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Inside Washington (04/02/2010)

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* WASHINGTON (4/5/10)--Lawmakers on the Senate Agriculture Committee are writing new rules to oversee the derivatives market, which could affect larger regulatory reform for the financial industry. Committee Chairman Blanche Lincoln (D-Ark.) and ranking Republican Saxby Chambliss (Ga.) plan to introduce a bipartisan bill after Congress comes back from its April recess. The effort is noteworthy because Sens. Jack Reed (D-R.I.) and Judd Gregg (R-N.H.) have reached an impasse in negotiations over the reform bill after months of work on a reform bill by Sen. Christopher Dodd (D-Conn.) to overhaul the financial system. If Lincoln and Chambliss reach a deal on derivatives, it could help pass Dodd’s legislation. Reforming the derivatives market remains at the core of how lawmakers plan to change how the government will regulate Wall Street (The Washington Post April 2). Debate continues among lawmakers about how to make the derivatives market more transparent to minimize risk ... * WASHINGTON (4/5/10)--The President’s Economic Recovery Advisory Board (PERAB) will meet April 16 at the White House. The meeting will be open to the public via live webcast (Federal Register April 1). The board invites the public to

Go Direct preps CUs for Financial Literacy Month

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WASHINGTON (4/5/10)—The U.S. Treasury Department's direct deposit program, Go Direct, reminds credit unions and other national campaign partners to use financial literacy month as an opportunity to help members and customers “protect their money and improve their financial health by switching from paper checks to electronic payments for their federal benefits.” Go Direct has also provided additional resources for both financial institutions and community organizations via free materials for their members and customers. These materials include program overviews, newsletters, and other print and web-based resources. Go Direct is also looking ahead to May, when Older Americans Month begins. Financial institutions can use May to follow up on many of the same messages that are sent out during Financial Literacy Month, with a specific emphasis on seniors that currently receive their social security payments and other federal benefits via paper check. Go Direct has also provided a tool kit for financial institutions that wish to take part in Older Americans Month. For the Go Direct program’s April and May resources, use the resource links.

Compliance Challenge Opt-in or no opt-in account terms apply

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WASHINGTON (4/5/10)--While Regulation Z does not currently cover over the phone applications for credit cards, the Credit Union National Association (CUNA) has advised that credit unions that receive all necessary applicant information verbally, while still requiring the applicant to sign a text-version of their application at a later date, will “likely have satisfied the written application requirement” imposed on potential accountholders that are under 21 years of age. CUNA’s latest Compliance Challenge also addresses Regulation E. Responding to another query, CUNA says that in cases where members that have not opted in to the credit unions’ overdraft program but are abusing their debit cards by frequently overdrawing their accounts, the credit union can only suspend that members’ account “if it would do the same for members who have opted-in to the service.” Under Section 205.17(b)(3) of Regulation E , credit unions must “apply the same account terms, conditions, and features,” including interest rates, fees, and minimum balance requirements, “regardless of the consumer’s opt-in choice,” CUNA said. In another example, CUNA said that card issuers must provide 45 days of advance notice “when a discounted rate, such as a 25 basis point reduction in the credit card rate for payroll deduction, is increased to the normal rate.” This must be done whether or not the member still meets the requirements for the discount, according to CUNA. “However, a card issuer that does so cannot subsequently increase the rate unless permitted by one of the exceptions in Section 226.55(b), such as providing a 45-day advance notice of change in terms,” CUNA added. For more of CUNA’s Compliance Challenge, use the resource link.

NCUA will fully back CUs in states affected by recent flooding

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ALEXANDRIA, Va. (4/5/10)--The National Credit Union Administration on Friday encouraged credit unions in Delaware, New Hampshire, Massachusetts, Rhode Island and West Virginia to work with members as they deal with damages and other issues related to the recent flooding and sever weather. Portions of these states have been declared federal disaster areas, and the NCUA has suggested that credit unions in these areas facilitate the recovery of their communities by making loans with “special terms and reduced documentation” for members that have been affected by the recent storms. The NCUA will also “reschedule routine examinations of affected credit unions” as needed. Additionally, the NCUA said it would aid recovery efforts by guaranteeing lines of credit through the National Credit Union Share Insurance Fund and lending to “meet the liquidity needs of member credit unions through the Central Liquidity Facility.” The NCUA release follows a Federal Deposit Insurance Corporation release earlier this week. While the NCUA at first indicated that it would handle the situation in these jurisdictions on a case by case basis, the Agency later elected to produce its own guidance. For the full NCUA guidance, use the resource link.