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SAFE Act TCCULGP on NCUA meeting agenda

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ALEXANDRIA, Va. (5/14/10)—The National Credit Union Administration (NCUA), at its upcoming board meeting at 10 a.m. ET next Thursday, will be briefed on a final rule related to the implementation of the Secure and Fair Enforcement (SAFE) for Mortgage Licensing Act. The SAFE Act will require all credit union staff involved in originating mortgage loans, including home equity loans, to register with a new nationwide mortgage registry within six months after the registering procedures are established. Registering will require staff to provide finger prints and information for background checks and to obtain a unique identifying number, according to the Credit Union National Association (CUNA). While the NCUA Board has already approved the final regulation, this is an interagency rule that has yet to be signed off by all the agencies charged with writing the regulations to implement the SAFE Act. CUNA staff said that changes are still possible because the Office of Management and Budget, which has had the regulation under review since the end of 2009, has yet to approve the final regulation. CUNA understands that the NCUA plans to make the final regulation publicly available before the board meeting next week. “What credit unions will really care about are the actual registration procedures, which are not part of the final SAFE regulations. These are still being developed, and CUNA anticipates that NCUA staff will provide some information about the registration timetable during the briefing next week,” CUNA Senior Vice President for Compliance Kathy Thompson said. CUNA will discuss the SAFE Act at a June 24 audio conference. NCUA also will discuss an extension of its Temporary Corporate Credit Union Liquidity Guarantee Program and will have its monthly report on the status of its National Credit Union Share Insurance Fund during the meeting. During the closed portion of the meeting, NCUA will discuss a member business loan waiver appeal and address some supervisory activities. NCUA on Thursday also announced that it has scheduled another in a series of webinars aimed at interacting with and answering questions for the credit union public. The webinar will take place on June 28 between 3 p.m. and 4:30 p.m. ET, and will be open to all who wish to sign up. There is no set agenda for the webinar at this time. For more on the upcoming board meeting, the CUNA audio conference, and the NCUA webinar, use the resource links.

NCUA to consider splitting share insurance corp. fees

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ALEXANDRIA, Va. (5/14/10)--Telling credit unions that the agency is “very mindful of the effect” that assessments have on their balance sheets, National Credit Union Administration (NCUA) Chairman Debbie Matz said that the NCUA would soon consider splitting the fees used to maintain its share insurance and corporate stabilization funds. The NCUA will also consider separating the timing of credit union payments for the National Credit Union Share Insurance Fund (NCUSIF) and the Temporary Corporate Credit Union Stabilization Fund, Matz added. Separating these two assessments--those that cover NCUSIF costs associated with problem natural person credit unions and those associated with NCUA's Corporate Stabilization Fund--would help improve the transparency of NCUA’s assessment process-–and, at the same time, improve the accuracy of credit unions’ budget estimates, Matz said. The NCUA chair emphasized that separating the funds would not change the total amount due from federally insured credit unions. Rather, the amount of the assessment for natural person credit union losses versus corporate stabilization costs would be clarified. CUNA has urged NCUA to take all appropriate steps to minimize federally insured credit unions' insurance and corporate stabilization costs, and commends the chairman for this development. CUNA will continue to follow up with NCUA staff on this and other mechanisms to contain such costs. The Temporary Corporate Credit Union Stabilization Fund covers corporate stabilization-related expenses, and also oversees the Temporary Corporate Credit Union Share Guarantee Program and the Temporary Corporate Credit Union Liquidity Guarantee Program. For the NCUA release, use the resource link.

Interchange vote forces CUNA opposition to Sen. reform bill

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WASHINGTON (5/14/10)—Late Thursday the U.S. Senate voted 64-33 in favor of including Sen. Richard Durbin’s (D-Ill.) interchange amendment in S. 3217, the Restoring American Financial Stability Act. Credit Union National Association (CUNA) President/CEO Dan Mica had vowed earlier in the day that credit unions would have “no choice but to vigorously oppose the financial regulatory reform bill” if the Senate adopted amendments that would require the government to regulate interchange fees. While one amendment offered by Sen. Durbin would ensure that the interchange provisions only applied to larger financial institutions, Mica said in a letter to each U.S. senator that while CUNA appreciates Durbin’s intention to “exempt credit unions from the harmful impact of his amendments,” his purported ‘carve out,’ “no matter how large,” would not do a great deal of good for credit union members and consumers. While CUNA in general has called for legislators to minimize the regulatory burdens and streamline requirements under which credit unions must operate as they move forward with regulatory reform, there has been selective criticism of other aspects of the bill and CUNA had called the bill, overall, a balanced approach to reform. CUNA Senior Vice President John Magill said last evening, “While we are clearly extremely disappointed, this is not the end of the road for the fight against these interchange provisions. There will be opportunities to affect this legislation as the Senate continues toward a final vote.” In related news, CUNA, in a separate letter sent to Senate Banking Committee leaders Chris Dodd (D-Conn.) and Richard Shelby (R-Ala.) earlier this week, also opposed "excluding any non-depository institution provider of financial products, including auto dealers, from the rules promulgated" by the proposed bureau of consumer financial protection (BCFP). Doing so would "defeat the purpose of creating the new consumer regulator, would put credit unions at a competitive disadvantage in the new regulatory regime," and could potentially "cause confusion for consumers of financial products," the letter added. The U.S. Treasury’s Assistant Secretary for Financial Institutions Michael Barr this week spoke out against that proposed amendment. “For the sake of responsible consumers--as well as for responsible community banks and credit unions--we must ensure that all businesses that are significantly engaged in providing consumer financial products and services play by the same basic rules of the road,” Barr said in a statement. Use the resource link below to read Barr’s statement.

CUNA report urges big changes to merger rules

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WASHINGTON (5/14/10)—The National Credit Union Administration (NCUA) needs to provide credit unions with more guidance on its assisted merger process and needs to make clear how credit unions may be considered as an acquiring credit union. Those points are just two of many found in the Credit Union National Association’s (CUNA’s) new Mergers Task Force report, submitted to the NCUA this week. The task force was formed early in 2010, in part, in recognition of the complex issues facing credit unions and the impact consolidations may have on the future of the overall credit union system. The task force, headed by Paul Mercer, president of the Ohio Credit Union League, also made these recommendations to the agency as it revises its merger rules. The NCUA’s proposed changes should:
* Address the agency’s criteria for using a purchase-and-assumption approach under which, for example, assets are sold to one or more credit unions, versus an assisted merger; * Address the role of the agency in assuming the success of the merger, including a transition period following the merger approval; * For state credit unions, address how NCUA shall coordinate with the state credit union supervisors; and * Solicit comments from the credit union system on the proposal.
The CUNA task force also suggested NCUA provide more information on its website regarding mergers, including the process for considering merger candidates and expectations for the acquiring credit union. Further, the NCUA, in conjunction with CUNA, should conduct a thorough study involving all issues surrounding mergers, including the long-term impact on the credit union system of the current pace of mergers, the report said. Such a report should be made available to the credit union system and updated periodically, CUNA added.

Inside Washington (05/13/2010)

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* WASHINGTON (5/14/10)--The Senate voted Wednesday to add an amendment that would require minimum mortgage standards for lenders and borrowers. The amendment, by Sens. Jeff Merkley (D-Ore.) and Amy Klobuchar (D-Minn.) would ban yield-spread premiums and require lenders to verify borrowers’ incomes (American Banker May 13). The measure also requires a proposed consumer protection bureau to write rules that guarantee a borrower can repay a mortgage. The measure, which was supported by consumer groups, would apply to all mortgages. It also would require lenders to ensure borrowers can repay a mortgage for five years based on verifiable income documentation ... * WASHINGTON (5/14/10)--A Congressional Oversight Panel study has found that the federal government’s Troubled Asset Relief Program (TARP) has done little to spur small business lending and has failed to restore stability to the smaller financial institutions that provide the bulk of small business loans. The study, which was released Thursday, concluded that the Treasury's new lending program for small banks, which would require Congressional action, would have only limited success, if enacted. The proposed Small Business Lending Fund would provide $30 billion in low-cost capital to small and mid-sized banks and incentives to increase lending. The program requires legislative approval, and even if Congress acts immediately, it may not be operational for some time, the panel said. Financial institutions also may shy away from the program for fear of being stigmatized by their association with TARP. They also may avoid taking on liabilities when their existing assets--such as commercial real estate--are troubled ... * WASHINGTON (5/14/10)--On Wednesday, the Senate voted 90-9 in favor of an amendment to keep the Federal Reserve’s current supervisory powers over state-chartered banks and holding companies. A few months ago, the Fed had been in danger of losing that oversight--which could have led to a consolidation of the Federal Home Loan Banks, said American Banker (May 13). The amendment was authored by Sen. Kay Bailey Hutchison (R-Texas). If the Fed’s powers are taken away, the regional banks won’t have any input about what’s going on in smaller communities, Hutchison said. Industry groups representing community financial institutions had lobbied in favor of the Fed keeping its supervisory powers ... * WASHINGTON (5/14/10)--The Internal Revenue Service (IRS) has named four new members to the Advisory Committee on Tax Exempt and Government Entities (ACT) for the term starting in 2010 and ending in 2012. “ACT members provide valuable feedback and insight on a wide variety of issues related to tax-exempt organizations and governmental entities,” said IRS Commissioner Doug Shulman when making the announcement. The new members are: David N. Levine, Washington, D.C. , a principal at Groom Law Group; Adam C. Pozek, Reading, Mass., vice president of consulting services for Sentinel Benefits & Financial Group; Karen A. Gries, Minneapolis, a principal with Larson Allen LLP; and Celia Roady, Washington, D.C., a partner in Morgan Lewis & Bockius, LLP…