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Washington

Financial crisis is subject of federal inquiry

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WASHINGTON (4/2/10)--The Financial Crisis Inquiry Commission on Thursday announced that representatives from the Federal Reserve, Fannie Mae, the Federal Housing Finance Agency, the Federal Housing Finance Board, the Office of Federal Housing, and Citigroup will testify during a hearing entitled "Subprime Lending and Securitization and Government-Sponsored Enterprises." The FCIC was created by Congress last year and is tasked with studying fraud in the financial system and determining the cause of the financial crisis. The hearing will take place on April 7, 8 and 9, and will start at 9 A.M. E.T. on each of those days. The hearing will also be available via webcast. The FCIC conducted an earlier series of hearings which featured testimony from Securities and Exchange Commission (SEC) Chairman Mary Schapiro, Attorney General Eric Holder, and various high ranking executives. Thomas Greene, a lawyer in the California Attorney General's office, is the current executive director of the 10-member commission. The FCIC will issue a final report on the nation's financial crisis to the U.S. Congress by December 2010. Credit unions have seen growth in spite of the below average economic conditions, reporting a 5.7% increase in share drafts, a 3.9% increase in regular shares, and a 1.4% increase in money market accounts during February. (See related story: CU loans down 0.6%, savings up 1.8%) For the FCIC hearing notice, as published in the Federal Register, use the resource link.

Inside Washington (04/01/2010)

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* WASHINGTON (4/2/10)--The Office of Thrift Supervision (OTS) Wednesday offered tips to consumers regarding the Real Estate Settlement Procedures Act (RESPA) in the brochure, “What to Expect When You Apply for a Mortgage Loan.” The brochure discusses how credit scores impact getting a mortgage, new mortgage loan disclosures, the new Good Faith Estimate, and the mortgage loan application process. New RESPA rules took effect Jan. 1 ... * WASHINGTON (4/2/10)--Federal Reserve Board Gov. Elizabeth Duke said she expects bank lending to improve by year-end despite challenges and failures in the financial industry. Duke made the comment at a banking conference in Arizona Wednesday (American Banker April 1). While the nation’s community banks are sound, some firms are under stress from problem loans, particularly in commercial real estate, Duke said ... * WASHINGTON (4/2/10)--State regulators are encouraging Senate Banking Committee Chairman Christopher Dodd (D-Conn.) to revise a provision in his regulatory reform bill that they claim would force large state banks to convert to national charters. The conversions, they argue, would prevent eight states from receiving the funding they need to oversee banks under their jurisdictions. The state banking departments also would have to make up the difference by charging more fees to smaller banks, said Richard Neiman, New York State Superintendent of Banks (American Banker April 1). Exam fees also are expected to rise, the Banker said. Under Dodd’s bill, all state-chartered banks would be regulated by the Federal Deposit Insurance Corp (FDIC). The Federal Reserve Board would oversee holding companies with more than $50 billion in assets. Roughly 15 state-chartered banks belong to companies with that asset size and could end up with three regulators--the Fed, FDIC and the state ...

Obama signs new student loan law

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WASHINGTON (4/2/10)--Federal student lending regulations were officially changed earlier this week when President Barack Obama signed legislation that eliminates government subsidies to credit unions and banks that take part in the Federal Family Education Loan Program. Starting on July 1, education loans will be originated by the government. Obama on Tuesday estimated that this change would save taxpayers $68 billion, and the government is projected to offer $61 billion in funds to active and prospective students in the form of need-based Pell grants. The Credit Union National Association (CUNA) estimates that this change could affect 1,000 credit unions that currently participate in publicly-funded student lending. However, private student lending still provides valuable market share opportunities for credit unions. A recent Fynanz survey revealed that private loans accounted for 10% of the $229 billion total cost of higher education in the 2008-2009 academic year, and cuStudentLoans.org, private student lending cooperative of over 30 credit unions in New Jersey, Pennsylvania, New York, Ohio and Minnesota, handled $90 million in student loans in late 2009. The cuStudentLoans.org network is backed by Fynanz and lends to students at over 700 schools in 47 states. According to Fynanz estimates, 90% of those loans go to new credit union members, “which is welcomed news for credit unions looking to expand their customer base and offer programs that attract younger credit union members.” Earlier this year, CUNA Strategic Services Inc. (CSS) joined with Fynanz Inc. to help credit unions get a piece of the private student loan market, attract new members, and assist borrowers with financing tuition and achieving higher education goals.

CUNA seeks comment on NCUA RegFlex changes

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WASHINGTON (4/2/10)--The Credit Union National Association (CUNA) has issued a regulatory comment call on the National Credit Union Administration’s proposed changes to its Regulatory Flexibility (RegFlex) Program. CUNA has suggested that those who do submit comments address the appropriateness of the 5% of fixed assets limit on investments and stress testing requirements. More generally, CUNA has also sought comment on whether or not changes to the RegFlex rules are necessary. The NCUA last month approved a proposed rule that would rescind some exemptions related to fixed assets, member business lending (MBL), stress testing of securities, and the discretionary control of investments. Specifically, the RegFlex proposal would require RegFlex credit unions to comply with the general limitation of a federal credit union’s investment in fixed assets to no more than 5% of its shares and retained earnings. The proposal would also subject RegFlex credit unions to stress test standards for some types of securities and would saddle RegFlex credit unions with the same 100% net worth limitation on discretionary control of investments that applies to federal credit unions. Member business lending by credit unions would also be affected, with the proposed rule subjecting RegFlex participants to collateral and security provisions that require the personal liability and guarantee of the borrower’s principals. Comments are due to CUNA by May 10. Comments solicited to the NCUA should be submitted by May 24. To view the CUNA comment call, use the link.