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Administration seeks public input on housing finance reforms

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WASHINGTON (4/15/10)--The Obama administration on Wednesday sought public comment on potential housing finance reforms, asking for direct input on how the current organization of the housing finance system can be improved and how that system can support “sound market practices.” The administration also asked for input on the roles of Fannie Mae and Freddie Mac. "The overall role of the federal government in housing policy,” as well as other questions, which will be published in the Federal Register, “have been designed to generate input from a wide variety of constituents, including market participants, industry groups, academic experts, and consumer and community organizations.” The administration wants constituents to detail what role the federal government could play in “supporting a stable, well-functioning housing finance system and what risks, if any, should the federal government bear in meeting its housing finance objectives,” and, as the government changes its approach, whether or not that approach should “differ across different segments of the market.” "A well-functioning housing finance system is critical to the long term stability of the housing market," U.S. Treasury Secretary Tim Geithner said . He added that "hearing from a wide variety of perspectives” as the administration moves forward “is an important part of establishing a more stable and sound housing finance system for the American people." In addition to collecting the comments, which will be taken in via an online portal at http://www.regulations.gov/, the administration will hold several public forums nationwide.

CULAC-backed Deutch of Fla. cruises to House victory

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WASHINGTON (4/15/10)—Ted Deutch, a Florida Democrat who has indicated support for credit union issues, was victorious in his special election for the U.S. House seat from the 19th district. Deutch, a former state Senator, will fill the seat vacated by Democrat Robert Wexler, who left Congress earlier this year to become president of the S. Daniel Abraham Center for Middle East Peace. Wexler had served in the House since 1997. Republican Ed Lynch also challenged for Wexler’s seat. CUNA's Credit Union Legislative Action Council (CULAC) and the League of Southeastern Credit Unions supported the new congressman with $10,000 in financial support. Deutch won with over 64% of the vote.

CARD Act safe harbor should reflect fair CU fees CUNA

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WASHINGTON (4/15/10)--The Credit Union National Association (CUNA) on Wednesday told the Federal Reserve that it is “concerned” by the recent proposal that implements the provisions of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (CARD Act) that require penalty fees to be "reasonable." Under the proposal, financial institutions may base these fees on costs, deterrence value, or they may charge a “safe harbor” fee that would be determined at a later time but before the Aug. 22 effective date. According to a CUNA comment letter, credit unions “will most likely only be able to use the safe harbor approach, since the other two alternatives are overly cumbersome for smaller financial institutions.” CUNA in the letter urged the Fed, which would determine these safe harbor fees, “to select a fee that is at the upper range of fees charged by credit unions, since credit union fees are reasonable and have always compared favorable to banks and thrifts” and “to allow credit unions and others to comment on these specific safe harbor fees before they are finalized.” CUNA also expressed concern regarding provisions that would prohibit the imposition of multiple penalty fees based on a single event or transaction in some situations. The proposal also addresses provisions of the CARD Act that require biannual reviews of any account rate increases, and in the letter CUNA requests that these “be limited to the first two years after the initial increase.” CUNA has also asked the Fed to provide additional guidance detailing “what would be considered ‘reasonable’ policies and procedures that credit unions need to develop with regard to this review process.” Credit unions should also be given a 45-day cushion to implement any rate decrease that relates to the results of this review process, according to CUNA. As proposed, the rate must be reduced within thirty days of the review. For the full comment letter, use the resource link.

More LICUs wont have to match funds to apply to CDCI

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WASHINGTON (4/15/10)--The National Credit Union Administration (NCUA) on Wednesday announced that it has “adjusted its evaluation criteria with respect to non performing loans” to allow additional low income credit unions (LICUs) to qualify for the U.S. Treasury’s Community Development Capital Initiative (CDCI) without the need for matching funds. According to the NCUA’s Director of Small Credit Union Initiatives Tawana James, the “new formula will give greater weight to LICUs’ cushion against delinquencies even in worst-case scenarios.” The Treasury late last month extended the CDCI application deadline until April 30, and National Federation of Community Development Credit Unions (Federation) President/CEO Cliff Rosenthal said his group hopes that the new standards “will indeed make it possible for many more credit unions to apply by the April 30 deadline." The NCUA and the Treasury last month also extended the deadline for associated secondary capital plans until May 10. A federation request reportedly precipitated the change by the NCUA. The CDCI program allows LICUs that are certified by Treasury as Community Development Financial Institutions (CDFIs) to obtain up to 3.5% of their assets as secondary capital. The federation recently opted to make $1 million in secondary capital available as matching funds for member community development credit unions (CDCUs) that might not be immediately eligible for CDCI investments in a bid to help more CDCUs qualify for CDCI funds. For the federation release, use the resource link.

Inside Washington (04/14/2010)

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* WASHINGTON (4/15/10)--Democrats and Republicans continue to debate a proposed regulatory reform bill. Republicans say the proposed bill is unacceptable for passage, but the bill’s author, Senate Banking Committee Chairman Christopher Dodd (D-Conn.), said he was optimistic the bill would pass the Senate (American Banker April 14). Dodd said he assumed Republicans would eventually support the bill. Democrats need one Republican to support the bill to ensure its passage, but Dodd said he expects more than one to vote for it. Senate Minority Leader Mitch McConnell (R-Ky.) and Sen. Richard Shelby (R-Ala.) said the bill does not end the “too big to fail” dilemma and would encourage more bailouts of big banks. Shelby said he hopes that lawmakers can reach an agreement on the legislation, but no Republicans would support the bill as drafted. The bill would not passed the Senate, he added ... * WASHINGTON (4/15/10)--The Financial Crisis Inquiry Commission has focused on Citigroup guarantees the company used to trigger sales of mortgage-backed debt that cost the company $14 billion (Bloomberg News April 14). Panelists may conclude that the cause of Citigroup’s bailout was that traders used liquidity to boost sales, according to Phil Angelides, commission chairman. Citigroup had to buy $25 billion of collateralized debt valued at 33 cents per dollar when financial markets tumbled in 2007. American International Group faced a similar situation when it went bankrupt in 2008, Angelides said. Citigroup CEO Charles Prince and executive committee chairman Robert Rubin testified last week before the commission, saying that they did not know the risks posed by using the instruments ... * WASHINGTON (4/15/10)--Treasury’s programs to mitigate foreclosures, even though they are fully operational, will not reach the overwhelming majority of homeowners in trouble, according to a Congressional Oversight Panel report released Tuesday. “Treasury’s response continues to lag well-behind the pace of the crisis,” the panel said in its executive summary. “As of February, only 168,708 homeowners have received final, five-year loan modifications--a small fraction of the six million borrowers who are presently 60 days or more delinquent on their loans.” The panel also raised concerns about the timeliness, sustainability and accountability of the Treasury’s programs. The panel previously noted concerns about Treasury’s foreclosure programs in October ... * WASHINGTON (4/15/10)--Credit union representatives from Kansas City, Mo., encouraged House Financial Services Committee Chairman Barney Frank (D-Mass.), center, to support lifting member business lending limits on credit unions, according to the Missouri Credit Union Association (The Missouri difference April 14). Pat Yokley, CommunityAmerica government affairs consultant (left) and Mazuma CU President/CEO Rob Givens met Frank at an event for Rep. Emanuel Cleaver II (D-5) at the Kansas City Club April 4. Cleaver serves on the House committee with Frank. “I talked with both Cleaver and Frank about our need to lift member business lending limits, and asked for their help in moving this issue forward,” Givens said. “At a time when lawmakers are looking to create jobs and opportunities, it is frustrating that credit unions cannot do more because of an arbitrary limit. (Photo provided by the Missouri Credit Union Association) ...