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Inside Washington (03/13/2008)

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* WASHINGTON (3/14/08)--The Federal Deposit Insurance Corp. (FDIC) is set to vote today on premium rates, and bankers are waiting to see if the agency will lower the rates as it said it would two years ago--when a law giving the agency power to adjust rates was enacted (American Banker March 13). Some industry observers doubt the FDIC will lower rates. John Douglas, a former FDIC general counsel, said he would be surprised if the rates were cut. Jaret Seiberg, Stanford Group Co. analyst, said the agency will want to be perceived as healthy, so it would likely not defer to banks if failures soon rise ... * WASHINGTON (3/14/08)--Dean Schultz has been named as president/chief executive of the Federal Home Loan Bank (FHLB) of San Francisco, succeeding David Hehman, president/CEO of FHLB Cincinnati (American Banker March 13). Schultz’s appointment ends March 31, 2011 ... * WASHINGTON (3/14/08)--The President’s Working Group on Financial Markets recommends stronger oversight of mortgage lenders, Treasury Secretary Henry Paulson said yesterday (Forbes March 13). The group released a statement with recommendations on how to improve the future state of U.S. and global financial markets, earning the support of Federal Reserve Board Chairman Ben Bernanke. “The recommendations constitute an appropriate and effective response to the deficiencies in our financial framework that contributed to the current turmoil in the financial markets,” Bernanke said. One recommendation would be to improve oversight of mortgage lenders by federal and state regulators, while another would implement licensing standards for mortgage brokers across the U.S. ... * WASHINGTON (3/14/08)--Former Sen. Howard M. Metzenbaum (D-Ohio) died Wednesday at the age of 90 (Associated Press March 13). He was a former union lobbyist and labor lawyer and spent 18 years on Capitol Hill, from 1977 to 1995. After his third term in the Senate, he headed the Consumer Federation of America (CFA), of which the Credit Union National Association was a founding member ...

NCUA names Fazio deputy executive director

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ALEXANDRIA, Va. (3/14/08)—The National Credit Union Administration
Larry Fazio during a June 21, 2007 monthly NCUA Board meeting. (Photo provided by CUNA)
(NCUA) has named Larry Fazio to be its deputy executive director, assisting Executive Director Leonard Skiles in managing the daily operation of the agency. Fazio, who has been with the agency for more than 17 years, is currently deputy director of the NCUA’s office of examination and insurance (E&I). In announcing the appointment, NCUA’s Skiles said of Fazio, “(H)e has played a crucial role in helping ensure the safety and soundness of the credit union system. His tireless work on a variety of issues ranging from examinations to capital reform has placed him at the pinnacle of his profession, and I am pleased that he will continue to contribute to the agency in this new capacity.” Fazio began with the NCUA in 1991 as an examiner. He was selected as a supervision analyst in what was then Region IV in 1996 and in 1999 became supervisory examiner in Region IV, a position he held until his selection as director of supervision, also in Region IV. In 2002, Fazio was selected to be the director of risk management in E&I and was then promoted to his current position as deputy director in 2006.

A new Lincoln comes to Washington

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WASHINGTON (3/14/08)--The first new five-dollar bill was issued by the Federal Reserve Thursday, a greenback that continued to feature a portrait of the 16th President while incorporating enhanced security features to foil counterfeiting operations. The new currency received quite a symbolic launch here in Washington at President Lincoln's Cottage at the Soldiers' Home, a historic site used by the former president as a White House summer retreat. Officials from the Fed, U.S. Treasury, Bureau of Engraving and Printing and U.S. Secret Service ushered the new $5 bill into circulation at the Lincoln Cottage gift shop. A release accompanying the event noted that Lincoln had established the Secret Service the same evening he was assassinated and made safeguarding the nation's currency from counterfeiters the agency's primary mission. "The redesigned five-dollar bill's enhanced security features help ensure we stay ahead of counterfeiters and protect your hard-earned money," Michael Lambert, assistant director of the Fed’s division of reserve bank operations and payment systems, said. “It only takes a few seconds to check the new $5 bill to make sure it's genuine. If you know how to check its security features, you can easily be confident it's real,” he added. If cash handlers hold the bill to the light, they can check for these features:
* Two watermarks: A large number "5" watermark is located in a blank space to the right of the portrait replacing the previous watermark portrait of President Lincoln found on the older-design $5 bills. A second watermark -- a column of three smaller “5”s -- has been added to the new $5 bill design and is positioned to the left of the portrait; and * A security thread that runs vertically and is now located to the right of the portrait on the redesigned $5 bill. The letters "USA" followed by the number "5" in an alternating pattern are visible along the thread from both sides of the bill. The thread glows blue when held under ultraviolet light.
According to the Fed, in 2007 at total of $61.4 million in counterfeit money was passed in the United States. "Everyone who uses U.S. currency is on the front line of defense against counterfeiters," said Michael Merritt, Deputy Assistant Director, U.S. Secret Service. "The best way to protect yourself is to learn the security features. It’s simple, it’s quick, and it can save you from accepting a fake."

Credit card bills see Hill action

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WASHINGTON (3/14/08)—Legislation to introduce reforms of certain credit card practices has been seeing action this week in both the House and the Senate. On the Senate side, Sen. Robert Menendez (D-N.J.) introduced the Credit Card Reform Act (S. 2753) Wednesday. Menendez is a member of the Senate Banking Committee. His bill is intended to end what Menendez labeled “egregious” practices such as excessive fees, retroactive rate increases, universal default, unilateral changes to credit card agreements, and deceptive credit card offers. In the House, the House Financial Services subcommittee on financial institutions and consumer credit conducted a hearing Thursday on "The Credit Cardholders' Bill of Rights: Providing New Protections for Consumers." That bill was drafted by the subcommittee's chairman, Rep. Carolyn Maloney (D-N.Y.), and has the support of, among others, Rep. Barney Frank (D-Mass.) who heads the full Financial Services Committee. While there are many common areas embraced by the two versions, they are not identical. For instance, the Senate bill includes an opt-in clause which would require card issuers to receive approval from consumers under the age 21 before they could mail credit card solicitations to the young consumers. The House bill does not contain this language. The Credit Union National Association (CUNA) generally supports legislative action that protects consumers from predatory lending practices, but also monitors this type of legislation to ensure that it does not have an unintended consequence which would hamper credit union service to their members. CUNA Vice President of Legislative Affairs Ryan Donovan has noted that, while credit unions are not the target of these bills, the legislation may affect credit card programs that credit unions offer their members. "We're taking a close look at all of these bills. We've discussed these issues with a number of credit unions to try to get a sense of exactly how the bills will affect credit unions," Donovan said. Separately, the Federal Reserve Board is working to update its Regulation Z for credit card disclosures. Fed Chairman Ben Bernanke, in testimony before the House Financial Services Committee last month, said the agency soon would exercise its authority under the Federal Trade Commission Act to write regulations to better protect consumers from unfair and deceptive acts or practices in the credit card industry.

Rep. Frank debuts economic rescue initiative idea

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WASHINGTON (3/14/08)—House Financial Services Committee Chairman Barney Frank Thursday announced an economic, mortgage and housing “rescue proposal” the Massachusetts Democrats is crafting to stem the rising flow of mortgage foreclosures. Frank outlined the parameters of his proposal, but advised that he is still drafting language of a bill he intends to introduce. He said he will be seeking input and comments regarding the proposal over the next few weeks. The legislation would address increasing mortgage foreclosures by allowing the Federal Housing Administration (FHA) to insure and guarantee refinanced mortgages that have been significantly written down by mortgage holders and lenders. Franks program would permit the FHA to provide perhaps up to $300 billion in new guarantees to help refinance at-risk borrowers into viable mortgages. In exchange for the acceptance of a substantial write-down of principal, the existing lender or mortgage holder would receive a short payment from the proceeds of a new FHA loan if the restructured loan would result in terms that the borrower can reasonably be expected to pay, according to a release from the chairman’s office. The bill is also expected to broach the following areas:
* Eligibility requirements for existing loans; * Requirements for new FHA-insured loans: * Coordination of existing lien-holders; and * Improving FHA capacity, among other things.
“Chairman Frank has indicated that he would like comment and input on this proposal during the March District Work Period, so we are going to take a look at it over the next few weeks," said Ryan Donovan, vice president of legislative affairs for the Credit Union National Association. Use the resource link below to read Frank’s release addressing his plan.

Short NCUA open board meeting agenda

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ALEXANDRIA, Va. (3/13/08)—The National Credit Union Administration (NCUA) released a one-item agenda for its open board meeting next Thursday. The agency will consider issuing guidance on prohibition orders barring an individual from working with a federally insured credit union. The agenda item reads:
* Proposed Rule: Interpretive Ruling and Policy Statement (IRPS) 08-1, Guidance Regarding Prohibitions Imposed by Section 205(d) of the Federal Credit Union Act.
Under that section of the FCUA, any persons convicted of a crime involving dishonesty or breach of trust is prohibited from working for or with a federally insured credit union.