Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Washington Archive


Inside Washington (03/10/2010)

 Permanent link
* WASHINGTON (3/11/10)--The Federal Reserve Board announced that its Consumer Advisory Council will meet March 25. The council is slated to discuss proposed rules to implement the Credit Card Accountability, Responsibility and Disclosure Act; foreclosure issues; and short-term and small-dollar loan products. Alan Cameron, Idaho Credit Union League president, is a member of the council ... * WASHINGTON (3/11/10)--The Securities and Exchange Commission’s (SEC) chief economist, James Overdahl, will step down March 31 to join NERA Economic Counseling (Bloomberg News March 10). Overdahl became chief economist three years ago. SEC Chairman Mary Schapiro merged Overdahl’s office with another and adopted short-selling rules that hedge funds claimed ignored financial analysis. Overdahl has not said if the short-sale rule or reorganization affected his decision to step down ... * WASHINGTON (3/11/10)--Senate Banking Committee Chairman Christopher Dodd (D-Conn.) said he is continuing to work toward a bipartisan financial reform bill but did not offer any new details (American Banker March 10). Sen. Bob Corker (R-Tenn.), who is working with Dodd on the bill, said the talks have been positive but complicated. He did not indicate whether he had earned the support of ranking member Sen. Richard Shelby (R-Ala.) on the bill. Lawmakers continue to debate the legislation, especially regarding concerns that the Fed would retain oversight of financial companies. Sen. Mike Crapo (R-Idaho) said that if the Fed has jurisdiction over only large institutions, it could create the problem of defining ‘too big to fail’ ... * WASHINGTON (3/11/10)--Regulators issued 1,143 formal enforcement actions against financial institutions in 2009--which more than doubles the 2008 tally (American Banker March 10). Informal actions by regulatory agencies also doubled, reaching 1,099 in 2009. The Federal Deposit Insurance Corp. (FDIC) had the most with 551, compared with 273 in 2009. The Federal Reserve Board quadrupled actions to 191. The Fed filed 467 informal actions in 2009, compared with 216 in 2008 ...

FTC requests comment on mortgage relief rule changes

 Permanent link
WASHINGTON (3/11/10)—The Federal Trade Commission (FTC) this week issued for public comment proposed rules that would change its current rules for for-profit companies that provide mortgage assistance relief services. The proposal excludes financial institutions that own or service loans. While the release does not specifically mention state-chartered credit unions, “the effect is the same,” Credit Union National Association (CUNA) Senior Assistant General Counsel Jeff Bloch said. CUNA last year specifically asked the FTC to exclude state-chartered credit unions from these rules. The FTC proposed rules also exempt federally chartered credit unions, as they are not under the FTC's authority for purposes of this rule. Though the FTC “is mindful that consumers at risk of foreclosure could benefit from assistance in refinancing,” the FTC is “concerned that services purported to help consumers obtain refinancing could be marketed deceptively as a means to avoid disclosure.” The proposed rule, which was published in the Federal Register, would prohibit mortgage assistance providers from “making false or misleading claims” and impose new recordkeeping, disclosure, and compliance requirements. The proposed rule also would prevent the providers from collecting advance fees for their services. The FTC in the release specifically asks the public how the proposed rules would “affect the provision of different types of mortgage assistance relief services,” as well as individual consumers and service providers. The FTC has also requested any evidence that points to consumers being misled in the “promotion and sale” of mortgage assistance relief services. Information on any other types of mortgage assistance that is being offered to consumers should also be provided in any responses to the Notice of Proposed Rulemaking. The FTC also asked “what changes, if any” should be made to increase potential benefits and decrease potential costs for both the industry and consumers. For the FTC release, use the resource link.

NCUA request to move WesCorp case to fed court granted

 Permanent link
ALEXANDRIA, Va. (3/11/10)--The National Credit Union Administration (NCUA) has transferred a lawsuit against Western Corporate (WesCorp) FCU's former directors and current and former officers from the Los Angeles Circuit Court, a state court, to the U.S. District Court for the Central District of California. The NCUA in late 2009 moved to intervene as plaintiff in a lawsuit that seven natural person credit unions that are members of WesCorp brought against several current and former employees and officials of WesCorp. The Los Angeles Superior Court granted NCUA's motion to intervene on Feb. 24. NCUA filed a notice of removal with that court on March 5, an action that automatically removed the case from state to federal court. The NCUA claimed that it was rightfully intervening in the case as a substitute plaintiff, because it had served as conservator for WesCorp since March and was the "successor to all the rights, titles, powers and privileges of the credit union and any of its members, accountholders, officers or directors" pursuant to Section 207 of the Federal Credit Union Act. Based on the language of Section 207, the NCUA has asked the court for a declaratory judgment that it is the sole proper plaintiff in this matter. In the suit, the credit unions--which include 1st Valley CU, Cascade FCU, Glendale Area Schools FCU, Kaiperm Northwest FCU, Northwest Plus CU, Stamford FCU and Tulare County FCU--have alleged negligence and breach of fiduciary duties in connection with WesCorp's substantial investments in residential mortgage-backed securities and collateralized debt obligations. WesCorp was taken over by the NCUA in early 2009 after mortgage-backed securities that were held in its portfolio decreased due to the recession and plummeting home values across the nation. WesCorp late last year reported $1.2 billion in total Other Than Temporary Impairment (OTTI) losses for 2009, bringing its total OTTI losses for 2008 and 2009 to $6.8 billion.

Mica Reform should include streamlining of fed regs

 Permanent link
WASHINGTON (3/11/10)--Financial regulatory reform should include some "streamlining" of federal regulation to keep credit unions and other financial institutions out of the bog of repetitive regulations, but must also ensure credit unions continue to have their own regulator, Credit Union National Association (CUNA) President/CEO Dan Mica told a gathering of Washington insiders at the National Journal’s “Power Breakfast” Wednesday.
Click to view larger image Regulatory reform legislation should place a premium on streamlining rules for credit unions and other financials, CUNA President/CEO Dan Mica remarked during a panel discussion on financial services reform. Considering Mica's comments are (from left) Bill Swindell of the daily newsletter Congress Daily; Jill Hershey of the Financial Services Roundtable; Camden Fine, president and CEO of the Independent Community Bankers of America; and, on Mica's left, Travis Plunkett of the Consumer Federation of America.
Mica also addressed the need for balance in financial regulatory reform, saying that one of the greatest potential roadblocks to legislative progress would likely be the “politics of the day.” However, the CUNA leader added, if the financial reform legislation simply piles on “a whole new set of regulations,” Congress and the legislation itself will “hit a major roadblock” in Washington. Mica made his points while speaking as a participant on one of two panels during a forum focusing on financial regulatory reform sponsored by the National Journal publishing group. Mica's panel was made up of representatives of advocacy groups on all sides of financial regulatory reform: The Independent Community Bankers Association, the Financial Services Roundtable, the Consumer Federation of America, and CUNA. In the first panel of the program, two key players in Senate financial regulatory reform, Sens. Mark Warner (D-Va.) and Bob Corker (R-Tenn.), shared some insight into the mechanics of crafting a Senate bill. Both have been instrumental in the bill taking form in the Senate Banking Committee, where they have seats. Corker said the new legislation must give regulators the authority needed to address financial issues, regardless of which body is doing the overseeing. He also said that the Senate’s version of reform legislation, which is expected to be released soon, is well balanced. The sold out event was covered by Fox Business Channel and Bloomberg TV.

CDFI Fund seeks reviewers for CMF applications

 Permanent link
WASHINGTON (3/11/10)--The Community Development Financial Institutions (CDFI) Fund this week announced that it is seeking assistance in its upcoming review of Capital Magnet Fund (CMF) applicants for fiscal 2010. The CMF program provides “competitively awarded grants to CDFIs and qualified nonprofit housing organizations to finance affordable housing and related community and economic development activities,” according to the CDFI Fund. According to the release, application reviewers must have “considerable expertise in the finance and development of affordable housing as well as community facilities and economic development activities.” Employees, partners or affiliates of organizations that have applied for access to funding or could potentially receive funding from a CDFI may not serve as applicant reviewers. These reviewers, once selected, will evaluate the “business strategy, leveraging strategy, community impacts, and organizational capacity” of applicants, as well as other factors. The review process will begin in May and will last for around one month. The CDFI Fund may also seek out assistance for a second round of CMF application reviews that would begin around midyear. For more on the CMF review program, use the resource link.

Senate passes flood insurance SBA programs through 2010

 Permanent link
WASHINGTON (3/11/10)--H.R. 4213, the American Workers, State, and Business Relief Act of 2010, which would extend authorization for the National Flood Insurance Program, Stimulus Act small business loan guarantee programs, federal unemployment insurance, COBRA benefits, and other select federal programs, passed the Senate 62 to 38 on Wednesday and will now move on to the House for consideration. The legislation extends funding for flood insurance and small business provisions through the end of 2010. The New Markets Tax Credit will also be extended through Dec. 31. The bill also contains several other tax and business-friendly provisions. Inactivity in the Senate led to the temporary expiration of many of these programs earlier this month, but temporary extenders, which run through the end of this month, were passed shortly thereafter.