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Inside Washington (03/26/2010)

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* ALEXANDRIA, Va. (3/29/10)—In a legal opinion letter posted late last week, the National Credit Union Administration (NCUA) wrote that Membership Capital Shares (MCS) maintained by a member of a corporate credit union are available during notice period to cover losses in excess of retained earnings and paid-in capital (PIC) after the owner of the MCS has notified the corporate of intent to withdraw the MCS. The letter, an extension of a 2009 opinion, in essence says a credit union can't protect its MCS investment from write-downs by announcing its intention to leave a corporate credit union’s membership since the MCS can still be impaired by losses during a waiting period. The new opinion came in response to a question from Richard Schulman, an attorney with Esp, Kreuzer, Cores & McLaughlin, LLP, Wheaton, Ill. The question, according to the NCUA letter, was framed within the context of adjustable balance MCS accounts, which are specifically permissible under NCUA regulations. 12 C.F.R. §704.3(b)(8). The letter, signed by John Ianno, NCUA associate general counsel, and dated Feb. 25, said in part, “In accordance with the rule, a corporate may establish and offer its members the choice of investing in an MCS account with a feature calling for adjustments to or from the balance based on fluctuations in an external index. Adjustments may be made at six-month intervals or longer, but not more frequently than once every six months. If the corporate selects an index other than the asset size of its member, it “must address the measure’s permanency characteristics in its capital plan. 12 C.F.R. §704.3(b)(8)(ii).” Use the link at the beginning of the brief to read more… * WASHINGTON (3/29/10)—The U.S. Department of the Treasury, in partnership with The White House Council on Women and Girls, is holding a symposium today to recognize the contributions of women in the fields of public and private finance, and to discuss effective ways to foster success in the future for women working in those sectors. The symposium will bring together senior Obama administration officials, private sector leaders, university presidents and women entering the field of finance. To reach a broader audience, the symposium will be available to “students around the country” via webcast. Such participants may gain some insights as panelists share stories of how each achieved success in the world of finance and answer questions from students interested in being the next generation of women leaders. Throughout today’s event, questions can be submitted live on Twitter by using the "#WIF" hash tag or by e-mailing …

CUNA strongly backs CU exemption from FTC loan rescue rule

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WASHINGTON (3/29/10)--The Credit Union National Association (CUNA) in comments to the Federal Trade Commission (FTC) spoke in support of the FTC’s proposal to “protect consumers from unscrupulous entities who take advantage of consumers by offering loan modification and foreclosure rescue services that impose high costs without providing any benefits.” CUNA also said that it supports portions of the FTC’s proposed rule that would “exempt those that hold or service a loan secured by a home” from the burdens imposed by the new FTC protections. Currently, the FTC proposal exempts state-chartered credit unions, and federally chartered credit unions are not regulated by the FTC. The FTC proposal would restrict or prohibit practices that take advantage of vulnerable homeowners who seek loan modification or foreclosure rescue services. CUNA “strongly” encouraged the FTC to “retain” the state credit union exemption in the final rule to help ensure that “state-chartered credit unions are not needlessly subjected to new regulatory burdens that will add to their compliance costs.” “Credit unions have not been the source of problems for home loan borrowers and do not need additional rules to ensure they act in their members’ best interests,” CUNA added. For the full comment letter, use the resource link.

Matz urges CUs on Treasurys loan mod initiatives

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WASHINGTON (3/29/10)—National Credit Union Administration (NCUA) Chairman Debbie Matz on Friday urged credit unions "to work closely with any of their members who find their finances under that an enhanced array of federal initiatives is available to mortgage lenders helping homeowners stay in their homes." "Credit unions should evaluate every possible remedy to help responsible borrowers–-especially those who are victims of the real estate market crash and those who are unemployed,” Matz added. Matz made her remarks in response to the U.S. Treasury announcement Friday on adjustments to its Home Affordable Modification Program (HAMP) and Federal Housing Administration (FHA) programs that will “expand flexibility for mortgage servicers and originators to assist more unemployed homeowners.” The changes, Treasury said, “will help the administration meet its goal of stabilizing housing markets by offering a second chance to up to three to four million struggling homeowners through the end of 2012.” The changes, according to the Treasury, will increase available assistance for unemployed homeowners that are searching for employment, provide mortgage servicers and lenders “more flexibility to reduce mortgage principal for underwater borrowers,” increase the incentives that are provided to servicers that take part in the Administration’s Making Home Affordable (MHA) program. The changes will also help ease “transitions to more sustainable housing for borrowers who do not succeed within the HAMP program” and will expand “opportunities to refinance into affordable FHA loans for underwater borrowers. Specifically, the Treasury said that unemployed borrowers that meet certain criteria “will have an opportunity to have their mortgage payments temporarily reduced to an affordable level for a minimum of three months, and up to six months for some borrowers, while they look for a new job.” The FHA refinancing programs, which are made available to borrowers who owe more than their home is worth, will be implemented “as quickly as possible” and the Treasury will soon provide greater details on this program. While some of the proposed improvements will be available sooner, the Treasury said it expects most if not all of the HAMP and FHA improvements to be fully implemented by the fall. The costs of these improvements will be borne by both private industry and the government, with the government portion of the cost being paid by a $50 billion allocation for housing programs under the Troubled Asset Relief Program (TARP), the Treasury said. The Credit Union National Association will be working with Treasury and NCUA and seeking more details of how the program will be implemented and will be provding more information to leagues and credit unions next week. For the full Treasury release, use the resource link.

Reg reform discussion to get a jumpstart after recess

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WASHINGTON (3/29/10)--While Sen. Chris Dodd (D-Conn.) formally introduced his financial regulatory reform package during a Senate Banking Committee hearing held early last week, the expected weeklong debate on the provisions of the bill never fully materialized, and the bill simply passed out of committee on a party-line vote. Dodd and ranking committee minority member Richard Shelby (R-Ala.) were the only two to speak during the hearing, and Shelby indicated that bipartisan dialogue would continue after the committee vote and before the package is taken up by the full Senate. The Credit Union National Association (CUNA) has also been making its own views on the regulatory reform package known, encouraging 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 National Credit Union Administration's (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," exempting credit unions from portions of the bill that address remittances, and removing language that would amend the Federal Credit Union Act and, in fact, may “limit the ability of federal credit unions to offer other types of international money transfers as well as the ability of the NCUA to regulate international money transfers." Dodd late last week said he would restart dialogue on his regulatory reform bill next month once Congress's spring recess has been completed on April 12. The Senate Committee on Agriculture will also hold its own markup on derivatives legislation in mid-April. Additionally, both Dodd and House Financial Services Committee Chairman Barney Frank (D-Mass.) recently predicted that comprehensive regulatory reform would be signed by President Obama by Memorial Day.

Student-loan provisions gets House Senate okay

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WASHINGTON (3/29/10)--The House again passed comprehensive health care legislation late last week, and while some small portions of the original House bill have been removed, unrelated portions of the bill that revamped federal student loan programs and eliminated fees paid to private banks to act as intermediaries in student lending remained in the final document. As was reported earlier this week in News Now, the bill does not address private student lending. Rather, the bill redirects funds that would have been paid to private lenders that executed federally funded student loans into a federal direct lending program. Specifically, $61 billion in funds will be used to fund need-based Pell grants for prospective college students. The bill is expected to be signed into law on Tuesday. In other action that took place before the upcoming spring recess, Sen. Harry Reid (D-Nev.) cancelled a weekend cloture vote on H.R. 4851. That legislation would extend authorization for the National Flood Insurance Program (NFIP) and federal unemployment insurance and continue federal subsidies to COBRA health insurance recipients through April 30. Funding for the NFIP, unemployment insurance, and COBRA will lapse until Congress reconvenes on April 12. A vote on H.R. 4851 is now scheduled for that same date. H.R. 4938, which would permit the use of $40 million in previously appropriated funds to extend, among other items, federal government’s Small Business Loan Guarantee Program until April 30, has passed both chambers and is currently awaiting President Obama’s signature.