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Inside Washington (03/11/2010)

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* WASHINGTON (3/12/10)--Anti-money laundering (AML) issues are resurfacing on Capitol Hill. On Wednesday, lawmakers raised concerns at a House Financial Services subcommittee meeting about the oversight of money services businesses (MSBs). The meeting was held to discuss a bill by Rep. Spencer Bachus (R-Ala.), which would create an office in the Treasury to monitor MSBs’ compliance with the Bank Secrecy Act (BSA), according to American Banker (March 11). The bill could help financial institutions by reducing pressure to monitor the businesses. MSBs currently are required to comply with BSA and other AML statutes. There are an estimated 200,000 MSBs, with 40,831 registered, according to the Financial Crimes Enforcement Network. Financial institutions are often wary about doing business with MSBs because of regulatory scrutiny and concern about anti-laundering violations, the Banker said ... * WASHINGTON (3/12/10)--Sens. Carl Levin (D-Mich.) and Jeff Merkley (D-Ore.) said that they will introduce a bill that would implement the Volcker Rule. Named after former Federal Reserve Board Chair Paul Volcker, the rule aims to ban proprietary trading (American Banker March 11). Levin and Merkley said the Proprietary Trading Act would ban such trading by federally insured depository institutions and also prevent commercial banks from investing in hedge or private equity funds. Levin said by the fall of 2008 that financial firms suffered about $230 billion in losses from proprietary trading. The bill would conditionally exempt certain trading, including low-risk proprietary trading and risk-mitigating hedging ... * WASHINGTON (3/12/10)--The Obama administration has not outlined a plan for reforming Fannie Mae and Freddie Mac because it is focused on other issues. However, it plans to tackle reform in 2011, said Treasury Secretary Timothy Geithner (American Banker March 11). The administration plans to release more details on overhauling Fannie and Freddie during a House Financial Services Committee hearing March 23. The department also will release a list of questions on strategy for public comment, he said ... * WASHINGTON (3/12/10)--The Treasury’s Community Development Financial Institutions Fund (CDFI) is seeking comment on applications for its Native American CDFI Assistance program. The agency seeks input on whether offering separate applications for financial assistance and technical assistance (TA) components would reduce the burden on applicants; whether an applicant eligibility screen should be applied before the application deadline, allowing applicants to determine beforehand if they are qualified for an award; whether detailed Matching Funds documentation should be collected later in the application review process, and if so, what would be a reasonable time to expect an applicant to provide the data; the merit of reducing the narrative page limits in the application; the potential burden of requiring specific documents to support proposed uses of TA funds; and the potential burden of requiring other documentation to support the application. Comments are due May 10 ...

Reg-Flex 5-year plan on next NCUA agenda

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ALEXANDRIA, Va. (3/12/10)--The National Credit Union Administration (NCUA), at its upcoming board meeting at 10 a.m. ET on Thursday, March 18, will discuss proposed rules addressing its regulatory flexibility program. Specifically, the NCUA will be considering a proposal to change parts of its regulatory flexibility (RegFlex) program. The NCUA board will also discuss the fiduciary duties of federal credit union officials when considering merging or conversion. The Credit Union National Association has recently set up a working group to address how the NCUA selects and pursues credit union mergers. The NCUA’s five-year strategic plan will also be considered during the meeting. Additionally, the board will be updated on the status of the National Credit Union Share Insurance Fund during the meeting. A closed meeting of the board--during which the NCUA will discuss supervisory activities and personnel matters--will follow the session.

New growth spurt in House MBL backers

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WASHINGTON (3/12/10)--The momentum behind increasing the member business lending cap for credit unions continued to grow this week, with a total of 10 new legislators signing on to support Rep. Paul Kanjorski’s (D-Pa.) H.R. 3380, the Promoting Lending to America's Small Businesses Act. The additions of Reps. Frank LoBiondo (R-N.J.), Wally Herger (D-Calif.), Suzanne Kosmas (D-Fl.), John Linder (R-Ga.), Mike Quigley (D-Ill.), Jim McDermott (D-Wa.), Collin Peterson (D-Minn.), Bill Posey (R-Fl.), Howard Berman (D-Calif.) and Judy Chu (D-Calif.) brought the total number of cosponsors for the legislation to 99. H.R. 3380, which was introduced by Kanjorski and Rep. Ed Royce (R-Calif.) late last year, would increase the MBL cap from 12.25% of assets to 25% of assets, creating as much as $10 billion in new capital for small businesses within the first year after enactment. This additional funding could create as many as 100,000 new jobs, according to Credit Union National Association estimates. These funds and jobs could be added to the American economy at no cost to taxpayers. Kanjorski has asked House leaders Nancy Pelosi (D-Calif.) and John Boehner (R-Ohio) to include the MBL legislation as part of any future job creation legislation. For a full list of H.R. 3380’s cosponsors, use the resource link.

CUNA watches for CU issues in Dodds new reforms

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WASHINGTON (3/12/10)—The Credit Union National Association’s (CUNA) vice president of legislative affairs, Ryan Donovan, said that CUNA is looking forward to the release of Senate Banking Committee Chairman Chris Dodd’s (D-Conn.) financial regulatory reform legislation on Monday, and will fully analyze the legislation once it is released. "When regulatory restructuring legislation was considered in the House, we followed a set of principles in evaluating the measure, and we will evaluate the new Senate bill based on the same set of principles," Donovan said. “Those principles include ensuring that the examination and enforcement of consumer protection regulation is conducted by the prudential regulator, that credit unions do not end up paying more for new regulation than they are paying now, and that any single consumer protection rule writing agency would work to streamline duplicative and burdensome regulation,” Donovan added. In a release published on Thursday, Dodd commended Sen. Bob Corker (R-Tenn.) for being a “strong partner” during the legislative process, adding that many of Corker’s ideas will be included in Dodd’s final proposal. While the Banking Committee members “have made significant progress” toward a consensus package, Dodd said that “a few outstanding issues remain. Our talks will continue, and it is still our hope to come to agreement on a strong bill all of the Senate can be proud to support very soon,” Dodd added. Dodd said that he would plan to bring his legislation up for debate in the Banking Committee during the week of March 22nd. Corker, who spoke during a Thursday press conference, said that most of the larger concepts in the legislation have been agreed on, with some differences on the consumer protection agency being the only remaining division, Reuters reported. Sen. Majority Leader Harry Reid (D-Nev.) was widely reported on Thursday as saying that he expected financial reform legislation to move through the Senate by Memorial Day.