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Washington Archive

Washington

NCUACUNA Tech Council set May 5 for online services webinar

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WASHINGTON (4/8/10)--As revealed at the Credit Union National Association’s (CUNA’s) Governmental Affairs Conference in February, the National Credit Union Administration (NCUA) will partner with the CUNA Technology Council to offer a webinar to help credit unions improve online services. The NCUA announced yesterday the date for the co-hosted webinar is May 5. The webinar, slated for 2-3:30 p.m. (EDT), will feature featuring best practices in member technology solutions. It also will offer cutting-edge ideas for credit unions to better serve existing members and to attract new members—with a particular nod to attracting young, tech-savvy consumers. In announcing the webinar date, Matz said credit unions lag behind other financial services providers in offering certain electronic services, especially such things as portfolio management and mobile banking.” Yet, she added, credit unions that provide these services have significantly higher consumer satisfaction ratings than other institutions offering similar services. “Expanding online services will appeal to a new generation of consumers who want to pay bills online and check balances from their iPhones,” said Matz. “This webinar will help credit unions meet the needs of consumers who want a financial institution that’s always open, everywhere, electronically.” CUNA Councils Vice President David Rohn noted that the webinar will be divided into two sections: “First will be an overview of where credit unions are doing well: collaboration, remote deposit capture, channel normalization, image capture and settlement. Second we’ll look at some services and emerging areas that credit unions will need to focus upon in order to stay competitive: personal financial management, mobile banking, user interface, and social media.”

Inside Washington (04/07/2010)

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* WASHINGTON (4/8/10)--Former Federal Reserve Board Chairman Alan Greenspan said Wednesday in prepared remarks that policymakers should place higher collateral and capital requirements on the financial services industry. He also warned that future crises could take place if steps aren’t taken to tackle the “too big to fail” problem (The Wall Street Journal April 7). Greenspan testified before the Financial Crisis Inquiry Commission Wednesday. If capital and collateral requirements are adequate, taxpayers will not be at risk for losses, he said. Only a few good solutions exist to deal with firms that pose systemic risks, and it’s hard to identify those risks in time for the government to react accordingly, he added. Greenspan also defended his work on consumer protection matters, arguing that subprime mortgages did not significantly cause the crisis, and that the Fed was active in pursuing consumer protections for mortgage borrowers during his time at the Fed. He voted in favor of consumer protection initiatives when they were brought before the board, he said. Addressing criticism that the Fed was slow to implement protections for homeowners to address unfair and abusive lending, Greenspan said the Fed worked to ensure the law was implemented and that it monitored the growth of subprime lending ... * WASHINGTON (4/8/10)--The Securities and Exchange Commission (SEC) voted Wednesday on a proposal to require financial firms to retain 5% of each class of an asset-backed security if they want to avoid regulatory obstacles when selling the bonds. Banks would not be allowed to hedge on the securities they retain (Bloomberg.com April 7). “I applaud today’s vote by the SEC to propose new standards under the securities laws for the securitization market,” said Federal Deposit Insurance Corp. Chairman Sheila Bair in a statement. “The SEC’s proposals align with the FDIC initiative to set new standards for a ‘safe harbor’ for future securitizations originated by FDIC-insured institutions. Notably, the SEC’s proposed new standards will extend to the nonbank ‘shadow sector,’ demonstrating a common approach that will further the ultimate goal of ending arbitrage and implementing securitization reforms across the entire market,” Bair said. The Obama administration and lawmakers say Wall Street lacked “skin in the game” when they engaged in risky lending before the housing market collapsed in 2007. The proposal would apply to shelf offerings--which allow firms to register stocks and bonds with the SEC before an offering and then sell securities as needed. Such offerings allow debt sellers to raise money quickly without SEC approval ... * WASHINGTON (4/8/10)--The National Association of Realtors (NAR) said Tuesday that it will urge lawmakers to renew the National Flood Insurance Program, which expired March 28. Congress is on recess and will return Monday. The program provided insurance coverage for homes bought within the 100-year flood map as defined by the Federal Emergency Management Agency. Flood insurance is required by law for home mortgages on properties in the 100-year floodplain areas, which are currently unprotected. Until the program is renewed, worthy buyers will be left without access to mortgages, said NAR President Vicki Cox Golder ... * WASHINGTON (4/8/10)--The Government Accountability Office (GAO) investigated the competitiveness and long-term viability of the domestic auto industry, specifically as it relates to auto companies that were recipients of the Troubled Asset Relief Program (TARP). More than $81 billion of TARP funds were funneled to bolster the car industry, the bulk of which went to General Motors (GM) and Chrysler, sponsors of some of the largest defined benefit pension plans insured by the federal Pension Benefit Guaranty Corporation (PBGC). The GAO is statutorily mandated to oversee TARP expenditures. “Although the pension plans have been maintained, their future remains uncertain. According to current company projections, large contributions may be needed to comply with federal pension funding requirements within the next (five) years,” the GAO reported. The report is titled ”Automaker Pension Funding and Multiple Federal Roles Pose Challenges for the Future”

NCUA opens 2010 CDRLF tech assistance program

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ALEXANDRIA, Va. (4/8/10)—National Credit Union Administration (NCUA) Chairman Debbie Matz this week announced the start of the 2010 round of the Community Development Revolving Loan Fund (CDRLF) Technical Assistance Grant Program. For 2010, Congress appropriated $1.25 million in funds for technical assistance to the NCUA’s CDRLF, which provides loans and technical assistance to federal and state credit unions that are 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 alongside concurrence from the NCUA. The NCUA has allocated $300,000 each for financial education and partnership and outreach programs, with maximum grants of $15,000. Up to $150,000 will be made available for credit unions that wish to build their internal capacity, with $250,000 in funds being evenly split between volunteer income tax assistance and staff training. Also, $100,000 will be made available for building technology and internship and job creation, respectively, with $50,000 provided for capital planning. The NCUA also has “set aside some funds for Urgent Needs Grants to be used by eligible credit unions in cases of extreme necessity,” according to the release. The financial education, partnership, student internship and capital plan initiatives are new for 2010. Matz strongly encouraged credit unions that serve low-income memberships to “consider the advantages of CDRLF programs and apply for grants.” For the NCUA’s letter to credit unions and background information on the CDRLF program, use the resource links.

Compliance CUs cant relax yet on CARD Act

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WASHINGTON (4/8/10)--While much of the work related to the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act has been completed in the past year, the Credit Union National Association’s Mike McLain warned that credit unions should remain wary of changes the Federal Reserve has made to portions of its Regulation Z. Those changes affect the “format, timing, and content” for “credit and charge card applications and solicitations, account opening disclosures, periodic statement disclosures, change-in-terms disclosures, and advertising provisions,” McLain said. Addressing these changes, which come into effect on July 1, in this month’s edition of Credit Union Magazine, McLain provided further detail on some of the new rules. Portions of the Reg Z changes that affect account opening disclosures will require “a new summary table to be included in the account-opening disclosures for all open-end credit except for home equity lines of credit (HELOCs).” These tables must include data on annual percentage rates and many bits of information related to the terms of the account. Periodic statement disclosures must also be adjusted through changes to the way that interest and fees charged during the billing cycle are displayed. Financial institutions must also show fees and interest totals for the month and year to date on these disclosures, but a previous requirement to “calculate and disclose the effective APR has been eliminated,” McLain added. CUNA has addressed a number of other CARD Act-related questions in a recently published list of Frequently Asked Questions (FAQ).These include questions related to floor rates, change-in-terms notices, increases in variable rates, limitations on increasing annual percentage rates and fees, changes in credit terms, renewal or annual fees, business credit accounts, and expedited payments. The FAQ also addresses portions of the CARD Act that prohibit rate increases in the first year that a credit card account is active, require co-signors for credit card accounts taken out by an individual under 21 years of age, require that creditors obtain the consent of the cardholder before charging over-the-limit fees, and limit many of the fees associated with so-called "subprime" credit cards. CUNA has submitted some of these questions to the Fed for its interpretation. “Even after credit unions implement all of these changes, they’ll have to deal with several additional CARD Act provisions” that become effective on Aug. 22, McLain said, adding that the Fed should soon issue additional final rules on HELOCs and closed-end mortgage loans. For the Credit Union Magazine story and CUNA’s FAQ, use the resource links.

House Committee to take up second liens on April 13

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WASHINGTON (4/8/10)--The House Financial Services Committee on April 13 will hold a full committee hearing entitled “Second Liens and Other Barriers to Principal Reduction as an Effective Foreclosure Mitigation Program.” While an official witness list for the hearing had not been announced at press time, it is thought that representatives from the largest banks, as well as government agencies, will be in attendance. In a letter sent last month to the CEOs of Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, Committee Chairman Rep. Barney Frank (D-Mass.) said that there was “no more important priority” than saving homes on “a large scale” by moving “past temporary modifications in interest rates or terms” to “focus on permanent principal reductions that result in truly sustainable mortgages.” Frank said that “failure to modify” second lien mortgages “has become a major and unnecessary obstacle to thousands of Americans being able to stay in their homes.” He added that he would work to remove any legal obstacles that may impede them from taking “immediate steps to write down these second mortgages and allow principal reduction modifications of the underlying first liens to take place.” Credit union lending practices have historically been conservative and credit unions have not been impacted by the current mortgage crisis as much as other types of lenders, Credit Union National Association Senior Assistant General Counsel Jeffrey Bloch said. “However, credit unions have also been impacted when they have made second lien loans. To the extent property values decline and foreclosure becomes an issue, the second lien becomes worthless in most situations, with or without a loan modification ” Bloch added. The Obama Administration’s Home Affordable Modification Program (HAMP) provides monetary incentives, “but so far these incentives have not proven effective in addressing these problems,” Bloch said.