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Abusive card tactics reg reform hearings this week

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WASHINGTON (3/24/09)--The Credit Union National Association (CUNA) will be following several hearings on both sides of the Capitol this week, with topics ranging from abusive credit card practices to regulatory reform. CUNA President/CEO Dan Mica also is scheduled to testify at a Senate Banking Committee today. (See related story: Mica to represent CUs at Senate Banking hearing today.) Hearings this week include:
* Tuesday’s Senate Judiciary Committee Subcommittee on Administrative Oversight and the Courts’ hearing on “Abusive Credit Card Practices and Bankruptcy”; * The Senate Small Business Committee’s Wednesday hearing on the Small Business Administration's budget for fiscal year 2010; * The House Financial Services Committee’s Wednesday hearing on “Exploring the Balance between Credit Availability and Prudent Lending Standards”; * The House Financial Services Committee’s Thursday hearing on “Addressing the Need for Comprehensive Regulatory Reform,” where Treasury Secretary Timothy Geithner is scheduled to testify; and * A hearing Friday for the House Financial Services Committee Subcommittee on Housing and Community Opportunity on the housing crisis in Los Angeles and preventing foreclosure and foreclosure rescue fraud. The hearing will be in Los Angeles.
A House Financial Services Committee hearing, “Seeking Solution: Finding Credit for Small and Mid-Sized Businesses in Massachusetts,” was held Monday in Boston. CUNA also is analyzing legislation--the Payday Loan Reform Act (H.R. 1214)--which focuses on payday loan fees and the “cycle of debt.” House Subcommittee on Financial Institutions Chairman Luis Gutierrez (D-Ill.) announced that a hearing on the matter is scheduled for April 2.

Inside Washington (03/23/2009)

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* WASHINGTON (3/24/09)--The Treasury Department Monday released information about its plan--the Public Private Partnership Investment Program --to handle toxic assets. The program will be designed around three principles: maximizing the impact of each taxpayer dollar, shared risk and profits with private sector participants, and private sector price discovery. “This approach is superior to the alternative of either hoping for banks to gradually work these assets off their books or of the government purchasing the assets directly,” the Treasury said in a statement. “Simply hoping for the banks to work legacy assets off over time risks prolonging a financial crisis. But if the government acts alone in directly purchasing legacy assets, taxpayers will take on the risk of such purchases ... * WASHINGTON (3/24/09)--The banking industry’s fourth-quarter net loss increased to $32.1 billion from $26.2 billion during the fourth quarter, according to the Federal Deposit Insurance Corp. (FDIC)’s quarterly banking profile, released Friday. The profile was updated from its original release Feb. 26. Other items of note: net income for all of 2008 was revised to $10.2 billion from $16.1 billion. The decline in the industry's total equity capital in the fourth quarter increased from $3.7 billion to $10.1 billion, but the additional goodwill write-downs had no effect on the industry's regulatory capital, because goodwill is not included in regulatory capital, FDIC said ... * WASHINGTON (3/24/09)--Some borrowers have failed to make even one payment on their new mortgages, which are insured by the government, the Department of Housing and Urban Development (HUD) said last week (National Mortgage News March 23). The defaults indicate fraud, said Lisa Gore, assistant special agent for the criminal investigation division in the HUD inspector general’s office. The investigation involved more than 100 loans, she told attendees of a financial industry conference last week ...

Mica in IBusiness WeekI Lifting MBL cap will boost economy

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WASHINGTON (3/24/09)--Credit Union National Association (CUNA) President/CEO Dan Mica recently spoke to BusinessWeek about the benefits of raising credit unions’ member business lending caps. Lifting the caps would boost the economy, while creating a small business “lending bubble” would be a mistake, Mica told the publication. “You have to draw that line very carefully,” Mica said. “But people who do lending for a living are very good at making the distinction between businesses that need extra help without being imprudent in their decisions.” Credit unions are the “best-capitalized” financial institutions left in America, and could put $10 billion into the economy if member business lending caps are raised, he said. The article also noted that Mica spoke with President Obama’s adviser Valerie Jarrett at a press conference March 16 about the caps, which limit credit unions’ member business lending to 12.25% of their assets. Credit unions would like to give small businesses more help, and credit unions have loan default rates of less than 2%, Mica added. “We have a record of lending to small companies, and we know how to do it,” Mica said. He noted that Sen. Charles Schumer (D-N.Y.) expressed his intent to draft a bill to lift the cap this year. For the full article, use the link.

CUNA offers consolidated CCU info

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WASHINGTON (3/24/09)—On the Credit Union National Association (CUNA) homepage, member credit unions can access comprehensive information related to corporate credit unions and regulatory actions taken on their behalf. To get the latest information on the National Credit Union Administration’s (NCUA) corporate stabilization efforts, click on “NCUA’s corporate actions,” written in red and boxed for easy access. CUNA members can access:
* All archived News Now articles on the corporates; * CUNA analysis of the NCUA’s actions; * Communications tools, such as talking points to help credit union members understand the issues; * An updated calculator to estimate cost of the NCUA corporate stabilization plan; and more.
Use the resource link below to read the available materials.

NCUA to consider corporate CU issues Thursday

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ALEXANDRIA, Va (3/24/09)—A special closed meeting has been called for Thursday morning by the National Credit Union Administration (NCUA)to look at possible plans to spread out the cost to natural person credit unions of the agency's corporate credit union stabilization efforts. The Credit Union National Association (CUNA) has been strongly advocating such action. An agenda states matters to be considered are:
* Consideration of supervisory activities. Closed pursuant to Exemptions (9)(A)(ii) and (B); and * Consideration of Proposed Legislation. Closed pursuant to Exemptions (9)(A)(ii) and (B).
The agency made clear that the items address corporate credit unions and actions taken to stabilize the liquidity in the corporate system. CUNA, through its Corporate CU Task Force, has been exploring options to mitigate the cost to natural person credit unions of the NCUA’s recent actions regarding the corporates. CUNA staff also has been pressing this point with the agency, as recently as at a meeting yesterday morning that CUNA initiated with NCUA Executive Director David Marquis, Examination and Insurance Director Melinda Love, and Central Liquidity Facility President Owen Cole. At that meeting CUNA General Counsel Eric Richard, Deputy General Counsel Mary Dunn and Chief Economist Bill Hampel urged the NCUA to go to Congress immediately to seek assistance in mitigating the costs of its action to credit unions by spreading out the costs over several years. Senior regulatory staff of the National Association of Federal Credit Unions also were in attendance. The agency also indicated it plans to approach the U.S. Treasury Department to see how credit unions may fit into the public-private asset acquisition plan announced yesterday by Treasury Secretary Timothy Geithner. (See "Inside Washington" for more details.) That is also in line with what CUNA has recommended to NCUA. On Friday, the agency announced it had places two of the corporates—U.S. Central FCU and Western Corporate FCU (Wescorp)—into conservatorship. Also, in January the NCUA announced a three-pronged initiative to bolster and enhance the liquidity positions of the corporates. The agency declared a premium assessment to restore the National Credit Union Share Insurance Fund (NCUSIF) equity ratio to 1.30%, and announced the premium would be collected in 2009. During a webinar on corporate credit union issues Monday, NCUA Executive Director David Marquis said the agency “remains committed” to finding a way to mitigate the costs. NCUA Chairman Michael Fryzel concurrently announced he had directed NCUA staff to explore two new avenues to augment NCUA’s Corporate Stabilization efforts. First, Fryzel said, the NCUA has held preliminary discussions with federal lawmakers regarding the creation of a “corporate Stabilization mechanism”, as an adjunct to the National Credit Union Share Insurance Fund (NCUSIF). The new mechanism would replenish the NCUSIF through an arrangement with the U.S. Treasury Department, while providing additional flexibility for credit unions to make their required contributions over a period of time, Fryzel said. Details of the proposal will be available pending the Board’s review and decision at Thursday’s closed meeting. The second NCUA action is to evaluate the latest Treasury initiative to deal with troubled assets—the program announced Monday. The new ‘Public-Private Investment Program,’ Fryzel said, “appears to hold some promise for corporate credit union holdings.”

Liquidity improves at six CCUs

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ALEXANDRIA, Va (3/24/09)—Some good news relating to the corporate credit union (CCU) system: There have been improvements in the liquidity position of the six largest CCUs, according to the National Credit Union Administration (NCUA). The NCUA revealed Monday that deposits in the six biggest CCUs increased $12.2 billion from Dec. 31, 2008 to Feb. 2 this year. At the same time, their external borrowings decreased even more dramatically from $27.9 billion $2.1 billion. Also of note, the NCUA’s Credit Union System Investment Program (CU SIP), an initiative designed to add liquidity to the corporate credit union system, has injected $8.2 billion in loans. (See related story: Mid-Atlantic Corporate reaffirms strength.) Corporate credit unions used the funds to pay down external borrowings, freeing collateral for future contingency liquidity needs. The NCUA noted the liquidity improvement during its Monday “Corporate Update” webinar.

Mica to represent CUs at Senate Banking hearing today

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WASHINGTON (3/24/09)—Credit Union National Association (CUNA) President/CEO Dan Mica is scheduled to testify today before the Senate Banking Committee during its second hearing this year on modernizing financial institution supervision. Mica will state the credit union case that a separate federal regulator is an imperative for credit unions because their structure and, in some ways, operations are so distinct from banks and thrifts. Mica will be seated on a panel of witnesses comprised of credit union, bank, and consumer group representatives. This hearing follows by less than a week the committee’s opening session on the issues. Last week, financial institution regulators, including National Credit Union Administration (NCUA) Chairman Michael Fryzel, testified. Fryzel told the banking panel that credit unions deserve and require a separate regulator because they are fundamentally different in structure and operation than other types of financial institutions. Other witnesses at today's hearing include:
* Gail Hillebrand, senior attorney, Consumers Union of U.S., Inc.; * William Attridge, president/CEO/COO, Community River Community Bank, for the Independent Community Bankers of America * Aubrey Patterson, chairman/CEO, BancorpSouth, Inc., for the American Bankers Association; and * Richard Christopher Whalen, SVP/managing director, Institutional Risk Analytics.

Wednesdays Power Breakfast to be broadcast live

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WASHINGTON (3/24/09)--Wednesday’s Power Breakfast, sponsored by the Credit Union National Association (CUNA) and the National Journal Group, is not only the first in the 2009 series--it will be the first to be streamed via live the Web. The breakfast begins at 8:30 a.m. ET. The topic is bipartisanship, and the event will be moderated by Ron Brownstein, political director, Atlantic Media Company. Panelists include:
* Sen. Mel Martinez (R-Fla.); * Sen. Bob Casey (D-Pa.); * Al From, CEO of the Democratic Leadership Council; and * Steve Bell, Bipartisan Policy Center scholar.
CUNA has sponsored the breakfast series for the past two years with the National Journal. For more information, use the link.

IAT effective date extended to Sept. 18

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WASHINGTON (3/24/09)--NACHA has extended the effective date of the International ACH Transaction (IAT) rules and formats to Sept. 18. The original effective date was Friday. NACHA encourages institutions to use the six-month extension for additional process documentation, testing with the ACH operators, and consumer education and training. The ACH rule changes are designed to improve institutions’ ability to identify the parties involved in international payments flowing through the ACH network, said Valerie Moss, director of compliance information at the Credit Union National Association. The rules will facilitate compliance with Office of Foreign Assets Control (OFAC) regulations. OFAC requires credit unions and others to block property and reject transactions involving any country, entity, or individual on OFAC's Specially Designated Nationals and Blocked Persons list.

Compliance When is e-Statement consent needed

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WASHINGTON (3/23/09)—Credit union compliance officers know that a credit union cannot automatically convert members to e-statements without first getting their consent. They know this because the Credit Union National Association (CUNA) Compliance Challenge folks told them in January. Never ones to leave a compliance stone unturned, the CUNA compliance experts follow up this month and ask credit unions: Does this opt-in requirement hold true for members who have already signed up for home banking but still receive paper statements? Hmmm? The answer is that it depends on exactly what the member agreed to when they signed up for home banking. If the member only signed up for online account access, then the credit union would still need to obtain their consent to receive e-statements. However, many credit unions have members that signed up for both account access and e-statements, but are still receiving paper statements too. In this case, the credit union’s goal is to encourage members to “go green” and “opt-out” of their paper statements. To find out how to do this, and to delve into nine other hot compliance topics, read the March Challenge. Use the resource link below to access it.