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CUNA to testify on Internet Gambling plans

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WASHINGTON (3/27/08)—The Credit Union National Association (CUNA) is preparing to testify before a House subcommittee that will be looking into proposed regulations to implement the Unlawful Internet Gambling Enforcement Act (UIGEA). The House Financial Services subcommittee on domestic and international monetary policy, trade, and technology announced late Tuesday that it will conduct a hearing on UIGEA. Harriet May, president/CEO of GECU, El Paso, Tex.., has been invited to testify on CUNA’s behalf. She is secretary of the CUNA board of directors. The April 2 hearing is expected to highlight the burden the proposed regulations would place on financial institutions, as well as the problems regulators are facing in drafting implementation rules, a process that has been have been bogged down with complications and controversy. In October 2006, President George W. Bush signed the SAFE Port Act into law, a measure which included the language requiring credit card and other payment system companies to establish procedures to block customer transactions with online gambling sites. The Treasury Department and the Federal Reserve Board were jointly given responsibility to implement the law and were statutorily assigned 270 days to come up with a plan. However, no effective date was mandated. Under their joint plan, the agencies proposed to apply the rules to five payments systems: automated clearinghouse (ACH); money transmissions, check clearing, wire transfers and credit cards. Even with this scope of application, the agencies determined in their cost/benefit analysis that 7,609 of the nation's 8,477 credit unions would be affected by the new requirements. CUNA, in a comprehensive comment letter on the joint Treasury-Fed implementation plan, called the proposed rules “unworkable.” CUNA called for a moratorium on the implementation of the current proposal and recommended that the regulators work with Congress “to develop an approach that will meet public policy goals in a clearly understood manner and without inflicting undue hardships on the financial institution sector in the process.” CUNA testimony is expected to parallel the comment letter.

Inside Washington (03/26/2008)

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* WASHINGTON (3/27/08)--The Federal Deposit Insurance Corp. is preparing for a possible increase in failures that could result from current problems in the credit markets by working toward hiring 115 more employees for its division that handles bank resolutions. The agency also announced last month that it would rehire 25 of its retirees from that division. The two hiring moves would bring the number of division staff to 360, a 60% increase over current levels. (American Banker March 26)… * WASHINGTON (3/27/08)—Sen. John McCain of Arizona, the presumptive Republican presidential candidate, began outlining principles he would back to tackle the current problems stemming from the housing crisis. They included lender accountability for faulty loans and increased disclosure for mortgage applicants. Speaking to a roundtable for Hispanic small businesses in Southern California, McCain said he is opposed to reducing requirement for down payments for government-backed mortgages. He also backed the idea of national summits on mortgage lending and on mark-to-market accounting. McCain did little to clear any confusion about what specific plans he might back if his bid for the White House is successful, but said he will consider “any and all proposals” based on cost and benefits. (American Banker March 26)…

NCUA provides its piece to Mo. CU merger

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WASHINGTON (3/26/08)—The National Credit Union Administration (NCUA) granted preliminary approval this week of a voluntary merger between Region River CU, Jefferson City, Mo., and struggling Missouri Farmers Union CU (MFUCU), also of Jefferson City. The merger is expected to take effect as of April 1. The merger was approved March 24 by the Missouri Division of Credit Unions “pending the affirmation of the credit union’s share insurer, the National Credit Union Administration.” The NCUA is the administrator of the National Credit Union Share Insurance Fund. NCUA spokesman John McKechnie said Wednesday, “We wrote the state yesterday granting them preliminary approval to the proposed merger, subject to satisfaction of any requirements imposed by the state.” The state regulator’s short notice of approval in March also noted, “No vote of the membership is required due to the financial condition of the credit union,” referring to MFUCU, which has been struggling every quarter through its mere few years of existence. According to the Missouri Credit Union Association (MCUA), MFUCU, which opened two years ago, reported just $24,380 in net capital on $1.1 million in assets, a 2.2% capital ratio, for year-end 2007. The credit union, chartered to serve members of the state farmers cooperative, never attracted more than 180 members and had net income of just $7,100 for 2007, after a $16,900 loss the year before, MCUA said in its March 26 CourierNet. Rick Nichols, River Region president/CEO, told the league that his credit union had been assisting MFUCU since July 2007, “so it’s a good fit.” “Their board also wanted to offer their members some services that they wouldn’t be able to provide, but that River Region could,” he added.