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FinCen plans to simplify CTR exemptions

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WASHINGTON (4/24/08)--The Financial Crimes Enforcement Network (FinCEN) Wednesday announced a plan intended to simplify current requirements for credit unions and other depository institutions to exempt their eligible customers from currency transaction reporting. CTRs are mandated by the Bank Secrecy Act, are required of credit unions, banks and thrifts each time more than $10,000 in cash comes into or moves out of the financial institution, but there are exceptions. For instance, current rules allow financial institutions to exempt large transactions made by other depository institutions, government agencies, and public companies that are listed on a major exchange referenced in the FinCEN rule. However, to qualify for the exemption, the financial institution must file and renew annually an exemption form. Under some of the proposed changes, depository institutions would:
* No longer be required to file exemption forms for, or to annually review, customers that are depository institutions, government agencies, or entities acting with governmental authority; * No longer be required to biennially renew a designation of exempt person filing for otherwise eligible Phase II customers; * No longer be required to wait 12 months before designating otherwise eligible Phase II customers for exemption. Instead, depository institutions would be able to institute a risk-based approach to determine how much time to maintain an account before an initial Phase II exemption could be provided to the customer. FinCEN is considering an alternative proposal which would set a length of time to consider Phase II entities, but reduce it to two months; and * Require institutions to notify FinCEN when a customer's exempt status has been revoked.
According to the document FinCEN has submitted for publication in the Federal Register, much of its proposal is based on recommendations from a Government Accountability Office report released in February. GAO requested input from CUNA prior to releasing its recommendations. That report concluded CTRs were useful to law enforcement agencies and should not be significantly curtailed, which backs up what FinCEN has argued. However, the report also said changes to the exemption system could help lighten the burden faced by credit unions, banks and thrifts responsible for filing the information.

CUNA thanks Rep. Clarke for pro-CU comments

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WASHINGTON (4/24/08)—Credit Union National Association (CUNA) President/CEO Dan Mica Wednesday thanked Rep. Yvette Clarke (D-N.Y.) for her strong statement of broad praise of credit unions submitted for the April 22 Congressional Record. Clarke, a credit union member herself, made her statement to “recognize the importance of credit unions” to their communities. “I am a true believer that people should help people," which, Clarke said, is the mission of credit unions. "Members know that during the economic downturn that we are currently facing right now, credit unions will always be there to serve their members to the best of their ability,” Clarke said. Clarke noted that as the nation suffers through the current mortgage crisis, credit unions have displayed an “outstanding record of service to both minority and low- to moderate-income mortgage applicants and have a long history of responsible mortgage lending.” “What is impressive to me…is that in 2006, credit unions approved an overwhelming 71% of applications from low- to moderate-income mortgage applicants,” she added. Clarke also lauded credit unions for their generally higher interest rates on deposits and lower interest rates charged for loans and other services than those charged by banks. “(C)redit unions are extremely vital to my hometown, New York City. Credit unions serve more New Yorkers living in low-income and underserved areas that are continually being abandoned by big corporate banks,” Clarke said. She also called lawmakers’ attention to the following figure: She said that more than one-third of credit union CEOs nationwide are women. In a letter to Clarke, CUNA’s leader noted credit unions’ appreciation of the congresswoman’s remarks for the official record of Congress. He commended her for her understanding of the credit union difference. “Credit unions do indeed seek to fill the vacuum created in many communities as banks and other types of financial institutions leave to serve more lucrative markets. The credit union movement was founded to serve people who had little or no access to mainstream financial services.” Mica wrote. He also noted that House Financial Services Committee Chairman Barney Frank (D-Mass.) made similar favorable comments about the responsible mortgage lending practices adhered to by credit unions.

SBA extends date for SOP changes

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WASHINGTON (4/24/08)—Credit union participants in U.S. Small Business Administration (SBA) guaranteed loan programs should note a 45-day effective date extension for the agency’s revised Standard Operating Procedure form for lender and development company loan programs, said Jeff Bloch, senior assistant general counsel of the Credit Union National Association (CUNA). The revised document, SOP 50 10, incorporates substantial structural changes, according to the SBA, but only limited policy changes or clarifications. The revisions resulted in a 600-page cut in the original 1,000-page text. The new SOP was made available to the public on March 20 to permit lenders and certified development companies (CDCs) an opportunity to become familiar with and implement the revised document. The SBA said staff from the its offices of general counsel and financial assistance met with lenders and CDCs in sessions across the country to discuss clarifications and changes to the SOP and to hear concerns. The result of those meeting, the agency said, was technical changes to the SOP that should be made before the SOP takes effect and the agency is extending the effective date from May 1 to June 15. The provisions under SOP 50 10(5) will apply to all applications received by SBA on or after the June 15effective date. Interested parties can e-mail questions or comments to SOP50-10Modernization@sba.gov. Use the resource link below to access the revised SOP.

Inside Washington (04/23/2008)

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* WASHINGTON (4/24/08)--The number of borrowers helped by loan modifications has increased, but the number of delinquent loans also has increased, causing the modifications to fall short, the State Foreclosure Prevention Working Group said Tuesday. The group issued “Analysis of Subprime Mortgage Servicing Performance”, which was based on data collected from servicers October 2007 through January. Major findings: Seven out of 10 delinquent borrowers do not have alternatives to foreclosure, and two-thirds of all efforts to identify alternatives to foreclosure are not completed in the month after they are started ... * WASHINGTON (4/24/08)--The Internal Revenue Service (IRS) is reminding retirees, disabled veterans and others who do not normally file a tax return that there is still time to submit a 2007 form to receive an economic stimulus payment. People must file by Oct. 15 to receive a payment ... * WASHINGTON (4/24/08)--Taxpayers who have filed their returns can use the Internal Revenue Service’s “Where’s My Refund?” online tool to check the status of their refunds. Taxpayers will need their Social Security number, filing status and exact refund amount ... * WASHINGTON (4/24/08)--The Internal Revenue Service launched a campaign to help educate new self-employed small-business owners about federal tax responsibilities. The campaign coincides with the Small Business Administration’s annual Small Business Week, which ends Friday. The campaign will provide a new Schedule C, Profit or Loss from Business, filers with improved and updated educational materials, small business workshops and other outreach events. Schedule C is filed by sole proprietors as an attachment to their 1040 individual income tax form ...

Mass. CU-bank merger plan needs revote

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WASHINGTON (4/24/08)—Members of Northeast Community CU, Haverhill, Mass., will have to recast their votes regarding their credit union’s plan to merge into Haverhill (Mass.) Bank, according ot Mary Dunn, deputy general counsel of the Credit Union National Association (CUNA). Dunn said the National Credit Union Administration (NCUA) last week deferred a decision on the merger until a membership vote is taken which meets the requirements of the agency’s rules for converting a credit union to a mutual savings bank. The decision, in effect, negates a 77-1 membership vote cast last September in which Northeast Community members approved the move. Sixty-seven depositors at Haverhill Bank had voted unanimously the week before to approve the bank's proposed merger. In 2006, the NCUA unanimously approved a new rule governing conversions from credit union to mutual savings bank charter form, The rule was intended, in part, to make it clear that the agency supports and encourages communications to members and between members. The final rule revised disclosure and voting procedures, as well as procedures to facilitate communications among members and for members to provide their comments to directors before their credit union board votes on a conversion plan. It also specifically requires directors adopting a conversion proposal to determine that the conversion is in the best interest of the members. It mandates that directors sign a document certifying that they have fulfilled their fiduciary duty to members in their pursuit of a conversion proposal. Also under the rule, boxed disclosures to members prior to a vote must clarify:
* Specifically what a "yes" vote or a "no" vote means in terms of the wording on the ballots; and * The effect of a conversion on the credit union member in terms of the loss of beneficial savings and loan rates and charges for services when average credit union products and services are compared with those of other financial institutions.
If the merger is ultimately approved, the resulting bank would have combined assets of roughly $260 million, deposits totaling $220 million and capital totaling $30 million. It would have the second-largest market share in Haverhill. David Cotney, COO of the Massachusetts Division of Banking, confirmed Wednesday that the merger application is still pending action by the state regulator. He added that his agency does not comment on matters pending action. Haverhill Bank CEO Thomas Faulkner was unavailable for comment Wednesday. The NCUA declined to comment.