conjunction with CUNA's Governmental Affairs Conference, which begins on Feb. 27 in Washington, D.C. For a CUNA summary of the GSE proposal, use the resource link.

NCUA clarifies its guidance on third-party investment sales

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ALEXANDRIA, Va. (2/15/11)—The National Credit Union Administration (NCUA) has clarified that its letter to credit unions 10-FCU-03, which advised federal credit unions to carefully review the financial statements and capital adequacy of eligible third party brokers and perform needed background checks on brokers, does not require credit unions to back specific financial instruments. The NCUA issued its clarification in the form of a letter to the National Association of Credit Union Service Organization's (NACUSO). NACUSO had recently written to the NCUA out of concern that the letter “represented a set of new requirements that would extend potentially far beyond what the previous guidance encompassed in this arena and create the possibility of unreasonable compliance burden and liability for credit unions.” The group said that while credit unions are able to examine the track records of brokers, requiring credit unions to select individual investment products “is a risk that NCUA should not compel credit unions to take.” NCUA General Counsel Bob Fenner in the NCUA’s response said that said that letter No. 10-FCU-03 “is not intended to require [federal credit unions] to select, authorize, or restrict each specific investment product that will be offered to its members. However, Fenner said, a credit union’s policies should reflect a prudent analysis of the types of products that brokers may offer to that credit union’s members. In addition to performing due diligence reviews, the NCUA guidance, which was issued in December, recommended that directors of federal credit unions adopt written policies and procedures concerning third party brokerage arrangements to ensure compliance with applicable law and regulation and to ensure consistency with these guidelines. Credit unions should consider engaging legal counsel to evaluate their policies, procedures, and contractual agreements, the NCUA added. Federal credit unions should also outline, in writing, the duties and responsibilities of each party in a third party brokerage arrangement, according to the NCUA. NACUSO encouraged credit unions to take the NCUA’s guidance, alongside other advice, “into consideration to implement polices that will protect the credit union from liability in offering investing services in affiliation with a broker/dealer.” For the NACUSO and NCUA releases, use the resource links.

Inside Washington (02/14/2011)

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* WASHINGTON (2/15/11)--Federal Reserve Gov. Sarah Bloom Raskin said Friday that the mortgage servicing issues plaguing the housing market remain unaddressed, and must be overhauled before the market will rebound. Deficiencies in how loans are serviced are impairing the mortgage markets and diminishing “overall accountability to homeowners,” she said. Late last year, the federal banking agencies began a targeted review of loan servicing practices at large financial institutions that had significant market concentrations in mortgage servicing, Bloom Raskin told a Utah housing conference. “The preliminary results from this review indicate that widespread weaknesses exist in the servicing industry,” she said, adding that bank holding companies should be accountable for the actions of their servicing units. “For those servicers who are subsidiaries or affiliates of a broader parent financial institution, the responsibility for change and further investment absolutely extends up to that parent company, many of which have enjoyed substantial profits while their servicing arms have been run on the cheap,” Bloom Raskin said. She also called for strong corporate governance procedures for servicers, and a stronger effort by regulators in policing servicers … * WASHINGTON (2/15/11)--The Federal Deposit Insurance Corp. (FDIC) announced the hiring of additional leadership staff for the Office of Complex Financial Institutions (CFI) and the Division of Depositor and Consumer Protection (DCP). The FDIC Board of Directors approved establishing the two new organizations in August to carry out its responsibilities as outlined in the Dodd-Frank Wall Street Reform and Consumer Protection Act. CFI will monitor and address risks in the largest, systemically important financial institutions. DCP will oversee depositor and consumer protection programs. Two appointments were named in the large-firm division. Jason Cave, currently a deputy to FDIC Chairman Sheila Bair, will be services deputy director for the CFI. Mary Patricia Azevedo, an international affairs expert and associate general counsel at The Western Union Co., will become deputy director for international coordination. Three positions were announced in DCP. Sylvia Plunkett, who has 32 years’ of experience with FDIC, will become senior deputy director for compliance and Community Reinvestment Act examinations. Jonathan Miller, a senior staffer for the Senate Banking Committee, will become deputy director for policy and research. Keith Ernst, a research director at the Center for Responsible Lending, will serve as associate director for consumer research and examination support …

Congress Interchange discussion leads the week for CUs

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WASHINGTON (2/15/11)—Thursday’s House Financial Services Committee Financial Institutions and Consumer Credit Subcommittee hearing on the economic impact of interchange fees will surely be the main Washington concern for credit unions this week. The hearing, which will be led by subcommittee chair Rep. Shelley Moore Capito (R-W. Va.), will address the Federal Reserve’s recently released proposal to cap the amount of interchange fees that are charged on a given transaction. Frank Michael, President/CEO of Stockton, Calif.-based Allied CU, will testify on behalf of the Credit Union National Association and his credit union during the Feb. 17 hearing. There will be other hearings of note during the week, with the full House Financial Services committee holding a hearing on the regulatory, economic and market implications of the Dodd-Frank Act’s treatment of derivatives on Tuesday. Dodd-Frank legislation will also be addressed on Thursday as the Senate Banking Committee discusses oversight of that legislations implementation. Federal Reserve Chairman Ben Bernanke, Federal Deposit Insurance Corporation Chairman Sheila Bair, chairman of the Securities and Exchange Commission and other federal financial authorities are set to testify. National Credit Union Administration (NCUA) Chairman Debbie Matz was not on the witness list at press time. The House Financial Services Committee’s oversight and investigation subcommittee will cover the post-conservatorship legal expenses of Fannie Mae and Freddie Mac on Tuesday, and housing-related issues will also be discussed during a Wednesday House insurance and housing subcommittee hearing on possible governmental impediments to a potential housing market recovery. Hearings on the Financial Crisis Inquiry Commission’s report and the small business economy will also be held on Wednesday. Those hearings will take place before the full House Financial Services Committee and the House Small Business Committee, respectively. A number of committee hearings on President Barack Obama’s 2011 budget are also expected. Both the House and Senate are expected to have full sessions during the week, ahead of next week’s constituent work period that will last through Feb. 25. H.R. 1, a full-year continuing appropriations bill, will be discussed during the week.

Interchange ads launches by CUNA and partners

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WASHINGTON (2/14/11)—The fight against the Federal Reserve’s proposed interchange changes will take to the airwaves this week in the nation’s capital as a 30-second television spot airs in the Washington, DC, television market. The Credit Union National Association (CUNA) is one main sponsor of the ad, which was developed by the Electronic Payments Coalition (EPC). Fellow EPC members the Independent Community Bankers of America, the National Association of Federal Credit Unions, and the American Bankers Association have also sponsored the ad. The ad buy continues through March 4 in Washington, D.C. – which includes the week of the CUNA Governmental Affairs Conference. Interchange will be a key issue during the conference. The Fed's interchange provisions could cap debit card interchange fees that are paid by merchants to card issuers at as little as seven cents per transaction. Issuers with under $10 billion in assets would be exempt from the interchange changes. The Fed proposal will remain open for public comment until Feb. 22, and, if approved, could come into effect after April of this year. The House Financial Services Committee’s Financial Institutions and Consumer Credit Subcommittee has scheduled an interchange hearing for Feb. 17, and several legislators have called for additional time to consider the impact interchange changes could have on financial markets and consumers. Frank Michael, President/CEO of Stockton, California's Allied CU, will appear on CUNA's behalf during that interchange hearing. (See related story: CUNA witness slated for interchange hearing) Credit Union National Association (CUNA) President/CEO Bill Cheney recently urged the Fed to take the time needed to consider all interchange related costs, and set a reasonable interchange rate to avoid "unintended consequences" such as the elimination of debit card programs by credit unions. Credit unions may also be forced to impose new fees on members' debit accounts to keep their card programs afloat, Cheney added.

NCUA reminds CUs HMDA deadline approaching

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ALEXANDRIA, Va. (2/14/11)—Credit unions that are subject to Home Mortgage Disclosure Act (HMDA) requirements for any 2010 activities must report their loan data to the Federal Reserve by March 1, the National Credit Union Administration (NCUA) said in a Friday release. The NCUA in its regulatory alert no. 11-RA-01 also reminded credit unions that credit unions that have not submitted their filings by the required deadline may be subject to civil financial penalty assessments. Under HMDA, credit unions with total assets of more than $39 million that have home or branch offices in defined metropolitan statistical areas must collect their loan data and report it to the Fed. Credit unions that have processed 26 or more mortgages are required to submit their applications in an automated, machine-readable form. The rest may use paper applications. The government will then use the data to analyze whether they are complying with fair lending laws. The Fed has considered whether certain data elements of HMDA should be added, modified, or deleted, and the Credit Union National Association (CUNA) last year recommended that the Fed take a "bright line" approach to HMDA reporting, limiting the need for HMDA reports to situations in which there is a lien on a given home. CUNA also suggested that HMDA requirements only be applied to the largest mortgage lenders that make the vast majority of mortgage loans. For the full NCUA regulatory alert, use the resource link.

CUNA working to assess GSE plans impact on CUs

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WASHINGTON (2/14/11)—The Credit Union National Association (CUNA) on Friday said it will examine the Obama administration’s proposed changes to the current mortgage finance system to identify any potential difficulties for credit unions. The Obama administration’s proposal for the future of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac was released on Friday and suggests a trio of potential outcomes. One proposal would almost completely privatize the housing finance system, limiting the government’s role to assisting low-income and veteran homebuyers. The report notes that smaller lenders could have a difficult time competing under such a system. Another proposal would create a system through which the government would back mortgages only in times of financial distress. Low-income individuals and military veterans would still be offered assistance under this structure. The government could also use a system of reinsurance to backstop private mortgage guarantors to a targeted range of mortgages. The report notes that this option provides the lowest cost mortgages, and would likely benefit smaller lenders. The document does not propose specific legislative solutions. The administration noted that changes such as reducing conforming loan limits, increasing guarantee fees, and requiring higher down payments from potential homeowners could be handled through internal regulatory changes. House Financial Services Committee Chairman Rep. Spencer Bachus (R-Ala.) and Senate Banking Committee Chairman Tim Johnson (D-S.D.) in separate Friday statements said that they would soon begin working with the Administration to further develop new housing finance policies. CUNA will be following this issue closely as developments unfold in Congress and with other policymakers. CUNA's GSE Reform Task Force in previous comments said that equal access to the secondary market is critical for credit unions. A breakout session on GSE reform will be held March 1, in conjunction with CUNA’s Governmental Affairs Conference, which begins on Feb. 27 in Washington, D.C.

CUNA witness slated for interchange hearing

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WASHINGTON (2/14/11)—Frank Michael, President/CEO of Stockton, Calif.-based Allied CU, will testify on behalf of the Credit Union National Association and his credit union during a Feb. 17 hearing on the economic impact of interchange fees. The hearing will take place before the House Financial Services Committee’s Financial Institutions and Consumer Credit Subcommittee, which is chaired by Rep. Shelley Moore Capito (R-W. Va.). Michael has testified before the Senate in recent years, and is also a member of CUNA's Corporate Credit Union Next Steps Working Group. Federal Reserve Governor Sarah Raskin and representatives from various financial institutions are set to speak before the subcommittee. Representatives from a small business and from nationwide corner store chain 7-11 will also testify. The Fed's interchange plan, which seeks to implement provisions enacted by the Dodd-Frank financial regulatory reform package, offers a dual framework for determining what the law calls "reasonable" interchange fees. One plan would provide issuers with a safe harbor of seven cents per transaction, and set a maximum interchange fee cap of 12 cents per transaction. An alternative framework would simply cap the maximum interchange fee at 12 cents per transaction. These safe harbors and/or caps would be reevaluated by the Fed every two years. The Fed is accepting comment on the interchange provisions until Feb. 22, but does not expect the changes to be implemented until after April. CUNA has called for a delay in implementation. Such a delay would give the Fed and legislators more time to consider all interchange related costs, and set a reasonable interchange rate to avoid "unintended consequences" such as the elimination of debit card programs by credit unions. CUNA and its Electronic Payments Coalition partners have sponsored a 30-second television ad to spread the word about potential interchange changes. (See related story: Interchange ads launches by CUNA and partners) House Financial Services Committee Chairman Spencer Bachus (R-Ala.) and fellow Reps. Jeb Hensarling (R-Texas), Barney Frank (D-Mass.) and Gary Peters (D-Mich.) have all commented on the potential impact that interchange changes could have on consumers and financial institutions alike. Finance committees in both the House and Senate have stated that review of interchange fee changes would be a priority in the 112th Congress.

NCUA compensation plan must address CU concerns CUNA

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WASHINGTON (2/14/11)--As the National Credit Union Administration (NCUA) prepares to look at executive compensation rules later this week, the Credit Union National Association (CUNA) is urging the agency to consider credit unions’ significant concerns before issuing any proposal. CUNA acknowledged that inaccurate early reports of what is covered by the rule may have added confusion to the debate. However, the trade group underscored that there are a series of legitimate issues to be addressed prior to the agency finalizing a draft, which is expected to be considered at this Thursday’s open meeting. As background, the Dodd-Frank Wall Street Reform law requires the federal financial regulators to issue a joint rule or guideline on incentive-based compensation arrangements. The rule or guideline is not meant to address general compensation like salaries, but rather targets such things as commissions paid to certain employees or officials for undertaking investments, making loans or other activities that expose the institution to high risk. The Federal Deposit Insurance Corp. (FDIC) led the pack last week by issuing its version of the joint rule. In a communication to NCUA Chairman Debbie Matz, CUNA highlighted the following concerns:
* Credit unions generally have not been engaged in the kinds of abusive arrangements addressed under Dodd-Frank, and the NCUA’s rule should distinguish credit unions from other types of institutions such as banks and others that have provided such arrangements to their employees and others officials. For example, the Board should fully consider whether guidelines could be issued for credit unions, even if the other regulators issued a regulation for the entities they regulate. * The FDIC proposal would apply certain prohibitions regarding incentive-based compensation to banks with $50 billion or more in assets. The proposal indicates credit unions with assets of $1 billion and more would be covered by these prohibitions. The NCUA should correct this and not have a rule that would potentially subject relatively smaller credit unions to standards that only apply to the largest banks. * The definition of “incentive-based compensation” should not be so broad that it could be misconstrued in implementation or possible enforcement.
CUNA asked for Matz’s leadership to make the limited nature of the proposal clear and to minimize its impact since credit unions generally have not been engaging in the types of practices the law and proposal seek to address.

Repeal of 1099-MISC Form expansion needed says CUNA

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WASHINGTON (2/14/11)--The Credit Union National Association (CUNA) backs an effort to repeal a tax provision that would force companies to send 1099-MISC forms to any entity that has provided $600-worth of goods. For many years, credit unions and other businesses have been required to report to the Internal Revenue Service on Form 1099-MISC certain payments of $600 or more that will be considered income by the IRS. As a “pay-go” effort to offset the cost to taxpayers of the new healthcare reform law, Congress extended the 1099-MISC reporting provisions to cover payments for goods valued over $600. “This is an extremely burdensome reporting concept that will require businesses to gather tax identification numbers and to generate many millions of new tax forms that will have questionable value in actually increasing federal revenue,” CUNA Senior Vice President for Compliance Kathy Thompson explains. The provision is scheduled to go into effect in 2012. Sen. Debbie Stabenow (D-Mich.) earlier this month successfully added a repeal provision to a pending Senate bill when she and 80 of her colleagues voted in favor of her amendment to S. 223. That bill is expected to pass the Senate this week. In the House, a repeal bill sports 271 cosponsors, representing enough backing to pass the measure when it come to a full House vote. In fact, the chairman of tax-rule-writing panel, House Ways and Means, said he intends to get a repeal bill through the House in the next few weeks. The Obama administration also favors repeal. In a 2010 comment letter to the Internal Revenue Service (IRS) CUNA argued that an exact reading of section 9006 of the healthcare law that amends the 1099-MISC reporting rules should exempt tax-exempt organizations completely from this new 1099 reporting rule. However, the IRS proposed rule to implement the provisions attempts to address what it viewed as a congressional drafting error and would subject credit unions along with all businesses to the expanded 1099-MISC reporting requirements. In a related event, CUNA intends today to sign onto a letter sponsored by the American Society of Association Executives that calls for repeal of the 1099-MISC requirement on goods. The letter features 31 pages of signatures of association executives calling for repeal.

Inside Washington (02/11/2011)

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* WASHINGTON (2/14/11)--The House Financial Services Committee will hold a hearing to review the reports issued by the Financial Crisis Inquiry Commission at 10 a.m. ET on Wednesday. In 2009, Congress established the Financial Crisis Inquiry Commission, comprising six Democrats and four Republicans, to investigate the causes of the financial crisis and report its findings to Congress on Dec 15, 2010. The commission missed its deadline and failed to reach consensus on the causes of the crisis. More than a month after its deadline, the commission published three reports: one written by the Democratic commissioners, a second written by three of the Republican commissioners, and a third by the fourth Republican commissioner. The statute creating the commission requires the Financial Services Committee to hold a hearing on the commission’s findings no later than 120 days after the final report is issued …

CUs can offer Advantages starting Feb. 15

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WASHINGTON (2/11/11)—Beating its ETA by a month, the U.S. Small Business Administration (SBA) announced yesterday that its two new “advantage” lending programs will be up an running on Feb. 15. Qualified credit unions and other lenders can approve loans through the agency’s new Small Loan Advantage program starting on that date. Any financial institutions across the country in the SBA’s Preferred Lender Program (PLP), and there are 610 of them, can approve loans under this program. At the same time, the agency will begin accepting applications from community-based, mission-focused lenders who are interested in making SBA-guaranteed loans through the new Community Advantage program. Through Community Advantage, the agency will expand the points of access small business owners have for getting loans by opening SBA’s 7(a) loan program to “mission-focused” financial institutions, including Community Development Financial Institutions, SBA’s Certified Development Companies and SBA’s nonprofit microlending intermediaries. The new programs were announced in December and are part of the agency’s efforts to increase the number of lower-dollar loans being made to small businesses and entrepreneurs in underserved communities. The SBA has said that both the new programs offer a streamlined application process for SBA-guaranteed 7(a) loans up to $250,000. Advantage loans will come with the regular 7(a) government guarantee, 85% for loans up to $150,000 and 7% for those greater than $150,000. In conjunction with the implementation of these two new loan initiatives, SBA will end its Community Express pilot loan program on April 30.

Post-GSE conservatorship legal fees to be studied

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WASHINGTON (2/11/11)—A House Financial Institutions subcommittee will study legal fees paid on behalf of former top executives of Fannie Mae and Freddie Mac. The subcommittee on oversight and investigations, chaired by Rep. Randy Neugebauer (R-Texas), will convene Feb. 15 to examine millions of dollars of fees paid in defense of securities-related lawsuits against the companies and their executives. Announcing the hearing, Neugebauer said, “More than $160 million of the taxpayer’s money has been spent” to defend “the officials who led those organizations prior to, and during the subprime mortgage mess.” He added that the expenditure “raises serious questions about the conservators’ responsibilities to prevent any further losses to the American taxpayer on those legal fees. Since the imposition of the conservatorship, Fannie Mae has paid approximately $24 million in legal fees for former executives, including Franklin Raines ($7.9), Timothy Howard ($4.5), and Leanne Spencer ($11.8) to defend civil suits alleging they failed to meet their duties, the subcommittee hearing notice said. Moreover, an additional $30 million has been spent defending other officers and directors. Witnesses will be announced at a later date.

House Financial Services plans to take up CU priorities

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WASHINGTON (2/11/11)--Credit union priorities such as interchange fee legislation, financial regulatory burdens, and examination of some National Credit Union Administration (NCUA) actions will be among the oversight priorities of the House Financial Services Committee. The panel held a markup session to determine its oversight priorities for the 112th Congress yesterday. The committee in its oversight plan report said that the effectiveness of financial regulations and the difficulties caused by regulatory burdens will be examined, and added that it may require regulators to review their own rules to “identify those which may be unnecessarily burdensome or outdated.” A specific review of the corporate credit union system’s recent issues and possible reforms to the corporate system and the NCUA itself is also planned. The committee also plans to review whether government support of larger financial institutions has harmed credit unions and other small institutions by implying they are “too small to save.” The panel has scheduled a Feb. 17 hearing on interchange fees, and the committee also highlighted interchange fee examination in its oversight plan. Additional hearings had not been scheduled at press time. Regulatory burdens were also discussed during a Thursday House Committee on Government Reform and Oversight hearing Oversight Committee Chairman Darrell Issa (R-Calif.) earlier this year asked for companies, think tanks and trade groups to provide insight on how their respective regulatory situations could be improved. In a letter submitted as committee testimony, the Credit Union National Association told Issa and his fellow committee members that Congress can help credit unions by allowing credit unions to raise supplemental capital, reviewing and potentially amending the Fed's interchange fee proposal, and lifting the cap on credit union member business lending.

30-year mortgages again eclipse 5 threshold

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WASHINGTON (2/11/11)--Thirty-year fixed-rate mortgages averaged 5.05% during the week ended Feb. 10, the highest average mortgage rate recorded since April 2010, Freddie Mac reported on Thursday. Freddie Mac Vice President/Chief Economist Frank Nothaft said that increasing long-term bond yields “placed upward pressure on mortgage rates.” Thirty-year mortgage rates averaged 4.81% last week. Fifteen-year fixed rate mortgages also increased during the week, averaging 4.29%.Fifteen-year mortgage rates averaged 4.08% last week and 4.34% this time last year. Five-year and one-year adjustable rate mortgages (ARM) also crept up during the week, averaging 3.92% and 3.35%, respectively. Five-year ARMs averaged 4.19% this time last year, while one-year ARMs averaged 4.33%.

Interchange rule delay gets Mich. House backing

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LANSING, Mich. (2/11/11)--A resolution backing a delay in the implementation of the Federal Reserve’s proposed interchange regulations is awaiting action in the Michigan State Senate after the Michigan State House approved it on Thursday. The House Banking and Financial Services Committee unanimously approved the resolution earlier this week. The State Senate could act on the resolution as soon as Tuesday, Feb. 15. The resolution was backed by the Michigan Credit Union League and was introduced by Rep. Marty Knollenberg (R-Troy). League CEO David Adams said that the committee’s action was gratifying, and added that the league plans to seek similar action in the state Senate. The Credit Union National Association is working with the League to delay implementation of the Fed’s interchange provisions. The Fed's interchange provisions, which were released just before the end of 2010, could cap debit card interchange fees that are paid by merchants to card issuers at as little as seven cents per transaction. Issuers with under $10 billion in assets would be exempt from the interchange changes. The Fed proposal will remain open for public comment until Feb. 22. Fed officials during their December meeting said that the interchange provisions, if ultimately approved, would likely not become effective until after April. Credit Union National Association (CUNA) President/CEO Bill Cheney recently urged the Fed to stop and study the new Interchange law, rather than forging ahead with new rules, so that everybody wins -- consumers, merchants and financial institutions. Cheney said that the Fed should be given the time needed to consider all interchange related costs, and set a reasonable interchange rate to avoid "unintended consequences" such as the elimination of debit card programs by credit unions. Credit unions may also be forced to impose new fees on members’ debit accounts to keep their card programs afloat, Cheney added. Cheney has also challenged retailer claims that any savings gained from this interchange fee cap would be passed on to consumers.

Inside Washington (02/10/2011)

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* WASHINGTON (2/11/11)--The Obama administration announced two key resignations related to banking and finance on Thursday. Kevin Warsh announced his resignation from the Federal Reserve Board of Governors to be effective March 31. Warsh, a member of the board since February 2006, submitted his letter of resignation to President Obama Thursday. Also, Bruce Witherell, chief operating officer (COO) of Freddie Mac, resigned from the company for “personal reasons.” Witherell, a former managing director at Morgan Stanley, was named COO in September 2009. His resignation is effective immediately (The Wall Street Journal Feb. 10) … * WASHINGTON (2/11/11)--The Federal Deposit Insurance Corp. (FDIC) announced the release of an updated and enhanced version of its instructor-led Money Smart financial education curriculum for young adults. The new curriculum incorporates changes in the law and industry practices that have occurred since Money Smart for Young Adults was launched in 2008. The updated curriculum reflects recent amendments to the rules pertaining to credit cards, the overdraft opt-in rule, and information on financing higher education. The program also includes many enhancements suggested by instructors who use Money Smart, such as expanded pre- and post-tests teachers can use to measure changes in student knowledge or as quiz questions. The program is the FDIC's financial education curriculum designed to help young consumers understand basic financial services, develop money-management skills and learn how to use banking services effectively. For more information, visit the Money Smart page on the FDIC’s website … *
Click to view larger image NCUA Board Member Michael E. Fryzel (sixth from right) at the newest branch of the Polish & Slavic FCU branch in Bridgeview, Ill. From left: Claudette Struzik and Norma Pinion, Bridgeview Village trustees; Irena Marchaj, Polish & Slavic's board treasurer; Agnieszka Poslednik; the credit union’s chief operating officer; Ron Culen, vice president/regional management, Illinois Credit Union League; Frank Spula, president, Polish American Congress; Mary Sandra Anzelmo, president, Polish American Congress, Illinois Division; Father Wac³aw Lech, Saint Camillus Parish; Stanis³aw Zagata, president, Polish Highlanders Alliance of America; Tadeusz Czajkowski, president, Alliance of Polish Clubs; and Magda Kobiela, chair of finance board, Polish Teachers Association in America. (National Credit Union Administration photo)
ALEXANDRIA, Va. (2/11/11)--National Credit Union Administration (NCUA) Board Member Michael E. Fryzel attended and spoke at the ground breaking ceremony of the newest Polish & Slavic FCU branch on Tuesday, Feb 8. The new branch, located in Bridgeview, Ill., is an expansion of the venture the credit union began last year with its branch openings in Mt. Prospect and Norridge, Ill. The credit union has served New York and New Jersey for more than 35 years. “I was pleased to attend the grand opening of the Mt. Prospect and Norridge, Ill. branches last year. The potential for continued success of the Polish & Slavic Federal Credit Union was significant then and it remains significant now,” Fryzel noted. “This new branch will continue to bring quality credit union service and the community involvement for which Polish & Slavic is known to an expanded geographical region. In just one year, the credit union has added over 2,500 Illinois residents to its membership rolls and over $40 million in deposits. I anticipate similar growth with the new Bridgeview location.” Polish & Slavic FCU is a $1.4 billion financial institution with 14 branches. Headquartered in Brooklyn, N.Y., the credit union has a recognized presence across the Polish American community …

NCUA to look at executive compensation next week

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ALEXANDRIA, Va. (2/11/11)--A proposed rule addressing incentive-based compensation arrangements will be one of many items on the NCUA Board’s agenda when it next meets at 10:00 a.m. (ET) on Feb. 17. Though it did not release any details of the compensation-related proposal, the NCUA on Thursday did confirm that it would soon propose agency oversight of the executive compensation awarded by some natural person credit unions. The NCUA last year banned awarding so-called "golden parachute" executive compensation packages to executives of troubled corporates, and introduced new rules that require corporates to disclose their executive compensation packages. The agency will also vote on a final rule addressing corporate federal credit union chartering guidelines. The NCUA late last year proposed rules that would require at least seven natural person credit union representatives to provide detailed business planning and supplemental information alongside a corporate credit union charter application. The NCUA and its Office of Corporate Credit Unions (OCCU) would then judge whether the proposed corporate credit union would uphold the provisions of the Federal Credit Union Act, promote safety and soundness within the credit union industry, and provide quality services to members. Credit ratings and interest rate ceilings are also on the agenda for the NCUA’s February open meeting. The NCUA's monthly report on the status of its insurance funds will also be delivered during the meeting. A closed NCUA session will follow the open meeting. A creditor claim, insurance appeals, and supervisory matters will be discussed during the closed meeting. For the full NCUA meeting agenda, use the resource link.

Inside Washington (02/09/2011)

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* WASHINGTON (2/10/11)--The Federal Reserve Board on Wednesday approved a final rule to implement the provisions of the Dodd-Frank Act that give banks a period of time to align their activities and investments to the so-called Volcker Rule. The Volcker Rule generally prohibits banking entities from engaging in proprietary trading in securities, derivatives, or certain other financial instruments and from investing in, sponsoring, or having certain relationships with a hedge fund or private equity fund. The statute generally provides banking entities two years to bring their activities and investments into compliance and allows the Fed to extend the period under certain conditions. The rule can be viewed online … * WASHINGTON (2/10/11)--The National Federation of Community Development Credit Unions and the Institute of Mexicans Abroad will offer a webinar to provide information on an ACH-based remittance platform that the Federal Reserve Bank of Atlanta and Banco de Mexico (BANXICO) have developed. The webinar, to be held at 2 p.m. ET Feb. 23, will present an overview of Directo a Mexico, an alternative platform for sending money to Mexico. Directo a Mexico provides participant financial institutions with tools to serve the needs of immigrant consumers and with opportunities to work with the growing network of Mexican Consular offices throughout the U.S. It also offers a bridge for cross-border collaboration between U.S. and Mexican credit unions. Register for the webinar here. Another network that works with primarily with Hispanic clients is the International Remittances Network (IRNet), operated by the World Council of Credit Unions (WOCCU). About 109 U.S. credit unions participate in WOCCU’s IRNet, a remittance service operated by WOCCU Services Group. The service transmits remittances to eight countries and has taken part in over $2.9 billion in total transactions since its inception. Overall, $307 billion in remittances were sent from the U.S. to other nations in 2008, according to WOCCU estimates … * WASHINGTON (2/10/11)--The House Financial Services Committee will meet at 10 a.m. Feb. 15 to examine the economic and market impact of the derivatives title of the Dodd-Frank Act, announced Chairman Spencer Bachus (R-Ala.). The Dodd-Frank Act requires that all derivatives contracts be cleared through a central clearinghouse and that collateral is posted for each contract. The hearing will review the strengths and weaknesses of the derivatives title; the potential effects on U.S. competitiveness, job creation, and the overall U.S. economy; the likelihood of international harmonization of derivatives regulation; the consequences of the derivatives marketplace shifting from the U.S. to foreign markets; and the establishment of margin and capital requirements for end users who engage in legitimate hedging of business risks. “The derivatives market has evolved over the past 25 years into a highly sophisticated market that provides U.S. businesses with the ability to protect themselves against legitimate business risks, said Bachus. “Requiring companies that did not cause nor contribute to the financial crisis to be treated like banks will unnecessarily remove capital from the economy. We will work to ensure that the derivatives title of Dodd-Frank does not force valuable capital to sit on the sidelines or create a patchwork regulatory regime leaving market participants with conflicting regulatory mandates,” he said … * WASHINGTON (2/10/11)--Directors and officers of failed institutions may access bank records “where appropriate,” provided that the information is subject to the terms of a confidentiality agreement or protective order, according to Federal Deposit Insurance Corp. (FDIC) General Counsel Michael Krimminger. In recent months, the FDIC has discovered that former directors and officers of still-open banks have removed copies of confidential bank records, much of which is protected by federal law. Some of the banks subsequently failed. In a letter to the American Association of Bank Directors, Krimminger said the FDIC’s policy is not new nor does it represent a change in interpretation. Directors and officers may have individual interests in accessing bank records after failure but prior to the implementation of legal or administrative action. At issue are the lawsuits against former directors and officers for their roles in bank failures. Krimminger said the FDIC understands the interests of those seeking the information but proper procedures must be followed … * WASHINGTON (2/10/11)--The Federal Deposit Insurance Corporation (FDIC) Monday issued a Notice of Proposed Rulemaking intended to improve consumer awareness of deposit insurance coverage. Certain bank staff would receive annual training on the basic principles of deposit insurance coverage with the FDIC providing the materials--a computer-based module-- with no recordkeeping required by the insured institution. The rule would limit the required training to those employees who open accounts or are authorized by the bank to answer deposit insurance questions. Bank employees opening new accounts would be required to ask whether the customer has other accounts at that institution and determine whether the aggregate deposits may exceed the deposit insurance limit of $250,000. Read the Financial Institution Letter here

CUNA will work with CUs as corporate system realigns

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WASHINGTON (2/10/11)--Credit Union National Association (CUNA) President/CEO Bill Cheney on Wednesday said that CUNA appreciates the National Credit Union Administration’s (NCUA) concerns regarding overconcentration of assets, but will work with the NCUA and various stakeholders to determine how individual credit unions can be given the most flexibility as the future structure of the corporate credit union system is decided. Cheney’s statement followed the release of the NCUA’s letter to corporate credit unions No. 2011-02. In that letter, the NCUA cautioned that “the concentration of services or the aggregation of service volumes in one entity large enough to introduce systemic risk may create an unacceptable ‘too big to fail’ scenario.” As the NCUA letter noted, many have suggested that corporate credit unions or specialized credit union service organizations would benefit from larger client/member bases. While consolidation could promote greater efficiency and improve the long-term viability of the credit union system, consolidation can also be overdone, the NCUA said. CUNA’s Corporate Credit Union Task Force and its Next Steps Working Group have backed consolidation when necessary, and Cheney noted that the NCUA has taken the steps needed to ensure that the surviving corporate credit unions will operate in the best interest of their members. The agency in its letter also warned that consolidation, and the increasingly large institutions that could result, could create issues in the event of a failure or other difficulties, potentially denying natural person credit unions access to essential services. The agency also cited the need for a comprehensive contingency plans, and reminded corporates that while the NCUA was forced to step in and take several corporates into conservatorship in recent years, “future agency action to provide such systemic support cannot be factored into contingency plans.” The NCUA added that generating income, identifying risks, and ensuring stability are “difficult enough during normal business operations,” and can “become even more complicated during any consolidation process.” For the full NCUA letter, use the resource link.

Treasury housing plan could eliminate GSEs

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WASHINGTON (2/10/11)—Government-sponsored enterprises Fannie Mae and Freddie Mac, and the concept of government-backed mortgages itself, could be eliminated under a U.S. Treasury plan, Bloomberg News has reported. GSE elimination is one of three options that will soon be presented by Treasury Secretary Tim Geithner, the Bloomberg story said. White House Press Secretary Robert Gibbs confirmed that that presentation would be made before Congress this Friday. The Treasury is also expected to suggest a gradual phasing out of government guaranteed mortgage-backed securities, thus restricting government intervention in the mortgage market to only the worst of financial situations. Geithner will also propose an incremental reduction in the government’s support of the GSEs as a third option. The conforming loan cap, which currently stands at just over $729,000, would also be reduced under one proposal. The Treasury will stop short of proposing specific legislation, and sources told Bloomberg that the proposal could change before it is delivered to the Congress. GSE reform, and, more specifically, transitioning the GSEs out of their current conservatorship was the focus of a Wednesday hearing before the House Financial Services Committee’s capital markets subcommittee. Republican House members and other GSE critics have taken issue with taxpayer costs associated with the government takeover of Fannie Mae and Freddie Mac. The Credit Union National Association (CUNA) also weighed in on the GSEs early last month, supporting "meaningful, comprehensive efforts" to address numerous GSE-related issues. In a letter sent to Geithner, Consumer Financial Protection Bureau architect Elizabeth Warren, and House and Senate financial committee leaders, CUNA recommended that the government find a way to promote housing market efficiency, even if Fannie and Freddie are replaced. The government should also develop a strong supervisory system for secondary mortgage market participants, and that secondary mortgage market should remain open to all parties, CUNA added.

Bernanke backs spendingtax reform in Hill testimony

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WASHINGTON (2/10/11)--Substantive changes to national tax and spending policies would reduce the national deficit and enhance the long-term growth potential of the U.S. economy, Federal Reserve Chairman Ben Bernanke said in testimony delivered before the 112th Congress on Wednesday. Bernanke called on both the Congress and the Obama Administration to make the needed changes. The tax and spending changes could encourage saving, aid investment in employee and workforce training, and promote research and development, Bernanke added. The House Ways and Means Committee is continuously examining the nation’s tax system, and examined economic and administrative issued posed by the current tax system during a Jan. 19 hearing. A number of other tax related hearings are expected. The credit union tax exemption was not on the agenda for the recent hearing, and is not slated to come up in the near future. However, the Credit Union National Association (CUNA) continues to guard against any legislative action regarding the tax exemption by touting the exemption as one of the highest-yielding investments the federal government has made. CUNA figures show that America's 92 million credit union members receive substantial benefits in the form of better pricing on services, saving them about $7.5 billion a year. The $7.5 billion savings to consumers is especially significant when measured against the $1.5 billion in lost federal revenue a year that the government says is represented by the credit union tax exemption. "Further, the tax exemption helps to ensure consumers have choices beyond commercial banks in the financial marketplace. It is appropriate to view these results as evidence of sound public policy," CUNA President/CEO Bill Cheney has remarked.

CUs are 13 of CDFI Funds native American program applicants

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WASHINGTON (2/10/11)--The Community Development Financial Institutions Fund (CDFI Fund) announced a sharp jump in applications for grants and assistance under the FY 2011 round of its Native American CDFI Assistance (NACA) Program. The program, run under the auspices of the U.S. Treasury Department, saw nearly a 50% spike in both the number of applications and in total dollar amounts requested as compared to the 2010 round, “paralleling the rapid expansion of the Native CDFI industry in recent years”, a CDFI Fund announcement said. Loan funds made up the bulk of applicants at 82%, but for financial institutions credit union involvement was way ahead. Credit unions represented 13% of the applications, while banks, thrifts and holding companies comprised just 5% of the applicants. Applicants requested just a hair under $35 million in NACA financial assistance, technical assistance, or both. The CDFI Fund’s NACA Program addresses a lack of economic opportunity in Native communities by increasing access to capital and financial services. The financial and technical assistance is intended to foster the development and expansion of Native CDFIs. According to Treasury, the Native CDFI industry has grown from just 14 certified Native CDFIs in 2001 to 59 as of December 2010, with an additional 60 preparing for certification. “I am delighted to see the strong growth in applications for the NACA Program as Native CDFIs continue their critical work overcoming barriers to capital and promoting economic development in Native communities,” said CDFI Fund Director Donna Gambrell in a release. “Native communities face critical economic challenges and Native CDFIs are providing the leadership and stability to expand opportunity and create lasting change in the communities they serve.” Use the resource link below for more information on Treasury’s CDFI Fund and its programs.

Hill veteran Harper is new PACA director at NCUA

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

Federation working on 1B CDFI bond program

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

MBLs NCUA oversight part of Senate Banking agenda

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

Housing issues will see committee scrutiny this week

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WASHINGTON (2/9/11)—Housing related financial issues are on the agenda of the House Financial Services Committee and its capital markets subcommittee this week, with a Thursday oversight plan hearing featuring discussion of the Obama administration’s Home Affordable Modification Program (HAMP) and government-sponsored enterprises (GSEs) Freddie Mac and Fannie Mae being examined. The GSE hearing, which will take place at 2 p.m. (ET) later today, will focus on actions needed to transition the GSEs out of the federal conservatorship that they have been under since 2008. The subcommittee will also consider ways that the bailout of the GSEs, which has currently cost $150 billion in taxpayer funds, can be ended. Republican House members and other GSE critics have taken issue with taxpayer costs associated with the government takeover of Fannie Mae and Freddie Mac. Many have also criticized the Obama administration’s HAMP program, which aims to help struggling homeowners by modifying their mortgages. House Financial Services Chairman Spencer Bachus (R-Ala.) in a Tuesday release labeled the HAMP program a failure. The chairman said that ending HAMP, which the committee is expected to propose during its Thursday hearing, would save $50 billion in taxpayer funds. The Thursday hearing will begin at 10 a.m. (ET). Despite record levels of new foreclosures--2.9 million in 2010 and a projected 3 million in 2011—only 522,000 homes were undergoing permanent modification as of Dec. 21, 2010. However, the Obama administration earlier this month reported that 4.1 million modification arrangements started between April 2009 and the end of 2010, resulting in 1.4 million HAMP trial modification starts and more than 650,000 loss mitigation and early delinquency interventions. The administration also noted that 85% of homeowners with HAMP modified loans remained in their homes. The administration last year claimed that the HAMP program was on course to modify as many as 4 million mortgages by 2012. The Credit Union National Association (CUNA) has also formed its own GSE Reform Task Force to examine GSE-related issues.

Inside Washington (02/08/2011)

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

NEW Hill-veteran Harper is new PACA director at NCUA

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

NCUA revises 2011 meeting schedule

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Alexandria, Va. -- The 2011 National Credit Union Administration (NCUA) has revised its 2011 board meeting schedule. The September meeting has been pushed back to Sept. 22 from Sept. 15. The next scheduled NCUA board meeting is Feb. 17 and the remaining dates are as follows:
* March 17 * April 21 * May 19 * June 16 * July 21 * No August meeting * September 22 * October 27 * November 17 * December 15
Use the resource link below for more NCUA information.

NCUA details fin lit requirements for FCU directors

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ALEXANDRIA, Va. (2/8/11)—The National Credit Union Administration (NCUA) in its letter to federal credit unions No. 11-FCU-02 sought to remind federal credit union directors of specific financial literacy requirements that will become effective later this year as well as their general responsibilities as credit union leaders. The NCUA in December established a set of guidelines for credit union directors. Those guidelines would seek to ensure that credit union directors have “a base level of financial skills, consistent with the size and complexity of the credit union operation they serve.” In the letter, the NCUA reiterates that directors should have the ability to examine their credit union’s balance sheet and understand specific financial activities that their credit union takes part in. “In particular, a director must understand not only how these activities generate revenue for the credit union but also, and perhaps most importantly, the various risks associated with these activities that could lead to financial loss.” The NCUA has specifically cited the need for complete knowledge of risks, including credit risk, liquidity-related risks, and interest rate, compliance, strategic, transaction, and reputation risks. The NCUA has determined that directors will be given six months to familiarize themselves with the necessary financial information and concepts. Directors elected before Jan. 27 will need to have acquired the necessary knowledge by July 27. NCUA examiners will look for evidence of comprehensive financial training during their inspections, and will evaluate whether a given credit union has the policies needed to offer appropriate training to its directors. However, the Credit Union National Association’s (CUNA) Senior Vice President for Compliance Kathy Thompson noted that NCUA examiners should never quiz credit union board members on the substance of their training. Thompson added that these rules will not apply to state-chartered credit unions. Directors may gain the needed financial understanding through their own in-house credit union training, external training, on the job experience, or online training. The NCUA will offer its own training, and directors may also train through CUNA’s own Center for Professional Development. For the full NCUA letter and more on CUNA’s training sessions, use the resource links.

Reg burden must be addressed CUNA to NCUA

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WASHINGTON (2/8/11)--The Credit Union National Association (CUNA) is “currently reviewing the totality of credit unions' regulatory burdens” and is identifying problematic regulations, and hopes to work with the National Credit Union Administration (NCUA) to “help credit unions shoulder their regulatory responsibilities,” CUNA President/CEO Bill Cheney said in a recent letter to NCUA Chairman Debbie Matz. Although the NCUA, as an independent agency, is not subject to President Barack Obama’s recent executive order that urged regulators to conduct their own internal reviews, Cheney urged the NCUA to comply with the spirit of the order. Obama in a late January executive order called on federal agencies to design cost-effective, evidence-based regulations that are compatible with economic growth, job creation, and competitiveness. Those agencies should also work to reduce burdens on small businesses whenever possible, Obama added. Cheney commended the executive order in a January letter to the President. Cheney recommended that the NCUA look for ways that its 2011 budget, which increased by $25 million over 2010’s budget, could be cut. Cheney also suggested that the NCUA expand its RegFlex program and avoid overregulating credit union volunteers. The CUNA CEO recommended that the NCUA should, where applicable, target rules that can be simplified, and should work with the Consumer Financial Protection Bureau to limit potentially negative regulatory consequences, CUNA added. The NCUA’s own examination process should also be reviewed, and the NCUA should adopt the recommendations contained in CUNA's "Guidance for Credit Unions on Supervisory and Examination Issues," Cheney suggested. Cheney in his letter said that CUNA would work closely with credit union leagues and individual credit unions to develop a series of regulatory recommendations for the NCUA and other policymakers. For the full letter, use the resource link.

Regulatory reviews scheduled this week

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WASHINGTON (2/8/11)—The House and Senate have relatively light legislative calendars this week, as the Senate on Wednesday will recess for the Senate Democratic Caucus retreat, but credit unions will be interested in several regulation-related actions. The House on Wednesday will discuss and potentially vote on a resolution that would direct congressional committees to inventory and review existing, pending, and proposed regulations and orders from various federal agencies. Regulatory review will also be a focus of House committees, with the House Oversight and Government Reform Committee examining regulatory impediments to job creation on Thursday. That job creation focus will also be evident during a Wednesday House Financial Services Committee subcommittee on domestic monetarypPolicy and technology hearing on the Federal Reserve’s role in job creation. The House Financial Services Committee will markup its oversight plan on Thursday, and that committee’s capital markets subcommittee will examine potential reforms to government-sponsored enterprises Fannie Mae and Freddie Mac on Wednesday. Witnesses for that hearing will include the Cato Institute’s Mark Calabria, American Enterprise Institute resident fellow Alex Pollock, the Reason Foundation’s Anthony Randazzo, and Sarah Wartell of the Center for American Progress. Several other GSE hearings have been planned, subcommittee Chair Scott Garret (R-N.J.) said. More generally, the state of the U.S. economy will be covered as Federal Reserve Chairman Ben Bernanke appears before the House Budget Committee on Wednesday.

Inside Washington (02/07/2011)

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* WASHINGTON (2/8/11)--As federal agencies remain deadlocked over new loan servicing rules, more observers are calling for Congress to settle the debate (American BankerFeb. 7). Regulators cannot decide whether to use the authority granted by Dodd-Frank legislation to create the new rules or direct other vehicles to mandate the handling of foreclosures. With the issue unresolved, some observers say Congress is most likely to create a single solution, or at least get the process started. What regulators do agree on is the need for loan servicing standards, created by servicers’ poor handling of foreclosures, modifications and buyback requests and other issues related to the mortgage crisis. The Federal Deposit Insurance Corp. advocates making standards part of risk retention rules for securitized loans, which are mandated by Dodd-Frank. But other agencies are opposed to that approach. Though observers agree that Congress should be involved on some level, it remains to be seen if any legislation could garner enough votes for passage. Spencer Bachus (R-Ala.), chairman of the House Financial Services Committee, has yet to clarify his position on the issue. But Barney Frank (D-Mass.), the former committee chair, said he fears Republicans will give low priority to the issue … * WASHINGTON (2/8/11)--Michael H. Krimminger has been named the Federal Deposit Insurance Corp.’s (FDIC) new general counsel. The FDIC general counsel is in charge of the legal division, which is responsible for legal work on regulatory issues, and FDIC transactions, litigation, and corporate and commercial claims. The legal division has more than 800 employees nationwide. As deputy to the chairman for policy at the FDIC since 2009, Krimminger has served as the chairman’s advisor and has directed policy initiatives on banking and financial institution crisis and resolution, mortgage finance, international coordination, capital markets, and legal issues … * WASHINGTON (2/8/11)--Deposit insurance will climb and bonus pay sink for top executives under two regulations approved on Monday by the Federal Deposit Insurance Corp. The new large bank pricing system will result in higher assessment rates for banks with high-risk asset concentrations, less stable balance sheet liquidity, or potentially higher loss severity in the event of failure. Over the long term, large institutions that pose higher risk will pay higher assessments when they assume these risks rather than when conditions deteriorate. The compensation rule requires that at least 50% of incentive-based payments be deferred for a minimum of three years for designated executives. Moreover, boards of directors of these larger institutions must identify employees who individually have the ability to expose the institution to substantial risk, and must determine that the incentive compensation for these employees appropriately balances risk and rewards according to enumerated standards … * WASHINGTON (2/8/11)--The Federal Deposit Insurance Corporation (FDIC) Monday issued a Notice of Proposed Rulemaking intended to improve consumer awareness of deposit insurance coverage. The proposed rule would require certain bank staff to receive annual training on the basic principles of deposit insurance coverage with the FDIC providing the materials--a computer-based module--with no recordkeeping required of the insured institution. The rule would limit the required training to those employees who open accounts or are authorized by the bank to answer deposit insurance questions. The rule achieves the balance of minimizing regulatory burden while ensuring that depositors are better informed, according to an FDIC release …

Oakland Municipal is first CU closing of 2011

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ALEXANDRIA, Va. (2/7/11)—On Friday, the National Credit Union Administration (NCUA) was appointed liquidating agent of Oakland Municipal Credit Union, of Oakland, Calif., by the state’s Department of Financial Institutions (DFI). It was the first liquidation of a federally insured credit union in 2011. Western Federal Credit Union, of Manhattan Beach, immediately purchased and assumed Oakland Municipal’s assets, liabilities and members. At closure, Oakland Municipal had approximately $88 million in assets and served 7,800 members. The credit union was established in 1964 to serve employees of Oakland area federal, state, and local government. Former members of the closed credit union will experience no interruption in credit union service as they become member new members of Western Federal. The $1.5 billion-asset, full service Manhattan Beach credit union has 148,000 members. It will continue to serve members of Oakland Municipal at the existing branch office located at 150 Frank H. Ogawa Place. At closure, Oakland Municipal had approximately $88 million in assets and served 7,800 members. The credit union was established in 1964 to serve employees of Oakland area federal, state, and local government.

30-year mortgage rates stay steady

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WASHINGTON (2/7/11)—Freddie Mac last week reported an average rate of 4.81% on 30-year mortgages, a fractional increase from the 4.8% average reported during the previous week. Thirty-year fixed mortgage rates averaged 5.01% this time last year. Fifteen-year conventional mortgage rates and five-year adjustable rates also fluctuated by a mere .01% between the week ended Feb. 3 and the week ended Jan. 27, coming in at 4.08% and 3.69%, respectively. One-year adjustable rate mortgages remained at 3.26 % for the second week straight. Freddie Mac Vice President/Chief Economist Frank Nothaft said that the rates remained stable due to improving economic news and a stable rate of inflation through the end of 2010. For the full mortgage rate survey, use the resource link.

Latest NGN offering expected to get AAA rating

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ALEXANDRIA, Va. (2/7/11)—The National Credit Union Administration’s (NCUA) latest NCUA Guaranteed Notes (NGN) offering has been tentatively assigned an AAA rating by market analyst Fitch Ratings. The high rating is due to the assets being backed by the full faith of the U.S. Government. The $1.253 billion in NGNs should be available for purchase soon. The latest NGN offering will be comprised of mortgage-backed securities. A price for the NGNs had not been released at press time, but price guidance was around 40 to 45 basis points. Fitch in a release said that the senior notes would accrue interest at a rate of one-month LIBOR plus a spread subject to a maximum rate of 8% per annum. The NCUA last month completed its first NGN sale of 2011, gaining $1.5 billion in proceeds. The agency has completed 65% of the securitization designed to fund deposits assumed by the bridge corporate credit unions, and has gained a total of $19 billion in revenue from its NGN sales. The remainder of the NGNs will be sold in the coming months, according to the NCUA.

CUNA backs SECs CU swap clearing exemption

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WASHINGTON (2/7/11)--The Securities and Exchange Commission’s (SEC) proposal to exempt credit unions with under $10 billion in assets from mandatory securities-based swaps clearing requirements has the backing of the Credit Union National Association (CUNA), but CUNA would like it to go even further. Without the exemption, credit unions could be effectively prohibited from hedging risk using over-the-counter options or other derivatives when a security, such as a bond, is the underlying asset. The Dodd-Frank Act gives the SEC the leeway to consider exemptions from the swap requirements, but the SEC is not required to exempt any financial institution from the requirements. Federal credit unions are allowed to enter into some types of over-the-counter agreements, which would meet the definition of “security-based swaps,” and some state credit unions have this authority as well. Credit unions would therefore be disadvantaged if the end-user exemption is not expanded to include credit unions, CUNA said in a comment letter sent Friday to the SEC. CUNA added that the proposed $10 billion exemption threshold should not be lowered, and added that the SEC should consider using a different exemption criteria, if possible. CUNA suggested that credit unions be covered by the proposed rule only if they have at least $10 billion in assets and transact significant volumes of securities-based swaps. The SEC proposal seeks to limit the types of risky investments that some have said lead to the recent financial crisis. However, CUNA noted that, in the few and restricted instances where credit unions may make investments in swaps and other forms of derivatives, such investments rarely pose a risk to credit unions due to the comprehensive nature of existing National Credit Union Administration derivatives rules. Those rules generally prevent federal credit unions from investing in derivatives except for certain options used to hedge risk on bonds and retail products tied to an equity index, and to hedge interest rate risk. For the full comment letter, use the resource link.

Social media gets new focus at NCUA

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ALEXANDRIA, Va. (2/7/11)--The National Credit Union Administration (NCUA), known already to “tweet” on Twitter, is enhancing its outreach through social media and has brought on a new employee to lead the charge. The NCUA says it wishes to ensure a “vibrant and active presence in the social media sphere,” which includes a presence, not only on Twitter, but Facebook, YouTube and other forms of electronic communications as well. Kenzie Snowden is the NCUA’s new social media and outreach specialist. She started in that position a week ago. NCUA Chairman Debbie Matz said of the development, “The Social Media and Outreach Specialist position is about the future. NCUA is continuing to explore all avenues to enhance communication with consumers, the credit union industry, and other audiences. I look forward to NCUA reaching new audiences, and new levels of transparency, through the outreach that will be initiated by our Social Media program.” Prior to joining the NCUA, Snowden did a stint in social media development with the public affairs office at the U.S. Patent and Trademark Office.

Inside Washington (02/04/2011)

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* ALEXANDRIA, Va. (2/7/11)--An archived version of the National Credit Union Administration’s (NCUA) webinar entitled “Troubled Debt Restructurings: What are They & How Does the Accounting Work?” is now available. Hosted by NCUA board member Gigi Hyland, the webinar addresses the following topics: What is a TDR? How is financial difficulty defined? What is a concession? How do you measure impairment on a TDR modification? Prudent CRE Workouts. The webinar features presenters Dave Lawrence and Sydney Garmong, of Crowe Horwath, and is intended to facilitate credit unions’ understanding of U.S. Generally Accepted Accounting Principles, aka GAAP, in relation to TDRs … * WASHINGTON (2/7/11)--Federal Reserve Board Chairman Ben Bernanke answered congressional calls for audits of the Federal Reserve System with a defense of monetary policy independence from short-term political considerations at an National Press Club luncheon Thursday. All the Fed’s financial transactions are reported and available to congressional agencies, Bernanke said. The calls for audits, he said, were calls for political oversight of monetary policy decisions. Independence is “the fundamental bedrock of central banking,” he said, adding that all members, past and present, of the Federal Reserve Board agreed. He said that experience elsewhere demonstrates that a politically independent monetary policy leads to better economic outcomes. The present Federal Reserve policy, which includes $600 billion in Treasury purchases begun in November, is supporting the economy, he said. He noted both rises in stock market indices and basic economic indicators as evidence … * WASHINGTON (2/7/11)--Richard Fisher, president of the Federal Reserve Bank of Dallas, said in an interview Thursday he would not support further quantitative easing after this round. The Fed completes its purchase of $600 billion in long-term asset purchases in June (Bloomberg Feb. 4). Fisher said he cannot imagine a convincing argument for further easing given the current state of the U.S. economy. Recent economic data indicate the recovery will gain momentum in 2010, with consumer spending rising and manufacturing increasing last month. Fisher became a voting member of the policymaking Federal Open Market Committee this year. He said he wouldn’t have supported easing if he had a vote last year …

CFPB launches website seeks YouTube videos

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WASHINGTON (2/4/11)—The Consumer Financial Protection Bureau (CFPB) on Thursday debuted its new website, www.consumerfinance.gov. The site includes a blog, background information on the bureau, and other resources, including a press release archive and a calendar detailing CFPB architect Elizabeth Warren’s upcoming schedule. Another feature of the site is a resource through which users can receive additional information on issues related to mortgages, credit cards, credit reports, bank accounts, and other financial services. Real stories from ordinary Americans that have experienced problems in the consumer credit market are also included on the site. The CFPB will accept suggestions from the general public through Twitter, YouTube, and its own homepage, and will respond to many of these suggestions via its own YouTube videos. The agency has sought out initial submissions through its own YouTube video, which features Warren and was shot by acclaimed director Ron Howard. Warren also discussed the future goals of the CFPB in a recent letter to Rep. Randy Neugebauer (R-Texas). (See related story: Warren: CFPB will work for reduced reg burden) To access the site, use the resource link.

Cheney talks interchange MBL cap on Bloomberg radio

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WASHINGTON (2/4/11)—Credit Union National Association (CUNA) President/CEO Bill Cheney during a Thursday appearance on Bloomberg Radio’s Taking Stock with Pimm Fox urged the Federal Reserve to stop and study the new Interchange law, rather than forging ahead with new rules, so that everybody wins -- consumers, merchants and financial institutions. The Fed should be given the time needed to consider all interchange related costs, and set a reasonable interchange rate to avoid “unintended consequences," Cheney said. These unintended consequences could include the elimination of debit card programs by credit unions or the addition of new fees that would be imposed on credit union members in order to keep the programs. The Federal Reserve’s interchange proposal would place an arbitrary cap, perhaps as low as 7 cents, on interchange fees. Cheney challenged retailer claims that any savings gained from this interchange fee cap would be passed on to consumers. The promise and progress of credit union member business lending legislation was also addressed during Cheney’s Thursday appearance. Prompted by one show host’s observation that big banks have recently been reluctant to lend to small businesses, Cheney noted that credit unions are waiting to do more to help the economy, and could do so if the cap is raised. Cheney also confirmed one host’s suspicions that fear of competition is the sole motive behind banker opposition to the MBL cap lift. The hosts noted Federal Reserve Chairman Ben Bernanke’s Thursday statement that more jobs would be needed if the economic recovery is to be sustained, and Cheney said that that employment gap could also be filled once the MBL increase is passed into law. Lifting the MBL cap to 27.5% of total assets would create over 108,000 new jobs, Cheney said. CUNA has estimated that the MBL cap increase would add $10 billion in new funds into the market, at no cost to taxpayers. CUNA and credit unions made significant inroads with their 2010 support of MBL legislation in both the House and Senate, and Cheney said that they are “not going to start at the beginning” whenever MBL legislation returns to the House and Senate floors. “We’re going to get it done,” he said. Cheney also took on the credit union tax exemption and credit union chartering issues during the half hour interview. Cheney said that while he is naturally in favor of more credit unions, the current restrictions on the raising of supplemental capital can make it difficult to gather the funds needed to organize and start a new credit union.

Warren CFPB will work for reduced reg burden

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WASHINGTON (2/4/11)—The Consumer Financial Protection Bureau (CFPB), once it is fully organized later this year, will work to reduce some regulatory burdens faced by credit unions and other financial institutions and will review the impact of its own rules on credit unions and other small financial service providers, CFPB architect Elizabeth Warren said in a recent letter to Rep. Randy Neugebauer (R-Texas). Warren’s letter was prompted by a Jan. 18 request from Neugebauer for more information on the development and future operations of the CFPB. Neugebauer, who serves on the House Financial Services Committee’s Subcommittee on Financial Institutions and Consumer Credit, also discussed the CFPB during an early January meeting with Warren. In Warren's letter, she said she shares Neugebauer’s “concern for promoting consistent regulation and minimizing implementation burdens,” and added that the CFPBs dialogue with the National Credit Union Administration (NCUA) and other financial regulators is “imperative” as the CFPB transitions into its own regulatory activities. The CFPB will take over a number of regulatory roles from the Federal Reserve and other agencies on July 21. The NCUA will remain mostly independent, however, as credit unions holding under $10 billion in assets will not be examined by the pending CFPB. The NCUA will have a seat on a pending regulatory council. CFPB representatives have discussed the agency’s goals and future work with credit unions, leaders of other financial institutions, and individual consumers as it works toward the July 21 deadline. The Credit Union National Association has met with the CFPB as well, stressing the need to minimize credit unions' regulatory burdens, costs and requirements. CUNA has delivered commentary on how consumer financial regulations can be improved and how consumer financial disclosures can be pared down, and has noted that improving the transparency and consumer-friendliness of many financial products would benefit credit unions, holding competitors to the same high standards generally used by credit unions in these core areas. Warren also outlined the CFPB’s structure in the letter. The CFPB will have six divisions, with respective groups addressing consumer engagement and education, supervision and enforcement, research markets and regulations, legal matters general counsel, external affairs, and the organization’s own internal operations. The CFPB has also set up its own website ahead of the July 21 deadline, and is seeking additional outside input via social media outlets. (See related story: CFPB launches website, seeks Youtube videos)

Inside Washington (02/03/2011)

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* WASHINGTON (2/4/11)--The Federal Deposit Insurance Corp. will meet Monday to finalize several deposit insurance measures and a proposal to prohibit risky compensation plans (American Banker Feb. 3). Among the changes, which were first proposed in November, is a new method for calculating deposit insurance assessments, as required by the Dodd-Frank Act. Under the new proposal, the FDIC would multiply a bank’s risk-based insurance rate by its assets minus its capital--instead of by its deposits--to calculate an assessment. The reform is meant to capture the nondeposit liabilities, used primarily by large banks, in their premiums. The FDIC has also proposed changes in how it comes up with risk-based rates for large banks. Under the new rule, the risk formula for large institutions would make their insurance prices more risk sensitive. The agency is also expected to issue another proposal, drafted jointly with other agencies, requiring greater disclosure of compensation agreements for top banking executives. Under Dodd-Frank, financial institutions must report their compensation plans and eliminate excessive pay packages. The meeting agenda is available online here … * WASHINGTON (2/4/11)--Fifth Third Bancorp, Cincinnati, has fully repaid its $3.4 billion in outstanding Troubled Asset Relief Program (TARP) funds, the Treasury Department announced Wednesday. With the transaction, total repayments and other income from programs within TARP to provide direct financial support to banks (about $243 billion) have nearly surpassed total disbursements (about $245 billion). Treasury currently estimates that bank programs within TARP will ultimately provide a profit of nearly $20 billion to taxpayers. Overall, across all TARP programs--including financial support for banks, the domestic auto industry, and American Insurance Group; targeted initiatives to help restart the credit markets; and foreclosure prevention programs--Treasury has disbursed a total of approximately $410 billion. With the Fifth Third payment, total program repayments (roughly $238 billion) and other income (about $36 billion) have reached more than $274 billion. Fifth Third Bancorp had previously paid a cumulative total of $340.8 million in dividends to Treasury on those preferred shares--representing a return on this investment of approximately 10%. Treasury also continues to hold warrants to purchase Fifth Third Bancorp common stock …

Treasury offers webinar on electronic benefit payments

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WASHINGTON (2/3/11)—The U.S. Treasury’s Go Direct program on Wednesday announced a pair of February webinars to better educate financial institutions and other Go Direct campaign partners on a recent rule change that will require all federal benefit payments to be paid electronically. The webinars will take place on Feb. 16 and 17. The Treasury last year announced that all federal benefits that are filed on or after March 1, 2011 will be paid electronically via either direct deposit or the Direct Express Debit MasterCard card. Individuals that are currently receiving their benefit payments via paper check will be asked to accept their benefits electronically by March of 2013. The change will save over $125 million annually, according to the Treasury. The Treasury has also again selected February as Go Direct month in a bid to encourage consumers to take advantage of the safety benefits of direct deposit for Social Security payments and other federal benefits. February has been Go Direct month since 2006. The Credit Union National Association (CUNA) is a Go Direct national partner and supports the check-safety and cost-savings goals for the program. For more on the coming Go Direct webinars, use the resource link.

Judge could decide CU claims against Fannie Mae

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WASHINGTON (2/3/11)--A potential ruling in a credit union suit brought against Fannie Mae could come within the next few months after the government-sponsored mortgage giant and a credit union each this week filed briefs regarding possible summary judgment. The credit union which filed the brief is New Jersey-based Picatinny FCU. Three other credit unions, New York-based Suffolk FCU and Sperry Associates FCU, and Proponent FCU, also of New Jersey, are involved in related litigation against Fannie Mae for up to $60 million in damages. The Picatinny FCU case alone involves over $14 million in disputed mortgage notes. The credit unions have alleged that Fannie Mae became responsible for these damages when it purchased bundled credit union mortgages from the now defunct U.S. Mortgage Corp. Michael J. McGrath, the former president/CEO of U.S. Mortgage who pleaded guilty last year to the fraud of $139.6 million from 28 credit unions, Fannie Mae, and others, sold the mortgages to Fannie Mae on behalf of these and other credit unions. McGrath was not authorized to perform such transactions on behalf of the credit unions. The fraudulent transactions took place between 2004 and 2009. McGrath’s former company, U.S. Mortgage, and its subsidiary Credit Union National Mortgage listed over $200 million in debts to Fannie Mae and 28 credit unions when they filed for bankruptcy in early 2009. Each side has alleged that the other did not properly screen McGrath before the mortgage transactions were made. While a recent Picatinny FCU filing claims that Fannie Mae failed to follow its own loan certification standards when it purchased loans from McGrath, Fannie Mae has alleged that the credit unions should have warned Fannie Mae that McGrath was acting without credit union authority. Fannie Mae and Picatinny FCU are each seeking a full judgment in their favor, but the case could go to trial. That case and the other three credit unions’ cases against Fannie Mae are pending in the U.S. District Court for the District of New Jersey.

Fed policy GSE reform arise on subcommittee agendas

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WASHINGTON (2/3/11)—The Federal Reserve’s impact on unemployment and job creation will be examined during a Feb. 9 hearing before the House domestic monetary policy and technology subcommittee, announced that panel's new chairman, Ron Paul (R-Texas). Paul in a Wednesday statement noted that “the nation’s unemployment picture remains bleak” in spite of “enormous amounts of monetary and credit expansion by the Federal Reserve in recent years.” The subcommittee hearing follows the Fed’s November purchase of $600 billion in long-term Treasury bonds. The purchase, which is known as "quantitative easing," is meant to stimulate the economy. Potential reform of government-sponsored mortgage backers Fannie Mae and Freddie Mac will also be discussed during a separate Feb. 9 hearing before the House capital markets subcommittee. That hearing, announced by House subcommittee Chairman Scott Garrett (R-N.J.) Wednesday, will focus on actions needed to transition government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac out of the federal conservatorship that they have been under since 2008. The subcommittee will also consider ways that the bailout of the GSEs, which has currently cost $150 billion in taxpayer funds, can be ended. GSE critics—including some Republican House members--have taken issue with the taxpayer costs associated with the government takeover of Fannie Mae and Freddie Mac, and Garret in a statement said that his committee would “continue to seek alternative solutions to housing finance in the United States that decrease the government’s exposure and get private capital off the sidelines.” Credit Union National Association (CUNA) President/CEO Bill Cheney in a 2010 letter to the Treasury said that the needs of credit unions and other small mortgage lenders should continue to be considered as the government develops its plans for the future of the secondary home mortgage market. CUNA has also formed its own GSE Reform Task Force to examine and opine on GSE-related issues. Witnesses for the two hearings have not yet been announced.

Inside Washington (02/02/2011)

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* ALEXANDRIA, Va. (2/3/11)—The National Credit Union Administration (NCUA) will soon offer an additional $1.253 billion in its NCUA Guaranteed Notes (NGNs), The Wall Street Journal reported on Wednesday. The latest NGN offering will be comprised of mortgage-backed securities. A price for the NGNs will likely be released later this week, and price guidance is currently around 40 to 45 basis points. The NCUA last week completed its first NGN sale of 2011, gaining $1.5 billion in proceeds. The agency has completed 65% of the securitization designed to fund deposits assumed by the bridge corporate credit unions, and has gained a total of $19 billion in revenue from its NGN sales. The remainder of the NGNs will be sold in the coming months, according to the NCUA… * WASHINGTON (2/3/11)--The Government Accountability Office (GAO), which is the investigative arm of the U.S. Congress that studies how taxpayer dollars are used, released a study titled ”Payday Lending: Federal Law Enforcement Uses a Multilayered Approach to Identify Employees in Financial Distress”. The GAO report estimated that there are about $40 billion worth of payday loans written annually, usually for amounts between $100 to $500 and with a quick payoff times of about two weeks. The GAO report addressed concerns raised about payday lending to federal employees in law enforcement and national security positions. As part of its information collecting and to identify alternatives to payday lending that are available for consumers, GAO noted it spoke with a number of credit unions and banks, including some federal- and state-employee credit unions, offering small-dollar loan products. The report also features an Appendix IV with comments from the National Credit Union Administration… * WASHINGTON (2/3/11)--Starting Friday, women-owned small businesses can participate in a new federal contracting program offered by the U.S. Small Business Administration (SBA). In an announcement this week, SBA said women-owned businesses are one of the fastest growing sectors of the economy. “As we continue to look to small businesses to grow, create jobs and lead America into the future, women-owned businesses will play a key role,” SBA Administrator Karen Mills said. The new Women-Owned Small Business (WOSB) Federal Contract Program will be fully implemented over the next several months, with the first contracts expected to be awarded by the fourth quarter of fiscal year 2011…

Reg M burdens should be minimized CUNA says

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WASHINGTON (2/2/11)--A recent Federal Reserve proposal that would increase the threshold for Regulation M consumer lease disclosures to $50,000 is consistent with the new statutory requirement imposed by the Dodd-Frank Act, the Credit Union National Association (CUNA) has said in a Tuesday letter to the Fed. Regulation M generally applies to consumer leases for the use of personal property, such as automobiles, where the contractual obligation has a term of more than four months. Under the recent Dodd-Frank Act changes, the $50,000 threshold will come into effect on July 21. The amount of the applicable thresholds will be adjusted annually to reflect any increase in the Consumer Price Index. CUNA in its comment letter to the Fed said that the regulator should work to minimize the regulatory burdens associated with the proposal, particularly for small credit unions. CUNA has made similar requests related to proposed Regulation Z changes. (See related story: CUNA comments on Reg Z changes) One such burden is the requirement that lessors retain evidence of compliance for 24 months. CUNA urged the Fed to clarify which types of records must be maintained, and to remain mindful of the costs that regulated entities must bear to provide and maintain these records. The extra time needed to maintain and provide these records should also be noted by the Fed, and should be reduced, if possible, CUNA added. For the full comment letter, use the resource link.

CUNA comments on Reg Z changes

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WASHINGTON (2/2/11)--The Credit Union National Association (CUNA) in a comment letter to the Federal Reserve said it does not support certain Regulation Z changes that go beyond the scope of a new $50,000 threshold for consumer credit disclosures. Specifically, CUNA said that changes beyond the scope of the $50,000 threshold increase would impose additional compliance and continuous monitoring costs. Consumer credit transactions of up to $25,000 are currently subject to several disclosure requirements under the Truth in Lending Act (TILA) and Regulation Z. Private education loans and loans secured by real property, such as mortgages, are subject to TILA regardless of the amount of the loan. Regulation Z implements the Home Ownership and Equity Protection Act (HOEPA) by adjusting the thresholds used to determine which loans are covered under HOEPA. CUNA urged the Fed not to adopt language that would require an initial extension of credit to be advanced at account opening. CUNA also supported Fed clarifications that would specify that closed-end loans would qualify for exemptions based on either credit extensions or a loan commitment at consummation in excess of the threshold, regardless of subsequent changes in the threshold or account balance. Under the Reg Z changes, lenders are required to retain evidence of compliance for 24 months. CUNA urged the Fed to clarify which types of records must be maintained. A similar request has been made in relation to the Fed’s Regulation M proposal. (See related story: Reg M burdens should be minimized, CUNA says) For the full CUNA comment letter, use the resource link.

Fed ends development of three Reg Z mortgage rule changes

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WASHINGTON (2/2/11)--The Federal Reserve Tuesday announced that it would halt work toward finalizing three pending mortgage rulemakings under Regulation Z. Credit Union National Association (CUNA) President/CEO Bill Cheney had asked the Fed to drop these proposals and impose a moratorium on any further rulemakings on issues that will be under the authority of the Consumer Financial Protection Bureau as of July 21, 2011. Although portions of the Fed proposals would not be affected by the CFPB's work, the Fed said that altering its regulations in a piecemeal fashion “would be of limited benefit, and the issuance of multiple rules with different implementation periods would create compliance difficulties.” A key provision in one of the now-dropped Reg Z proposals would have seriously jeopardized credit protection products, such as credit life, disability and related products. The other proposals addressed closed-end mortgage loans and home equity lines of credit under the Truth in Lending Act (TILA). CUNA worked closely with CUNA Mutual Group and its in its advocacy efforts with the Fed, particularly regarding the credit protection products. Also, about 4,000 comment letters were generated to the Fed through Operation Comment and the leagues. CUNA’s Cheney noted that CUNA had worked hard to pursue this result and also commended credit unions, the leagues and CUNA Mutual CEO Jeff Post for their efforts. “We’re gratified the Federal Reserve listened to the voices of credit unions, Leagues and CUNA,” Cheney said. Because the CFPB will assume rulemaking authority under Reg Z and 17 other consumer protection rules in July, these issues could resurface there. CUNA will be closely monitoring developments at the CFPB on these and all other issues affecting credit unions. Use the resource link below for more information from the Fed.

House Majority Whip Kevin McCarthy joins GAC lineup

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WASHINGTON (2/2/11)--House Majority Whip Kevin McCarthy (R-Calif.) is the latest of many big name speakers that are set to appear at the Credit Union National Association's (CUNA) 2011 Governmental Affairs Conference (GAC) in Washington. McCarthy was recently elected to serve his third term in the House of Representatives, and is a member of the House Financial Services Committee. House Speaker Rep. John Boehner (R-Ohio), House Financial Services Committee Chairman Rep. Spencer Bachus (R-Ala.), finance committee member Rep. Ed Royce (R-Calif.) and Senate Banking Committee member Sen. Jon Tester (D-Mont.) are also among the long list of luminaries on the GAC lineup. Rep. Shelley Moore Capito (R-W.Va.), Sen. Roy Blunt (R-Mo.), Sen. Mike Crapo (R-Idaho), and Reps. Barney Frank (D-Mass.), Debbie Wasserman Schultz (D-Fla.), Sen. Mark Udall (D-Colo.) and Steve Stivers (R-Ohio) are also set to speak at the GAC, which will begin on Feb. 27 and end on March 3. Consumer Financial Protection Bureau architect Elizabeth Warren and co-authors of The New York Times No. 1 best-seller "Game Change" Mark Halperin and John Heilemann are also scheduled to address GAC attendees. The GAC will also feature keynote speeches from actor and Children's Miracle Network Hospitals co-founder John Schneider and "Miracle on the Hudson" pilot Captain Chesley B. "Sully" Sullenberger III. To register for the 2011 GAC, use the resource link.

Inside Washington (02/01/2011)

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Inside Washington
* WASHINGTON (2/2/11)--The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury released the November edition of the Obama Administration’s Housing Scorecard, a comprehensive report on the nation’s housing market. The latest housing figures show continued signs of stabilization in house prices and high home affordability due in part to record low mortgage interest rates. One million families refinanced their mortgages in the last quarter, taking advantage of the lowest rates in history on 30-year fixed mortgages. Since April 2009, record low interest rates have helped more than 8.3 million homeowners to refinance, resulting in more stable home prices and $15.2 billion in annual borrower savings. As expected with the expiration of the Homebuyer Tax Credit, new and existing-home sales have remained below levels seen in the first half of 2010. At the same time, home prices remained level in the past year after 33 straight months of decline. Homeowners added $95 billion in home equity in the second quarter. More than 3.73 million modification arrangements were started between April 2009 and the end of August 2010--more than double the number of foreclosure completions during that time …