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6 more national groups oppose Sen. interchange plan

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WASHINGTON (5/13/10)—A letter opposing credit card interchange amendments to the Senate financial regulatory reform bill, and signed by leaders of six national organizations--representing African-American, Latino, women's, church and rural constituencies--was sent Wednesday to Senate leaders. The letter to Sens. Harry Reid (D-Nev.), who is Senate Majority Leader, and Mitch McConnell of Kentucky, the leading Republican of that body, said proposed interchange amendments to the Restoring American Financial Stability Act (S. 3217) could “cause financial harm to consumers, community banks and credit unions, and small business owners.” The Credit Union National Association (CUNA) has waged long-standing opposition to the efforts of some federal lawmakers to assert government interventions on interchange fees. Mirroring one of CUNA’s arguments, the coalition of national organizations wrote that credit unions, as well as community banks, “consistently report that government intervention in the interchange system could drive them out of the payment-card business, threatening the survival of these pillars of community economic activity--the vast majority of which had nothing to do with the recent financial crisis--and reducing credit availability to small business owners and entrepreneurs.” The letter was signed by: Hector Barreto, chairman of The Latino Coalition; Niel Ritchie, executive director of the League of Rural Voters; Roger Campos, president/CEO of the Minority Business RoundTable; Harry Alford, president/CEO of the National Black Chamber of Commerce; Rev. Miguel Rivera, president of the National Coalition of Latino Clergy & Christian Leaders (Coalition Nacional Latina de Ministros & Lideres Cristianos); and Dr. E Faye Williams, national chair of the National Congress of Black Women. CUNA joined other finance industry representatives last week in a letter to all U.S. senators that strongly opposed “any amendments to S. 3217 that seek to affect interchange rates and the rules established by payment card networks." Sen. Richard Durbin (D-Ill.) has filed a number of such amendments. The first would permit merchants to set a minimum or maximum transaction amount for payments by card; offer discounts for use of cash, check, debit card or stored-value card; and offer discounts to customers to use a competing card network. A second amendment would direct the Federal Reserve to issue regulations to govern interchange fees charged for debit card transactions, to assure that they are what the proposed language terms "reasonable and proportional" to the cost incurred in processing the transaction.

Matz encourages CUs to participate in IRS VITA program

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ALEXANDRIA, Va. (5/13/10)--National Credit Union Administration (NCUA) Chairman Debbie Matz again encouraged “qualified credit unions” to apply for Volunteer Income Tax Assistance (VITA) grants from the Internal Revenue Service (IRS) and the NCUA. Matz earlier this year announced that the NCUA would expand its involvement in the VITA program. VITA is an IRS program that helps low- and moderate-income taxpayers complete their annual tax returns at no cost. Credit unions and community organizations receive IRS-provided training in the preparation of basic tax returns and establishment of tax preparation sites. “The more credit unions provide this service to underserved taxpayers, the greater the likelihood that low-income families can build a solid financial foundation for their future,” Matz added. The IRS recently announced that it would award just under $12 million in VITA-related funds would be made available during 2010. Credit unions that wish to apply for VITA grants must do so by July 9. According to the NCUA, there is no maximum grant amount, but applicants must be able to provide dollar-for-dollar matching funds for its VITA-related programs and appropriate documentation. The NCUA also administers its own VITA initiative. This initiative provides a total of $125,000 in funds for credit unions, which may receive up to $6,500 in funds for their individual requests. A total of 541 credit unions participated in the VITA program in 2009. Members of credit unions that participated in credit union-based VITA tax prep programs received $20.9 million in tax refunds during 2009. For the NCUA release, use the resource link.

Webinars prep CUs for compliance onslaught

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WASHINGTON (5/13/10)--The Credit Union National Association’s (CUNA) Center for Professional Development (CPD) has scheduled programs to help credit unions that are being bombarded with upcoming compliance deadlines to better understand regulator expectations. The National Credit Union Administration’s (NCUA) examination and insurance director, Melinda Love, will discuss agency expectations and concerns related to real estate modification options during a May 18 CUNA webinar, entitled “Regulatory & Credit Union Perspectives of Loan Modifications.” A number of other webinars and audio conferences have also been scheduled:
* May 25 “Regulation Z-–July 1 Open-end Credit Provisions” (webinar): Experts will review what steps credit unions need to take before the Truth in Lending revisions become effective-–and emphasize that compliance can’t simply be left to data processors and forms providers. * May 27 “Unlawful Internet Gambling–-Complying with the New Rule” (audio-conference): After postponing at the last minute the original December 2009 effective date, the Federal Reserve and the U.S. Treasury have recently confirmed that they are going forward with implementing their rules on June 1. CUNA’s program will review what changes are needed in policies, which members need special attention, automated clearinghouse (ACH) and wire transfer risks, and dealing with card processors. * June 24 “SAFE Act and Other Pressing Compliance Issues” (audio conference): SAFE will require new registration by all credit union staff involved in originating mortgage loans. While regulations are likely to be published by June, it’s uncertain when the actual registration procedures will be finalized. NCUA attorney Regina Metz will join CUNA’s compliance attorneys, and if all the SAFE details are finalized, the whole program will be turned over to discussing SAFE compliance.
Another compliance program that credit unions may want to attend is a free webinar offered by the Federal Reserve on May 20 when it will discuss a variety of compliance issues. During that webinar, a senior Fed compliance manager and a Fed examiner will cover the “top 10 things found in well-run compliance programs, the top 10 issues identified on recent examinations, and the top 10 things to know about consumer complaints.” However, the Fed release does not provide any details of which laws and regulations will actually be addressed. To register for the CUNA and Fed programs, use the resource links.

Inside Washington (05/12/2010)

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* WASHINGTON (5/13/10)--The Federal Deposit Insurance Corp. (FDIC) Tuesday pushed ahead with securitization restrictions and living wills for banks--two measures it says could prevent the next financial crisis. In the first measure, the FDIC would place restrictions on securitizations so lenders retain some of the risk of the loans they originate and sell to the secondary market (American Banker May 12). In the second measure, FDIC would require 30 of the nation’s biggest banks to detail how the government should unwind them if there were another financial crisis. At a board meeting, Chairman Sheila Bair said the FDIC can’t wait for Congress to act. The rulemaking process for a regulatory reform bill could take about 270 days, she said. “It’s time to move forward,” she added. Office of Thrift Supervision Director John Bowman and Comptroller of the Currency John Dugan objected to the securitization proposal, saying lawmakers should handle the issue. However, the proposal passed. The board was unanimous in supporting the proposal on wind-down plans, which has a 60-day comment period ... * WASHINGTON (5/13/10)--Treasury Secretary Timothy Geithner has appointed Richard Gregg as fiscal assistant secretary. Gregg had been acting fiscal assistant secretary since May 2009, when his predecessor, Kenneth Carfine, was on medical leave. Gregg will report to the undersecretary for domestic finance, will be responsible for developing policy on payments, collections, debt financing operations, electronic commerce, government wide accounting, and government investment fund management. The responsibility also includes managing the government's daily cash position, and producing the cash and debt forecasts used to determine the size and timing of the government's financing operations ... * WASHINGTON (5/13/10)--The Financial Crimes Enforcement Network this week released issue 17 of its Suspicious Activity Report (SAR) Activity Review. The latest issue centers on the casino and gambling industry, and includes a detailed assessment of SARs that were filed by casinos and card clubs, as well as calls to the FinCEN regulatory helpline. The review also contains Internal Revenue Service guidance on how casino examiners may use Bank Secrecy Act information when conducting their examinations. FinCEN’s SAR review can be found online at the link ...

CUNA Interchange not just a big bank issue

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WASHINGTON (5/13/10)--In a Wednesday letter, the Independent Community Bankers of America (ICBA) joined the Credit Union National Association (CUNA) to oppose an interchange amendment that would “do nothing but increase costs and reduce choice for Main Street consumers and their local financial institutions.” Sen. Richard Durbin’s (D-Ill.) latest amendment is a combination of two earlier amendments, and would “have the government regulate interchange rates so big-box merchants can increase their profits by getting all of the benefits of debit acceptance for next to nothing, while simultaneously eroding the rules that force merchants to be fair to consumers.” Durbin introduced two amendments recently, one of which would have permitted merchants to set a minimum or maximum transaction amount for payment by card; offer discounts for use of cash, check, debit card or stored-value card; and offer discounts to customers to use a competing card network. A second amendment offered by Durbin would have directed the Federal Reserve to issue regulations to govern interchange fees charged for debit card transactions, to assure that they are what the proposed language terms "reasonable and proportional" to the cost incurred in processing the transaction. The CUNA letter, which was sent to Senate leaders Harry Reid (D-Nev.) and Mitch McConnell (R-Ky.), added that while the new amendment appears to impact only larger banks, offering a carveout for credit unions and community banks, the legislation still makes credit union debit cards “the most expensive for a merchant to accept--something the market will not tolerate for long.” “To make matters worse, nothing would stop Visa and MasterCard from simply applying the artificially lowered interchange rates across the board to all issuers, regardless of size, forcing many credit unions and community banks to re-evaluate their ability to offer debit cards,” the letter added. CUNA and the ICBA also noted that interchange “is not a ‘big bank’ issue.” “The fact is, interchange revenue--and the network rules supporting the electronic payments system--is vastly more important to small issuers, which rely on this income and structure to meet their customers’ and members’ needs and product expectations,” the letter added. For the full letter, use the resource link.