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Matz responds to CUNA urging to help CUs bear NCUSIF costs

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WASHINGTON (3/22/10)—Responding to the Credit Union National Association’s (CUNA’s) urging to help credit unions deal with unprecedented National Credit Union Share Insurance Fund (NCUSIF) costs, Debbie Matz wrote that the National Credit Union Administration (NCUA) will look at the operating level target in the Fall. Matz, the NCUA chairman, noted in a March 18 letter to CUNA that while the Federal Credit Union Act sets a range between 1.20% to 1.50% for the NCUSIF equity ratio, the agency’s currently established target is 1.30%. At an open board meeting Thursday, NCUA Chief Financial Officer Mary Ann Woodson reported that the ratio currently stands at 1.23% and once the 1% deposit required of insured credit unions is collected next month, the ratio will rise to 1.26%. In her letter to CUNA, Matz wrote that the agency plans to revisit the operating level target in the Fall as part of the agency’s annual budget process. “At that point, the board will make a decision on whether to replenish the NCUSIF to 1.30% or let the level continue to decline. “That decision will be based on our experience in 2010 tracking several key economic and institutional factors,” the chairman said. She reiterated her commitment to “the safety and soundness regime maintained by the NCUA, and the public confidence instilled by a strong and credible NCUSIF,” a commitment she said will not be compromised “despite challenges” faced by the credit union movement. CUNA recommends that the NCUA temporarily reduce the normal operating level of the NCUSIF from the current 1.3% to no lower than 1.2%, to reduce the amount of funds that credit unions must pay into the insurance fund. CUNA also proposes allowing insured credit unions to spread out their NCUSIF costs over several years, "even if the normal operating level is at or above 1.2%, consistent with a restoration plan to ensure the NCUSIF is properly funded." Also in her letter, addressed to CUNA President/CEO Dan Mica, Matz noted CUNA’s close work with NCUA staff to draft enhancements to Senate legislation that would, in part, increase the member business lending cap to 20% of assets, up from 12.25%. “Our respective staffs worked closely and productively on enhancements to a Senate proposal, and I am hopeful that Congress will enact legislation that gives NCUA the ability to formulate what I believe will be a stronger regulatory regime that prudently fosters broader consumer access to small business capital. The Senate bill, the Small Business Lending Enhancement Act (S. 2919), has a counterpart in the House known as the Promoting Lending to America's Small Businesses Act (H.R. 3380).

Comments in legacy assets loom behind discussions

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WASHINGTON (3/22/10)--While the National Credit Union Administration (NCUA) has received and is currently reviewing comment letters related to its proposed changes to the corporate credit union system, the issue of legacy assets remains unresolved. The NCUA estimated that there were $64 billion in total legacy assets as of early 2009. The Credit Union National Association (CUNA), in a recently published response to the NCUA’s corporate plan, said that proposed corporate credit union reforms would not succeed unless the NCUA also dealt with this issue. Among the many questions that CUNA has for the NCUA regarding this issue are whether the legacy assets will be “held and managed to the point of minimum loss, or sold as soon as the unrealized losses fall to the value” of the NCUA’s stabilization fund. CUNA also has asked whether the NCUA’s approach will require additional borrowing from the U.S. Treasury. NCUA Board Member Gigi Hyland, speaking at CUNA's Governmental Affairs Conference last month, said that the NCUA is working to address the legacy asset issue. CUNA is also forming its own working group to address these issues, and the makeup of that group will be announced in the near future.

Inside Washington (03/19/2010)

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* WASHINGTON (3/22/10)--Pending congressional action to reform financial institutions will be “very good for credit unions and credit union members,” National Credit Union Administration Chairman Debbie Matz told an Internet audience during an appearance on Reuters Inside, a Web-based venue featuring in-depth coverage of public policy issues. “Credit unions fill an important niche; they have seen a ‘flight to quality,’” Matz said. “The average credit union capital level is almost 10%.” To view the segment, use the link ... * WASHINGTON (3/22/10)--House Financial Services Committee Chairman Barney Frank (D-Mass.) Wednesday introduced the Housing Preservation and Tenant Protection Act to stem the loss of affordable renting housing units nationwide. The measures aim to curtail the loss of housing and prevent displacement of low-income tenants. “This bill does not force any owners who enter into this voluntarily to abrogate their rights, and we are committed to working with current owners of these affordable housing units,” Frank said. Since the 1950s, the Department of Housing and Urban Development has subsidized about 1.7 million rental units in more than 23,000 privately owned, multi-family properties that are typically affordable to low-income tenants ... * WASHINGTON (3/22/10)--The House plans to vote this week on a bill that would eliminate private lenders’ role in government-guaranteed student loans. The bill is part of a health care reform package that the House planned to tackle this past weekend and the Senate could deliberate this week. The bill could save $61 billion over 10 years, according to the Congressional Budget Office (American Banker March 19) ... * WASHINGTON (3/22/10)--Sen. Richard Shelby (R-Ala.) said he is worried the “too big to fail” principle would remain if a proposed $50 billion fund to help resolve failed banks is the Senate’s regulatory reform bill (American Banker March 19). Senate Banking Committee Chairman Christopher Dodd’s (D-Conn.) bill would require that all institutions with more than $50 billion in assets support the fund. Shelby told a banking association conference that when the money is there, it could be used in unintended ways. While he didn’t oppose the creation of a fund, he said a resolution authority should be established to make sure that the fund is available. Under Dodd’s bill, the Federal Reserve Board, the Federal Deposit Insurance Corp. and the Treasury would have to agree to put an institution into liquidation after bankruptcy judges deem it insolvent ...

Senate Banking to start reg reform votes today

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WASHINGTON (3/22/10)--The Senate Banking Committee later today will hold its first markup session on Sen. Chris Dodd’s (D-Conn.) financial regulatory reform legislation. The hearing, which will take place in the Dirksen Senate Office Building at 5 p.m. ET, will focus on Dodd’s recently introduced Restoring American Financial Stability Act of 2010. That legislation would allow the Federal Reserve to continue to oversee both large banks and smaller state-chartered banks while also adding authority over some non-bank financial firms to the Fed's list of responsibilities. Dodd's proposal also allows the National Credit Union Administration (NCUA) to maintain its independence and excludes credit unions with $10 billion or less in assets from the oversight authority of a proposed consumer watchdog. Dodd’s bill in general would increase protections for consumers of both regulated and currently unregulated financial products and would create an Orderly Liquidation Fund to wind down damaged financial services providers in some cases. The Credit Union National Association (CUNA) last week encouraged Dodd to consider adding language that gives his proposed Bureau of Consumer Financial Protection (BCFP) "the authority to delegate examination authority for large credit unions to the prudential regulator" rather than limiting the NCUA authority to credit unions with under $10 billion in assets. CUNA also promoted "permitting the BCFP to delegate examination authority for large credit unions to NCUA."

Three banned from CU work

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ALEXANDRIA, Va. (3/22/10)--The National Credit Union Administration (NCUA) issued orders prohibiting the following individuals from participating in the affairs of any federally insured financial institution.
* Margaret S. Aldridge, a former employee of Coastal Waters FCU of Mobile, Ala., without admitting or denying fault, signed an order of prohibition to avoid the time and cost of administrative litigation; * David Wayne Gleason, a former employee of Mid-Tex FCU of Brownwood, Texas, without admitting or denying fault, signed an order of prohibition to avoid the time and cost of administrative litigation; and * Mandi Nicole Shook, a former employee of TexDot-WF CU of Wichita Falls, Texas, was convicted of embezzlement and sentenced to 12 months and a day imprisonment, five years supervised release, and ordered to pay restitution of $195,173.
Use the resource link below to view NCUA enforcement orders online.