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Democratic trio seek House interchange delay support

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WASHINGTON (4/1/11)--Rep. Debbie Wasserman Schultz (D-Fla.) and a pair of other legislators have urged their House colleagues to add their names to the list of representatives calling for a delay in interchange fee cap legislation. Reps. Jared Polis (D-Colo.) and Lynn Woolsey (D-Calif.) joined Wasserman Schultz in co-signing the letter. The legislators called the Consumer Payment System Protection Act (H.R. 1081), a bill that would delay implementation by one year, “a reasonable response" for those that are concerned about the impact that interchange fees and the pending interchange fee cap will have on their constituents. That bill, introduced by Rep. Shelley Moore Capito (R-W.V.), would also direct federal agencies to study the impact that interchange changes would have on credit unions and other card issuers, consumers, and merchants. The Thursday letter notes that Moore Capito’s legislation “doesn’t pick winners and losers” and “doesn’t overturn the rule.” Rather, the legislation promotes a brief year-long delay to enable legislators to address “questions about customer savings, consumer protection, and the rule’s effects on small businesses and low-income consumers.” “These are all issues that should have been considered before we passed the bill, but it is not too late to protect consumers,” the letter adds. The letter notes that the interchange legislation “was not considered in committee, no studies of its effects were performed, and no separate vote was held on the provision in the House." Moore Capito’s legislation had 59 co-sponsors as of late Thursday. Sens. Jon Tester (D-Mont.) and Bob Corker (R-Tenn.) have introduced similar legislation in the Senate. That bill would delay implementation by two years, and would also order a study of the effects of interchange.

Interchange MBLs see Thursday Senate spotlight

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WASHINGTON (4/1/11)—Two of the credit union world’s hot-button issues--delaying implementation of debit card interchange fee limits and lifting the member business lending (MBL) cap--were spotlighted Thursday in Senate floor remarks by key lawmakers. With Senate colleagues around him, Sen. Jon Tester (D-Mont.) urged support for legislation that would delay the implementation of the Federal Reserve’s planned interchange fee rate cap, noting that Congress should not let these new regulations come into effect before knowing both the intended and unintended consequences of this action. The interchange provisions, which could become effective in late July, could lower the amount of transaction fees charged to seven cents per card swipe. The legislation, as currently written, would exempt credit unions and other small institutions with assets of $10 billion and under from the terms of the regulations. However, there is much debate over whether this proposed exemption would work as planned. Federal regulators, including Federal Deposit Insurance Corp. (FDIC) Chairman Sheila Bair, have publicly questioned whether small issuers would benefit from this exemption. Fed Chairman Ben Bernanke this week said that his agency would not be able to meet a statutory April 21 deadline for the issuance of debit interchange fee standards. The new standards are currently set to come into law on July 21. The Credit Union National Association (CUNA) this week said that releasing a final version of the proposal so close to the deadline would not give institutions, networks, and the marketplace the time needed to prepare for compliance with a final rule. Tester and Senate colleague Bob Corker (R-Tenn.) have introduced legislation that would delay by one year the implementation of these new standards, and that legislation could be offered as an amendment to a still developing small business package. The Senator said that the interchange issue, which is contentious, is not about picking sides. Rather, he added, it is about not tramping on the financial infrastructure that communities nationwide need. “When government sets prices on swipe fees it's the little guy who gets hurt,” Tester said. The Montana Democrat said that the interchange regulations would only add to the costs incurred by credit unions and other small institutions. These costs would harm the ability of these institutions to compete with larger financial service providers, and could result in the closure of smaller institutions. This could, in the end, cause financial market consolidation, Tester said. Tester’s remarks followed an earlier floor statement in which Sen. Richard Durbin (D-Ill.), the architect of the interchange legislation, defended his bill against his bill's critics. Sen. Mark Udall (D-Colo.) earlier in the day highlighted his MBL cap legislation, and called on his fellow Senators to help him “get government out of the way” and allow credit unions to increase their lending to small businesses. He also criticized the current “arbitrary cap” limiting MBL activity to 12.25% of a credit union’s total assets. Udall’s S. 509, The Small Business Lending Enhancement Act of 2011, would increase the MBL cap to 27.5% of a credit union's assets. CUNA has estimated that the MBL cap lift could provide up to $13 billion to small businesses in the first year alone and create over 140,000 new jobs, at no cost to taxpayers. Udall clarified that Senate Banking Committee Chairman Tim Johnson (D-S.D.) does not oppose lifting the MBL cap, and has said that he would like to examine the issue further. Udall in a blog post released earlier this week said that he would "continue to fight" for his "common-sense and bipartisan" legislation.

CUNA in for the mile at 2011 CU Cherry Blossom Race

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WASHINGTON (4/1/11)—Around 15,000 runners will again take to the streets of the nation’s capital this weekend at the annual Credit Union Cherry Blossom 10-Mile Run. This will be the tenth straight year that the Credit Union National Association (CUNA) has worked in support of credit union involvement in the race. CUNA will again serve as a co-sponsor of the "Capitol Hill Competition," a race-within-a-race for runners from congressional offices and will take part in a Friday press conference at Children's Hospital in Washington to promote the race to trade and local press. Twenty-four CUNA volunteers will also work the race bag check tent, where more than 10,000 runners will store their belongings while they race. More than 700 credit union members work as race volunteers, and 7,000 of the racers themselves are credit union members. Four CUNA employees will be among the runners. Race organizers expect the all-time 200,000th finisher to cross the finish line this weekend. The title sponsor, Credit Union Miracle Day, Inc., has raised a total of $5 million dollars for the Children’s Miracle Network in its ten years of race sponsorship. Credit Union Miracle Day, Inc. is slated to sponsor the race through 2016.

Senate matches House bill to privatize Freddie Fannie

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WASHINGTON (4/1/11)—Senators John McCain (R-Ariz.) and Orrin Hatch (R-Utah) on Thursday introduced legislation that seeks to privatize government sponsored mortgage backers Fannie Mae and Freddie Mac and to end the ongoing taxpayer funding of those entities. The legislation would end the government conservatorship of Fannie Mae and Freddie Mac within two years. The maximum portfolio held by the GSEs would be limited to $700 billion, and this limit would be gradually reduced to $250 billion over the course of five years. The proposal would also limit Fannie and Freddie’s conforming loan limit to $417,000. The Senate bill is similar to House legislation introduced by House Financial Services Committee Chairman Rep. Spencer Bachus (R-Ala.) and committee vice chair Rep. Jeb Hensarling (R-Texas). House Republicans earlier this week unveiled eight bills aimed at reforming Fannie Mae and Freddie Mac. The eight bills are known as the Government Sponsored Entities (GSE) Credit Risk Equitable Treatment Act, The Equity in Government Compensation Act, The Portfolio Risk Reduction Act, The GSE Subsidy Elimination Act, The GSE Mission Improvement Act, The Fannie Mae and Freddie Mac Accountability and Transparency for Taxpayers Act, The GSE Risk and Activities Limitation Act, and The GSE Debt Issuance Approval Act.

Inside Washington (03/31/2011)

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* WASHINGTON (4/1/11)--Critics of the Dodd-Frank Act, already wary of overregulation, are also concerned that the costs of the law will be exorbitant. Dodd-Frank is expected to have a final price tag of about $30 billion, but its effect on the federal budget is difficult to forecast because much of the bill will be paid for through regulatory fees on financial institutions (American Banker March 31). The Congressional Budget Office estimates the government’s cost will be $1 billion over five years. But during a House Financial Services subcommittee hearing Wednesday on the law's budgetary and economic costs, Republicans said indirect costs such as losses in capital formation, credit availability, and the U.S economy's ability to compete globally should also be added to the law’s cost. Randy Neugebauer (R-Texas), who chaired the hearing, said regulators should slow the rulemaking process to do more thorough cost analyses. But Democrats said all legislation comes with a price. Jill Sommers, a member of the Commodity Futures Trading Commission, said agencies can do cost-benefit analyses as they implement rules … * WASHINGTON (4/1/11)--The Treasury Department on Wednesday claimed a $23.6 billion profit from measures put in place to stabilize the financial markets during the crisis. Critics were unconvinced (American Banker March 31). The government bailout includes the Troubled Asset Relief Program, programs administered by the Federal Reserve and Federal Deposit Insurance Corp., financial support for Fannie Mae and Freddie Mac, and other initiatives. But Rep. Patrick T. McHenry, (R-N.C.), who is chairman of the House oversight committee’s bailout panel, said the government’s estimates have been inaccurate in the past and Treasury has consistently changed the metric to measure success. But the Treasury maintained that even if the nearly $24 billion figure is optimistic, the positive swing still represents a major turnaround from losses predicted by many. Even the Obama administration projected a $100 billion loss a year ago … * WASHINGTON (4/1/11)--Rep. Spencer Bachus (R-Ala.), chairman of the House Financial Services Committee, and Rep. Shelley Moore Capito (R-W.Va.), head of the consumer credit subcommittee, have asked Elizabeth Warren, who is in charge of setting up the Consumer Financial Protection Bureau (CFPB), to clarify her role in the mortgage servicer settlement (American Banker March 31). Bachus and Capito sent Warren a letter after a document that she sent to Iowa Attorney General Tom Miller was leaked to the media. In the document, Warren maintains that the largest servicers cut corners in their servicing to save as much as $20 billion and should be fined for that amount. Warren has said her role is advisory, but Bachus and Capito maintain the document is proof that Warren has further involvement. A Warren spokesperson responded in an e-mail that, as Warren previously testified to Congress, the CFPB provided advice to various officials involved in the mortgage servicing law enforcement matter. Warren understands that not everyone agrees with that advice or how to address the deficiencies at the largest U.S. mortgage servicing firms, the e-mail said …