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Inside Washington (05/13/2011)

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* (WASHINGTON (5/16/11)--The National Credit Union Administration (NCUA) has taken over leadership at the Federal Financial Institutions Examination Council (FFIEC) for the first time in more than 20 years. Debbie Matz, chairman of the NCUA Board, is now the Chairman of FFIEC for a two-year term. Matz succeeds Sheila C. Bair, chairman of the Federal Deposit Insurance Corporation (FDIC). In the May issue of The NCUA Report, Matz discusses her new role. “By accepting this new role, I am hopeful that NCUA, and by extension, the credit unions that we regulate and insure, will rise to a new level of prominence in the financial services arena. I am confident, the high quality of the NCUA staff and the important role credit unions play in their communities will become more readily apparent to those who monitor and observe the FFIEC’s activities,” Matz wrote. The FFIEC was created by the Federal Financial Institutions Regulatory and Interest Rate Control Act of 1978, which consists of the heads of the National Credit Union Administration, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision, to make recommendations to promote uniformity in the supervision of financial institutions … * (WASHINGTON (5/16/11)--President Obama said banks should consider longer-term mortgage modifications and “in some cases” principal reductions to help struggling home owners, during a CBS Town Hall meeting that aired on Thursday (cnnmoney May 13). In all likelihood, Congress would have to pass laws to force banks to comply with both ideas. The president said the struggling housing market is “the biggest headwind on the economy right now.” In response to a question posed by an underwater homeowner whose three-year mortgage modification will expire in January 2012, Obama said that reducing some mortgage principals would benefit both banks and homeowners … * (WASHINGTON (5/16/11)--Sen. Chris Dodd (D-Conn.), former Chair of the Senate Banking Committee and co-sponsor of the Dodd-Frank Act, said in a speech Wednesday that he thought the provisions related to payment card interchange were such a “complicated area of law” that he didn't think it was appropriate to “oversimplify” the issues (pymnts.com May 12). He therefore didn't include an interchange provision in the original version of the legislation, he said. Dodd, speaking before The Electronic Transactions Association, said was surprised that the Durbin Amendment “flew through” and was “shocked” by the 12-cent limit set by the Federal Reserve. He predicted that the Fed would have to increase the limit. Dodd said the dual standards for larger institutions vs. small credit unions and banks with less than $10 billion in assets is too complicated …

NCUA agenda focuses on exec comp corp. stabilization

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ALEXANDRIA, Va. (5/16/11)--Two items of particular interest to credit unions – so-called “golden parachutes” and indemnification payments and the potential for voluntary prepayment of stabilization fund assessments – are on the agenda for the National Credit Union Administration’s May open meeting. The meeting will take place Thursday at 10:00 A.M. ET. The NCUA’s final rule would implement a prohibition on golden parachute arrangements and indemnification payments in certain circumstances. Under the proposal, indemnification payment limits would only apply to proceedings brought by NCUA or a state regulator where the wrong-doer was assessed a civil money penalty, removed from office or subjected to a cease and desist order. The prohibition would not apply to qualified pension plans, "bona fide" deferred compensation, and some other types of employee benefits and severance agreements, and would not apply to current employment contracts, only to those that are agreed to or renewed after the rules take effect. The golden parachute provisions would apply if the credit union is in insolvent, in conservatorship, has a CAMEL 4 or 5 rating or is otherwise in “troubled condition.” The Credit Union National Association (CUNA) has said that it "cannot support proposals that do not provide proper safeguards for credit union officials who strive to fulfill their duties and serve their credit unions well.” These proposals were released in September of 2010. CUNA following the release said that it was "generally concerned that the scope of the proposal is too far-reaching and will have a chilling effect on the ability of credit unions to attract management personnel and board members." Potential voluntary prepayment of Corporate Credit Union Stabilization Fund assessments will also be covered during the meeting, and CUNA has discussed how this could be achieved with the NCUA after several credit unions told CUNA they would welcome the option of early payments. A proposed rule related to the NCUA’s Community Development Revolving Loan Fund, as well as final rules addressing the accuracy of advertising and insured status notices and the NCUA’s share insurance, are also on the agenda. The NCUA's monthly report on the status of its insurance funds will also be delivered during the meeting. A closed NCUA session will follow the open meeting. Insurance appeals and supervisory matters will be discussed during the closed meeting. For the full NCUA meeting agenda, use the resource link.

CFPB NFIP changes see committee action

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WASHINGTON (5/16/11)--Separate pieces of legislation addressing the Consumer Financial Protection Bureau (CFPB) and the National Flood Insurance Program (NFIP), respectively, moved further forward through Congress late last week. The bills were officially approved on Friday following an early Thursday House Financial Services Committee markup session. Three pieces of CFPB-related legislation were approved by the Committee, and could now move on to the full House at some point. The first, known as the Responsible Consumer Financial Protection Act, would replace the proposed single CFPB director position with a five-person panel. The Consumer Financial Protection Safety and Soundness Improvement Act would strengthen the Financial Stability Oversight Council's (FSOC) review authority over regulations that are issued by the CFPB by replacing a proposed two-thirds voting approval threshold with a simple majority threshold. The third piece of legislation would not, as scheduled, transfer several consumer-related regulatory functions to the CFPB if that agency does not have a director in place when it officially begins its work on July 21. Committee Chairman Rep. Spencer Bachus (R-Ala.) following the vote said that his committee “supports robust consumer protection,” adding, however, that “real oversight and accountability” of government bureaucracies like the CFPB is vital. Credit Union National Association Vice President of Legislative Affairs Ryan Donovan has said that the final fate of the CFPB-related bills is not certain. "We have seen very little appetite in the Senate to consider these types of changes to Dodd-Frank Act," he added. There is a great deal of volatility surrounding the CFPB as it nears its scheduled start date of July 21, with a group of 44 Republican Senators recently saying that they would not confirm any potential CFPB director, "regardless of party affiliation," unless structural changes are made to the bureau. A CFPB leader has not yet been nominated by the White House. The NFIP-related legislation, which was passed out of the Committee during the same early Thursday markup session, would preserve the rights of credit unions to protect their collateral from flood hazards and would clarify that flood insurance purchased by credit unions "would date back to the date the existing policy lapsed or became insufficient in coverage amount, including any premiums or fees incurred during the 45-day notification period." The bill would also extend NFIP reauthorization for an additional 5 years. The NFIP is set to expire on Sept. 30. CUNA has backed these planned changes to the NFIP.

Fryzel Activism educates legislators on CU issues

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ALEXANDRIA, Va. (5/16/11)--National Credit Union Administration (NCUA) Board Member Michael Fryzel last week said that the face-to-face credit union activism that is achieved in meetings with legislators helps “to educate them on the services that credit unions provide.” Credit union/legislator meetings “carry significant importance this year” and the success that is achieved in the meetings “will continue to resonate for years to come,” he added. Fryzel’s remarks were made before the Illinois Credit Union System’s Legislative Conference in Springfield, Ill. The NCUA board member spoke alongside Illinois Department of Financial and Professional Regulation Secretary Brent Adams and others as part of a panel of state and federal regulators. The grassroots strength of credit unions has been demonstrated during the ongoing fight over a potential interchange fee rate cap, with over 315,000 credit union members reaching out to urge their legislators to "stop, study and start over" on interchange regulations since March. Credit union members, state-based leagues, and individual credit unions have helped generate these comments to members of Congress, and many credit union backers met with legislators in their home districts during April's district work period. The Pennsylvania, New York, North Carolina, Delaware, Minnesota, California and Nevada, and Missouri leagues reported significant interaction during that time. Nearly 30,000 Ohio credit union members from more than 50 credit unions across that state have recently stepped up their own grassroots efforts, urging Sen. Sherrod Brown (D-Ohio) via a signed petition to reconsider moving forward with the Fed’s interchange proposal. For more on CUNA's interchange delay efforts, use the resource link.