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NCUA releases 2011 regulatory review targets

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ALEXANDRIA, Va. (4/28/11)--Bank Secrecy Act compliance, debt collection procedures, and Freedom of Information Act requests are among the items that are scheduled to be reviewed by the National Credit Union Administration (NCUA) in 2011. Regulations covering security programs, suspected crime reports, and suspicious transactions are on the agenda, as are rules addressing records preservation programs, appendices-record retention guidelines and catastrophic act preparedness guidelines. Post-employment restrictions for some NCUA examiners will also be reviewed. The NCUA reviews its full regulatory catalogue every three years, and schedules reviews of portions of its regulations on a rotating basis. The agency in its release said that its goal is to ensure that “all regulations are clearly articulated and easily understood.” Comments on the clarity and content of the regulations are welcome, the agency added. The NCUA will accept comment on these items until August 5. For the full release, with the entire list of rules to be reviewed, use the resource link.

Vensures challenge to NCUA to be heard on May 11

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WASHINGTON (4/28/11)--Vensure FCU's request to delay the National Credit Union Administration's (NCUA) conservatorship of the credit union will be heard before a U.S. District Court on May 11. U.S. District Court for the District of Columbia Judge Rosemary Collyer on Tuesday denied Vensure's request for a temporary restraining order to immediately halt the NCUA's conservatorship of the credit union. Collyer said that the Federal Credit Union Act does not allow a temporary restraining order under these circumstances. The Mesa, Ariz.-based credit union earlier this week challenged the NCUA's April 15 conservatorship, claiming that the NCUA's action "was arbitrary and capricious and threatens to significantly damage or destroy" the credit union. The complaint adds 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 plaintiffs also claimed that the NCUA violated due process in going forward with the conservatorship last week. While the NCUA had repeatedly noted deficiencies in the credit union's operations, the credit union claimed that its fortunes had improved under the stewardship of its new directors, adding new members and services. The new management, which took over in 2009, also worked with the NCUA to implement changes set forth in several letters of understanding and agreement. The credit union in the complaint admitted that it had taken part in poker-related fund transactions, and said that its work with online poker sites had helped it increase its size from a $150,000 asset credit union to one that held millions in assets. Vensure said that it never intended to permanently depend on these revenues. The credit union said that its directors had recently voted to stop doing business with the online poker companies, and said that it would have remained solvent, even without the funds provided by its financial relationship with the gambling firms. An NCUA official declined to comment on the case.

May 4 NCUA closed meeting scheduled

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ALEXANDRIA, Va. (4/28/11)--The National Credit Union Administration will hold a special closed board meeting on May 4. The agency has said that it will discuss supervisory matters during this meeting, which will take place in Alexandria, Va. The board held a pair of closed board meetings earlier this month, with an April 5 meeting being held in San Diego, Calif. The NCUA's customary monthly open board meeting is scheduled for May 19.

Reminder Federal benefit payments go electronic on May 1

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WASHINGTON (4/28/11)--The U.S. Treasury this week reminded federal benefit recipients that it will officially “retire” the use of paper checks for the payment of social security and other federal benefit payments on May 1. Individuals applying for Social Security or other federal benefits will begin receiving their payments exclusively via direct deposit at the start of next month. To sign up for direct deposit, eligible enrollees will need to know their financial institution's routing transit number, the type of account that the funds will be deposited into, and the account number. The payments will then be made to credit union accounts, bank accounts, or Direct Express Debit MasterCard card accounts, according to the U.S. Treasury. Those who lack bank accounts or who would rather use prepaid accounts can receive their benefits through a prepaid debit card. Individuals that choose this prepaid card route will need to notify their federal benefit agency. The Treasury has made new Go Direct campaign materials available to coincide with the May 1 transition date. Those materials include social media tips, a direct deposit checklist, and news briefs for credit unions, other financial institutions, and various community organizations. The Treasury began its Go Direct program, which encourages Americans to switch to direct deposit, in 2004. The Go Direct campaign notes that direct deposit enhances safety and convenience. The Credit Union National Association (CUNA) is a Go Direct national partner and supports the check-safety and cost-savings goals for the program.

Inside Washington (04/27/2011)

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* WASHINGTON (4/28/11)--In a letter to Treasury Secretary Timothy Geithner, Matthew E. Zames, chairman of the Treasury Borrowing Advisory Committee, warned that a default could trigger another financial crisis. Zames, who also serves as managing director of JP Morgan Chase, said any delay by Treasury in making an interest or principal payment could cause foreign investors, who hold nearly half of outstanding Treasury debt, to reduce their purchases of Treasuries, and sell some of their existing holdings. A default by Treasury, or delay in raising the debt ceiling, could also lead to a downgrade of the U.S. sovereign credit rating. Zames warned that another financial crisis could trigger a run on money market funds, as was the case in September 2008 after the failure of Lehman Brothers. A default could also disrupt the $4 trillion Treasury financing market, which could sharply raise borrowing rates for some market participants, Zames said. The rise in borrowing costs and contraction of credit would have damaging consequences for the still-fragile current recovery …