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Payday loan alternatives corporate CU requirements on NCUA agenda

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ALEXANDRIA, Va. (4/23/10)--The National Credit Union Administration (NCUA), at its upcoming board meeting at 10 a.m. (ET) next Thursday, is expected to discuss short-term, small dollar, so- called payday loans and waivers under certain provisions of its corporate credit union regulation. Posting its agenda yesterday, the NCUA had the following three items slated:
* Proposed Rule – Section 701.21(c) of NCUA’s Rules and Regulations, Short-term, Small-dollar Loans; * Waiver under Part 704 of NCUA’s Rules and Regulations; and * Insurance Fund Report.
Section 701.21 of the NCUA’s rules address loans made by federal credit unions, and Part 704 regulates corporate credit unions. The Credit Union National Association is aware that some at NCUA have been looking for ways to help credit unions offer alternatives to payday lending. One of the challenges facing federal credit unions is an 18% interest cap on payday loan programs. Under Section 704, some corporate credit union services are tied to the capital of the corporate. The NCUA late last year proposed substantial revisions to its corporate credit union regulations. The NCUA has collected public comments on these regulations, and plans to complete its work on the corporate credit union system later this year. The board will also be updated on the status of the National Credit Union Share Insurance Fund during the meeting. A closed meeting of the board--during which the NCUA will discuss supervisory activities and personnel matters--will follow the session. The NCUA on Thursday also announced a separate closed meeting, scheduled for later today, which will cover NCUA supervisory activities.

NCUA for Earth Day notes green gains

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ALEXANDRIA, Va. (4/23/10)--The National Credit Union Administration (NCUA) celebrated Earth Day by hailing the progress of the Agency’s “greeNCUA” initiative which has “helped reduce the environmental impact of everyday operations and has helped inspire employees to focus on improving environmental protection.” The greeNCUA initiative, which began in late 2009, resulted in new recycling programs, energy-efficiency improvements and increased communication about environmental concerns at the NCUA. These improvements “have helped the agency reduce its consumption of resources, limit its carbon footprint and restrain its operating costs,” according to the release. Specific steps that the NCUA has taken to reach its pro-environmental goals include conducting energy audits, using recycled office materials, turning off NCUA building systems after 6 p.m. on weekdays and throughout the weekend, and recycling much of its office waste, such as light bulbs, paper, glass, aluminum, and toner cartridges. The NCUA received input from both its own Green Committees, which are centered in the agency’s Alexandria-based headquarters and five regional offices, as well as suggestions from individual employees. "Earth Day reminds us of our responsibility to reduce our impact on the environment and to use natural resources wisely," NCUA Chairman Debbie Matz said, adding that "the progress that NCUA has made in adopting environment-friendly policies reflects our employees' public-spirited support for conserving the nation's resources."

Obama urges finance firms to fight for reform

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WASHINGTON (4/23/10)--President Barack Obama has urged Wall Street financial firms to “join” his Administration’s attempts to reform finance regulations “instead of fighting us in this effort,” stating that the reforms “are, in the end, not only in the best interest of our country, but in the best interest of our financial sector.” While many large financial firms, and groups representing their interests, elected to avoid or oppose any discussion with the government as the financial regulatory reform debate began, the Credit Union National Association has met directly with members of Congress and U.S. Treasury officials to lay out credit union concerns. CUNA’s advocacy on behalf of credit unions has continued more recently, with CUNA on Thursday urging legislators to narrow the legislation’s definition of remittances. CUNA has also called for Congress and the Administration to retain the National Credit Union Administration’s regulatory authority over all credit unions rather than limiting it to those with under $10 billion in assets. Senator Harry Reid (D-Nev.) on Thursday said that a vote to proceed with debate on Sen. Chris Dodd’s (D-Conn.) S. 3217, the Restoring American Financial Stability Act, would take place on Monday.

Preserve intl payments through tighter remittance definition CUNA

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WASHINGTON (4/23/10)—The Credit Union National Association ramped up its efforts to affect a change in legislative language addressing remittances and, along with a coalition of financial services groups, sent a letter Thursday to Senate leaders urging a more narrow definition of the service. The letter to Sens. Christopher Dodd (D-Conn.), chairman of the Senate Banking Committee, and Daniel Akaka (D-Hawaii), a committee member with longstanding interest in remittance issues, warned that an overly broad definition would reduce financial institutions’ ability to offer cross-border electronic funds transfers, which are not generally thought of as "remittances." Generally, a "remittance" is a transfer of money by a foreign worker located in the United States to relatives in his or her home country. Language included in the Senate’s financial regulatory reform package is currently so broad, CUNA argues, that is would cover payments and payments systems currently consider way outside the remittance system. “We are concerned about Section 1076 of the Restoring American Financial Stability Act that defines ‘remittances’ differently than the internationally accepted standard and that we believe will prevent our members from competitively offering many forms of international electronic fund transfer services because of the burdens that such an overly broad definition will impose on these services,” said the coalition letter. In addition to CUNA, the letter is signed by the National Association of Federal Credit Unions, the American Bankers Association, and the Independent Bankers Association of America. Dodd and Akaka were urged to make the definition of "remittance transfer" close to one adopted by the World Bank and Bank for International Settlements in 2007 in a white paper. The report, signed off on by now-U.S. Treasury Secretary Timothy Geithner, defined remittance transfers as “cross-border person-to-person payments of relatively low value.” “Generally these ‘remittance transfers’ are for the maintenance and support of the recipient and/or other relatives, and are defined to not include payments to businesses, many transfers between bank accounts, or payments made in exchange for goods or services. In order to ensure a competitive and viable product that serves consumers’ needs, it is critical to properly tailor the statutory definition…” the joint letter recommends. Attached to the missive was the trade groups’ endorsed definitional language. Ryan Donovan, CUNA vice president for legislative affairs, said CUNA’s main concern is that the current legislative language would position credit unions so they are liable for actions of correspondent banks, over which they have no control, and which are not subject to U.S. law. He noted that discussions regarding this provision with the Senate proponents have been positive and constructive. Donovan added, "Our concern here is not the requirements under the section as they relate to what everyone generally considers remittances." The Thursday letter follows up an earlier effort by CUNA and the World Council of Credit Unions (WOCCU). In a March 25 letter, CUNA and WOCCU encouraged Dodd to consider exempting credit unions or, more broadly, exempting transactions that are routed through programs administered by the major central banks, including Fedwire, Fed Global ACH, NACHA ACH, and the SWIFT system.

Inside Washington (04/22/2010)

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* WASHINGTON (4/23/10)--The House Financial Services Committee passed the Rural Housing Preservation and Stabilization Act (H.R. 5017) yesterday, a bill intended to ensure that homebuyers in rural America continue to have access to affordable mortgages through the U.S. Department of Agriculture’s (USDA) guaranteed mortgage loan guarantee. The bill was approved unanimously by the committee and the affirmative vote clears the bill for consideration by the full House, perhaps as early as next week. Rep. Paul Kanjorski (D-Penn.), who introduced the bill, said H.R. 5017 is needed because “unprecedented demand” for USDA guarantees, sparked by the financial crisis, created a tripling in the number of loans made as compared with 2006 levels. ““As a result of the unprecedented demand, the program is now unfortunately running out of money. At no cost to taxpayers, my bill will preserve the access of millions of families living in America’s heartland to needed USDA loan guarantees, so that they can continue to buy homes with affordable mortgages,” Kanjorski said in a release announcing the committee vote ... * WASHINGTON (4/23/10)--Federal Reserve supervisors are telling about two dozen big banks in the U.S. that they must end pay practices that encourage risk-taking. They also are telling boards to increase their scrutiny of incentives. Fed officials have met recently with executives and boards of the banks and told them they need to submit plans to repair deficiencies in how they monitor pay. Firms in the Fed’s review include Morgan Stanley, Bank of America, Goldman Sachs, Citigroup and JPMorgan Chase and Co. In October, the Fed released guidelines to encourage big banks to tie pay to long-term performance. The Fed’s actions are similar to those efforts by lawmakers to overhaul policies created by management and corporate boards. The Fed also wants to ensure banks consider how much employees expose the firms to liquidity and reputational risks (Bloomberg.com April 22) ... * WASHINGTON (4/23/10)--Efforts to widen Small Business Administration (SBA) programs took a step back Wednesday when the agency’s inspector general noted fraud concerns. President Obama asked Congress in February to increase caps on 7(a) and 504 loans to $5 million from $2 million, and to allow owner-occupied commercial real estate loans maturing within the year to be refinanced through the 504 program. However, Peggy Gustafson, SBA inspector general, found issues with the programs. A March audit of the 504 program indicated that lenders may not have used good practices for approved 68% of sampled loans worth $8.9 million. About 572 loans worth $254.9 million had weaknesses. For the 7(a) program, the general found an improper payment rate of 0.53%, representing $4.6 million of loans. Gustafson said to manage risk, the SBA needs to have increased oversight over SBA lenders and regular on-site reviews ... * WASHINGTON (4/23/10)—The Federal Deposit Insurance Corp. (FDIC) revised its list known as “Update to Notice of Financial Institutions for Which the Federal Deposit Insurance Corporation Has Been Appointed Either Receiver, Liquidator, or Manager” in the Federal Register. It updates the agency’s failed bank list regarding the FDIC as sole receiver, through March 19…