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Washington Archive

Washington

Cramdown changes remain a CUNA priority

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WASHINGTON (4/23/09)--Noting the ongoing work of his organization to reduce the impact of mortgage bankruptcy legislation on credit unions, Credit Union National Association (CUNA) President/CEO Dan Mica said Wednesday he believes progress has been made on two key issues. Mica noted a pronouncement issued by the National Association of Federal Credit Unions (NAFCU) that said it opposed compromise legislation currently being worked out in the Senate. NAFCU said its board voted unanimously Tuesday to oppose the revised mortgage bankruptcy provisions because of a lack of available information regarding work-out plans for subordinate liens, as well as how the Senate legislation would affect existing private mortgage insurance contracts. NAFCU sent a letter to Sen. Dick Durbin (D-Ill.), the majority whip, and the entire Senate announcing its opposition on Wednesday. Mica said CUNA was surprised at the content of NAFCU’s letter: “We thought that association had always opposed the House version of cram downs, as has CUNA.” “From the beginning of the discussions with the Senate, all opposed the House version of the bill, and CUNA engaged in good-faith negotiations aimed at good public policy and addressing concerns of our industry,” Mica said. He added,” In fact, because we stayed at the table, we believe we are very close to acceptable resolutions on the two issues mentioned by NAFCU.” However, he underscored that no deal has been made by CUNA regarding the revised legislation. “This is not the time to merely walk away; there is too much at stake for credit unions, including additional issues that have a direct impact on credit unions and service to their members. CUNA will continue to work with Sen. Durbin and Senate leaders to develop a legislative approach that limits negative impact on credit unions.” The U.S. House of Representatives voted 234-191 March 5 in favor of H.R. 1106, Helping Families Save Their Homes Act—its version of mortgage bankruptcy—or “cramdown”—legislation. The bill would allow broad authority for bankruptcy judges to modify the terms of existing mortgages, which the CUNA has said could lead to borrowers' gaming of the system.

CDRLF grants process open for business

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ALEXANDRIA, Va. (4/23/09)—There will be $975,000 worth of grants and loans for qualified credit unions this year through the National Credit Union Administration’s (NCUA) Community Development Revolving Loan Fund (CDRLF) Technical Assistance Grant Program, and the awards process starts now. The funds were approved as part of the Obama administration’s spending package signed into law in March. The CDRLF was established by Congress in 1979 to support credit unions that serve low-income communities. Federal credit unions wishing to participate in the CDRLF’s programs must be designated as a low-income credit union, as defined by NCUA regulations. State-chartered credit unions must have the equivalent low-income designation from its respective state supervisory authority and concurrence from NCUA. In a recent Letter to Credit Unions (09-CU-09), the NCUA noted this year’s technical assistance grant initiatives are:
* Building capacity, building technology; * Enhancing member services; * Staff, official, and board member training; * Student Internship; and * Volunteer Income Tax Assistance (VITA).
The NCUA noted additionally it has set aside funds for Urgent Needs Grant, earmarked for eligible credit unions in cases of extreme necessity. Use the resource link below to access 2009 TAG guidelines, as well as to read the NCUA letter.

Inside Washington (04/22/2009)

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* WASHINGTON (4/23/09)--The number of loan modifications Fannie Mae and Freddie Mac completed in January increased by 3% compared with December and the prior-three month average, according to a Federal Housing Finance Agency report. In January, 8.953 loan modifications were completed, compared to 8,688 in December and 7,926 three months earlier. Of the modifications completed, 65% required an interest rate reduction and term extension, 19.5% required only a term extension, and 5.3% required an interest rate reduction only ... * WASHINGTON (4/23/09)--The Congressional Oversight Panel expressed their opposition Tuesday to a Treasury Department proposal that would convert preferred shares of banks to common stock (American Banker April 22). Converting the shares to common stock would not stabilize a financial institution and would put taxpayers at greater risk, argued Rep. Jeb Hensarling (R-Texas). The panel also said banks should be allowed to repay government funds from the Troubled Asset Relief Program immediately. Hensarling and former Sen. John Sununu (R-N.H.) both said healthy institutions should be allowed to repay the funds, but Treasury Secretary Timothy Geithner asked if the companies would have enough capital to lend and if they are working for the American people for recovery ... * WASHINGTON (4/23/09)--Big banks should break up, said top economists at a hearing Tuesday. The banks should be broken up unless there is compelling evidence that they shouldn’t be separated, said Joseph Stiglitz, Columbia University professor who has won a Nobel prize. Simon Johnson, Massachusetts Institute of Technology professor, said there aren’t any “compelling” advantages to size, while the disadvantages of being large are “dramatic” (American Banker April 22). Rep. Carolyn Maloney (D-N.Y.), told reporters after the hearing that lawmakers are still considering how systemically significant firms should be handled under a new regulatory environment ...

House panel approves credit card bill

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WASHINGTON (4/23/09)--The House Financial Services Committee Wednesday voted 48 to 19 in favor of a credit card best practices bill that, in most areas, tracks regulatory changes that go into effect next July. The Senate Banking Committee approved a similar bill (S. 414) in March and if adopted by both the full House and Senate and signed into law, the legislation would serve to back up the regulators’ prohibitions on abusive and deceptive card practices. Both the regulators’ rules and the House and Senate bills would ban double-cycle billing, universal default and prolonged payment periods. However, the bills go a bit further in what they address. For instance, the lawmakers’ plans would provide greater protections for underage consumers and would limit some fees. On April 2, the House Financial Services subcommittee on financial institutions approved the Credit Cardholders' Bill of Rights Act (H.R. 627) by voice vote. As the Credit Union National Association (CUNA) testified at a hearing a few weeks before the subcommittee vote, credit unions back the intent of legislation to protect consumers from abusive and deceptive practices. However, CUNA urged that any new law create an equitable balance between those protections and the needs of providers to be fairly compensated for the service and not subjected to unnecessary regulatory burdens. CUNA contacted Rep. Luis Gutierrez (D-Ill.), chairman of the subcommittee, just prior to the vote to support amendments to the bill that would be beneficial to credit unions. CUNA noted in the letter that the bill would require creditors to provide cardholders, in each periodic statement, a telephone number, Internet address, and website address at which the cardholder may request the payoff balance on the account. Most credit unions already provide a telephone number but should not be required to also provide an Internet address and website since not all credit unions have interactive Internet capabilities, CUNA said. CUNA also supported a successful amendment to the bill that extended the legislation's effective date from three months to one year after enactment or June 1, 2010--whichever comes first.