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FinCEN rule defines foreign accounts CUNA analysis

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WASHINGTON (4/27/11)--The Financial Crimes Enforcement Network (FinCEN) has made final a series of foreign financial account reporting regulations and the Credit Union National Association (CUNA) offers the following analysis. The regulations, which amend the Bank Secrecy Act (BSA) and became effective on March 28, identify the persons required to file the reports and the types of accounts that are reportable. The regulations also provide information on potential exemptions from the rule. CUNA, in its final rule analysis, notes that the rule clarifies that officers and other employers that file reports of foreign bank and financial accounts are not expected to personally maintain the records of the foreign financial accounts of their employers. The rule also states that filers may rely on portions of the rule to determine their foreign account-related filing obligations if previous filings were deferred under U.S. Treasury guidance. The FinCEN rule provides exceptions for officers or employees of credit unions that are examined by the National Credit Union Administration. A similar exception has been provided for officers or employees of financial institutions that are regulated by other federal regulatory agencies. Specifically, officers or employees of credit unions and other institutions that have signature or other authority over foreign financial accounts that are owned or maintained by their financial institution would not be required to file reports on accounts that the individual has no financial interest in. The rules will apply to reports filed by June 30, and will also apply to all reports filed thereafter.

Vensure files challenge to NCUA conservatorship

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WASHINGTON (4/27/11)--Vensure FCU this week challenged the National Credit Union Administration’s (NCUA) move that placed the Mesa, Ariz.-based credit union into conservatorship on April 15, claiming that the NCUA’s action “was arbitrary and capricious and threatens to significantly damage or destroy” the credit union. The credit union has elected to open its case in the U.S. District Court for the District of Columbia. The credit union in its complaint challenged the NCUA’s conservatorship, saying that the agency’s conservatorship order “contained only cursory and incomplete facts to support the grounds for conservancy and included no exhibits, appendices or empirical data in support.” The credit union also noted that the NCUA “took possession of the very financial records [the credit union] needs to demonstrate that conservatorship is improper.” The plaintiff, Vensure, in an expedited motion for discovery has asked the NCUA to provide “the factual basis” for the credit union’s conservatorship, the facts and circumstances that led to the decision to conserve the credit union, information on the credit union’s compliance with NCUA regulations, and any audits and examinations that have been completed over the past five years. A full hearing has not yet been scheduled. An NCUA representative told News Now that the agency does not comment on ongoing legal matters. Vensure FCU serves employees of Vensure Employer Services, Inc., employees of various related companies, and their families. The NCUA in announcing the conservatorship said that it is authorized under the Federal Credit Union Act to appoint itself as conservator "to conserve the assets of a federally insured credit union, protect members' interests, or protect the National Credit Union Share Insurance Fund." News accounts have said that the credit union was one of 16 financial institutions that allegedly held funds tied to recent Federal Bureau of Investigation actions taken against online gambling sites PokerStars, Full Tilt Poker and Absolute Poker. Vensure is one of three federally insured credit unions to be placed into conservatorship this year.

SECCFTC plan meeting on swaps

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WASHINGTON (4/27/11)--The implementation schedule for final rules related to swaps and security-based swaps will be discussed during a pair of joint Securities and Exchange Commission (SEC)/Commodity Futures Trading Commission (CFTC) roundtables. The roundtables are set for May 2 and 3 and will be held at the CFTC’s home office in Washington, D.C. As noted in the Federal Register, the regulators during the meetings will consider whether to propose joint rules relating to the definitions of ‘‘swap,’’ ‘‘security-based swap,’’ ‘‘security-based swap agreement,’’ the regulation of mixed swaps, and books and records requirements regarding security-based swap agreements. A credit rating-related discussion is also on the agenda, according to the Register. The discussions will be open to the public, and the agencies plan to accept public comment on the potential rules following their meeting. They did not propose a public comment deadline. The SEC earlier this year proposed exempting credit unions with under $10 billion in assets from mandatory securities-based swaps clearing requirements. Without this exemption, credit unions could be effectively prohibited from hedging risk using over-the-counter options or other derivatives when a security, such as a bond, is the underlying asset. Federal credit unions and some state credit unions are allowed to enter into certain types of over-the-counter agreements that would meet the definition of "security-based swaps." The Dodd-Frank Act gives the SEC the leeway to consider exemptions from the swap requirements, but the SEC is not required to exempt any financial institution from the requirements. The Credit Union National Association (CUNA) backed this proposal, but also insisted that it could go further. (See News Now related Feb. 7 story: CUNA backs SEC's CU swap clearing exemption.)

Inside Washington (04/26/2011)

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* WASHINGTON (4/27/11)--Shutting down Freddie Mac and Frannie Mae--a cornerstone of the Republican strategy to shrink government—is proving to be an uphill battle in both the House and Senate ( April 26). In the Repubican-led House, a sweeping overhaul bill by Rep. Jeb Hensarling (R-Texas) has yet to gain consensus, according to House Financial Services Committee Chairman Spencer Bachus (R-Ala.). In the Senate, a measure from Sen. John McCain (R-Ariz.) must get through a Democratic majority. Republicans want to turn the mortgage market over to banks and other private lenders. Maintaining Freddie Mac and Fannie Mae since the housing bust has cost tax payers $150 billion, said Representatives from both the Republican and Democratic parties agree Freddie and Fannie should be minimized to lure private lenders back into the market, GOP members generally want to move faster and further … * WASHINGTON (4/27/11)--The Federal Reserve’s power to pay interest on bank reserves, an authority granted by Congress in 2008, may come into play today (American Banker April 26). The Federal Open Market Committee began a two-day meeting Tuesday and among the items on the agenda is whether to proceed with a $600 billion in bond purchases. How closely the fed funds rate follows the movements of those bonds could determine the success of using interest on reserves as a policy tool. Still to be determined is the margin between interest reserves and the effective funds rates, according to Dino Kos, a managing director at Hamiltonian Associates Ltd. Kos said that if the fed rate trades at a stable, narrow discount to the interest on reserves, then tightening policy through the interest on reserves is feasible. A wide spread would undermine the strategy, he said. Watch News Now this afternoon for updates … * WASHINGTON (4/27/11)--Including expected opposition from Republicans and bankers, President Barack Obama has another opponent for his yet-to-be-named nominee to head the Consumer Financial Protection Bureau (CFPB): time (American Banker April 26). As of Tuesday, only 10 legislative weeks remained for the Senate to confirm the selection before the bureau officially assumes its rulemaking and enforcement authorities. The short time frame leaves the president with two options: Nominate a candidate who would be approved with little debate, a challenge given the controversy surround CFPB's very existence, or make a recess appointment, a move that is sure to spark controversy among GOP opponents. After the president sends his nomination to the Senate, the Banking Committee would take several weeks to research the candidate prior to confirmation hearings, which could take up to a week. The committee may take another week or two to vote on the nomination. Then the Senate must take time for a floor debate. If Republicans seek to block or filibuster the nomination, the final vote could be held up for another week …