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Inside Washington (05/14/2010)

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* WASHINGTON (5/17/10)--Fourteen representatives from North Carolina credit unions traveled to Washington, D.C., last week. The group met with Sen. Kay Hagan (D-N.C.), Rep. Howard Coble (R-N.C.), and an aide to Sen. Richard Burr (R-N.C.) Credit unions discussed interchange fees with the lawmakers just as Sen. Dick Durbin (D-Ill.) was on the Senate floor trying to build support for an amendment to the regulatory reform bill that would authorize government intervention in the payment card system. Durbin had tried to allay credit unions’ fears by increasing an exemption in the bill to institutions with less than $10 billion in assets, but credit unions were still fundamentally concerned, said the North Carolina Credit Union League (Weekly Update May 14). The Senate did pass the interchange amendment Friday. The Credit Union National Association said the amendment could negatively impact credit union interchange revenues and that it will continue to address its concerns with the measure ... * WASHINGTON (5/17/10)--A provision in the proposed regulatory reform bill that would require banks to divest their swaps trading desks would be counterproductive, Federal Reserve Board Chairman Ben Bernanke told three senators in a letter Wednesday. Bernanke sent a letter to Sens. Chris Dodd (D-Conn.); Richard Shelby (R-Ala.) and Kirsten Gillibrand (D-N.Y.). The provision would make the financial system more susceptible to systemic risk and would weaken risk-mitigation efforts of banks (American Banker May 14) ... * WASHINGTON (5/17/10)--Sen. Tom Carper (D-Del) and 13 co-sponsors are working toward an amendment to prevent state attorneys general from enforcing federal laws against national banks (American Banker May 14). Carper said the group is continuing to get co-sponsors. The White House has increased its opposition of the measure Thursday, saying that a strong patrol would ensure national banks would not engage in abusive lending. Under the current regulatory reform bill, state attorneys general could enforce federal and state laws against all banks, regardless of charter ... * WASHINGTON (5/17/10)--The central bank is working on getting banks to lend to small companies by urging examiners not to cause lenders to be too conservative, said Federal Reserve Board Chairman Ben Bernanke on Thursday. Examiners need to strike “the right balance” by not allowing terms that are too easy, but also not making it too tough to get credit, he said (American Banker May 14) ...

Matz backs adding NCUA to oversight panel

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ALEXANDRIA, Va. (5/17/10)--National Credit Union Administration (NCUA) Chairman Debbie Matz this month urged senators to “help harmonize” House and Senate financial regulatory reform bills “with respect to oversight” by including the NCUA as a member of the Financial Stability Oversight Council proposed in the Senate’s reform legislation. The new oversight council would provide a forum for discussion between various regulatory agencies and would oversee the resolution of troubled financial institutions. The council would also evaluate rules set forth by the proposed Bureau of Consumer Financial Protection (BCFP). The BCFP, as currently constructed, would hold no power over credit unions with under $10 billion in assets. In a separate communication, Matz encouraged the Senate to “make permanent” the $250,000 share insurance coverage limit that is currently set to expire on Dec. 31, 2013. Matz said that making the coverage limit permanent, rather than allowing it to revert to $100,000, would “go far to ensure confidence in federally insured depository institutions and reduce any confusion on the part of consumers as to the safety of their accounts.” For the full NCUA release, use the resource link.

CUNA seeks comment on NCUA short-term loan proposal

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WASHINGTON (5/17/10)--The Credit Union National Association (CUNA) has issued a regulatory comment call on the National Credit Union Administration’s (NCUA) proposed plan to allow credit unions to charge a higher interest rate on short-term, small dollar loans. These short-term loans would be capped at a maximum interest rate of 10% above the NCUA's loan ceiling and would have a maximum amount of $1,000. The minimum amount for these payday alternative loans would be $200. The loans will not roll over, and credit unions would be permitted to charge late or default fees and a $20 per loan origination fee to cover costs. Comments are due to CUNA by June 25. Comments to the NCUA should be submitted by July 5. To view the CUNA comment call, use the link.

Interchange work will continue CUNA says

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WASHINGTON (5/17/10)--While Sen. Richard Durbin late last week succeeded in adding interchange fee restrictions to the Senate’s financial regulatory reform package, Credit Union National Association (CUNA) President/CEO Dan Mica on Friday said that “time remains to mitigate the effects” of Durbin’s amendment. In short, the interchange amendment offered by Durbin would assert government interventions on interchange fees. While CUNA’s attempt to defeat Durbin’s amendment altogether was not ultimately successful, CUNA and credit union representatives did convince Durbin to insert language clarifying that merchant discounts can only differentiate between card networks, not individual issuer’s cards. In a letter to credit union representatives, Mica said that it was important to note that Durbin views the issue “as one of big banks versus small businesses,” and “thought he was assisting credit unions in exempting financial institutions with assets of $10 billion or less from key requirements.” Durbin also worked with credit unions to remove language that would have made the amendment “even more onerous for credit unions.” “In particular, the amendment does nothing to restrict credit card interchange fees,” Mica noted. “Also, if a merchant sets a minimum credit card transaction amount, it has to be applied to all credit cards,” Mica said, adding that “these examples of changes made shortly before yesterday’s vote make clear that attaining further improvements is indeed possible.” The amendment “applies broadly to financial institutions and was not intended to single out credit unions.” However, Mica said, “the fact remains these amendments will negatively impact credit union interchange revenues.” For a credit-union specific summary of Durbin’s amendment, use the resource link.