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House panel OKs 30 billion fund for bank lending

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WASHINGTON (5/20/10)—Voting 42-23 in favor, the House Financial Services Committee Wednesday passed H.R. 5297, a bill that would establish a $30 billion fund for low-cost capital to small and mid-sized banks as incentives to increase lending. The bill, called the Small Business Lending Fund Act, is designed with hopes to boost lending to small businesses that, in turn, may look to hire and expand their operations. The bill gives oversight of the program to the U.S. Congress, the Government Accountability Office, and the U.S. Treasury Department’s Inspector General. The bill calls for the capital to be repaid by community banks over time During the markup process, the committee adopted several amendments, including one backed by the Credit Union National Association, which was introduced by Rep. Gary Peters (D-Mich.). The Peters amendment would provide federal funding for state lending programs that use small amounts of public resources to generate substantial private bank financing. According to a release from the committee, such programs would be intended to address many of the reasons banks are having trouble increasing lending to small businesses, including lenders’ desire to hold greater reserves against certain loans and concerns about collateral shortfalls on the part of borrowers. The next step for this bill would be a full House vote.

Frank Fin. Services will act on online gambling bill

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WASHINGTON (5/20/10)--Rep. Barney Frank (D-Mass.) on Wednesday said that his Financial Services Committee will act on H. R. 2267, the Internet Gambling Regulation Consumer Protection & Enforcement Act. That legislation, which was introduced by Frank and currently has 69 cosponsors, would give the U.S. Treasury the authority to license internet gambling operators to accept bets and wagers from U.S. citizens and to create regulations for those gambling operators. In a prepared statement submitted during a Wednesday House Ways and Means committee hearing on internet gambling, Frank said that enacting the legislation would bring the gambling industry “out of the shadows, benefit consumers and ensure that all of the revenue does not continue to exclusively benefit offshore operators.” The bill would also result in billions in currently uncollected taxes, Frank added. Similar legislation introduced by Rep. Jim McDermott would legalize many forms of online gambling and collect taxes on both winnings and on gambling account deposits. McDermott’s bill, the Internet Gambling Regulation and Tax Enforcement Act, would redirect 25% of those tax proceeds into foster care programs and could generate as much as $30 billion in funds for States and $41 billion in funds for the federal government. The Unlawful Internet Gambling Enforcement Act (UIGEA), which will become effective on June 1, will require credit unions and other financial institutions to establish and implement policies and procedures to identify and block restricted Internet gambling transactions, or rely on those procedures established by the payments system.

CULAC-backed candidates move on to general elections

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WASHINGTON (5/20/10)--A pair of Credit Union National Association (CUNA)-backed congressional candidates moved forward to their respective general election contests after winning their individual primary contests on Tuesday. One of these candidates was Rand Paul, who will vie for Kentucky’s Senate seat later this year. Paul, who defeated Trey Grayson to become the Republican nominee, was backed by the Credit Union Legislative Action Council (CULAC) and the Kentucky Credit Union League, and also touted the support of over 700,000 Kentucky credit union members on his website. CULAC and the Pennsylvania CU Association united behind candidate Mark Critz (D), who soundly beat special election opponent Tim Burns (R) by 9% of total votes. Critz, who will now assume the late John Murtha’s (D) congressional seat, was supported by CULAC, with Pennsylvania credit unions also chipping in to hold organized events for Critz. Critz will serve the remainder of Murtha’s term and will face Burns for a second time in this fall’s general election contest. Longtime credit union supporter Paul Kanjorski (D-Penn.) will again defend his seat this fall after winning his own primary contest with 49% of the vote. In the most highly-watched election on Tuesday, incumbent Sen. Arlen Specter of Pennsylvania lost the Democratic primary to Rep. Joe Sestak (D-Pa.). While CULAC and the Pennsylvania Credit Union Association backed Sen. Specter as the incumbent, Rep. Sestak, a credit union supporter and CURIA cosponsor, had also received CULAC funding as a House candidate prior to challenging Sen. Specter. CULAC has also backed Sen. Blanche Lincoln (D-Ark.) throughout her Democratic primary campaign and will continue to support her as she moves toward a June 8 runoff election with Lieutenant Governor Bill Halter. "Credit unions had a big day Tuesday because they weren't afraid to get in early, roll up their sleeves, and help those candidates that are friendly to credit unions,” CUNA Vice President of Political Affairs Trey Hawkins said. ”As the election season progresses, we will continue working with leagues and credit unions to increase their involvement in key races," he added.

Inside Washington (05/19/2010)

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* WASHINGTON (5/20/10)--Senate Banking Committee Chairman Christopher Dodd (D-Conn.) introduced an amendment Tuesday that would give regulators the power to eliminate a proposed plan by Sen. Blanche Lincoln (R-Ark.) that would require banks to divest their swaps desks. Dodd’s measure would require the proposed Financial Stability Oversight Council to analyze the impact of the swaps ban within a year of enactment. After that, the Treasury secretary could decide to lift the ban if a “material adverse impact” on the markets is found (American Banker May 19) ... * WASHINGTON (5/20/10)--An amendment to the regulatory reform bill by Susan Collins (R-Maine) has raised concern among investors who argue that her provision would stop the use of trust-preferred securities as a form of Tier 1 capital for bank holding companies. The amendment, approved unanimously last week, would ultimately allow regulators to impose strict capital standards on banks and their holding companies, and nonbank firms considered systemically risky (American Banker May 19). Collins said she intended for the standards to apply to systemically important firms only, but as the amendment stands now, all bank holding companies would have to comply once the law is enacted. The amendment also would force banks with more than $250 billion in assets to meet capital requirements as strict as smaller banks’. It doesn’t make sense for capital and risk standards for big banks to be more lenient than those at smaller banks, she said last week in a statement ... * WASHINGTON (5/20/10)--An amendment approved Monday to the regulatory reform bill would give consumers free access to their credit scores if they are denied or given unfavorable terms on a loan, or if they are otherwise harmed because of poor credit. Financial industry observers say that forcing lenders to reveal credit information could cause there to be less competition. Citibank doesn’t want Capital One to know what its credit ranges are--and Capital One doesn’t want Discover to know what its credit ranges are, said John Ulzheimer, head of consumer education at Inc. (American Banker May 19). Sen. Mark Udall (D-Colo.), who proposed the amendment, said he aimed to level the playing field for consumers so they have access to all the information they need to make smart financial decisions. Fair Isaac, which offers the FICO score--the mostly commonly used credit score--supports the amendment. It’s important for consumers to understand the industry and how the scores are used, said Lisa Nelson, vice president of scores at Fair Isaac ... * WASHINGTON (5/20/10)--The Senate Tuesday approved an amendment that would give federal regulators more room to pre-empt state laws but still give state attorneys general some enforcement power over national banks. The amendment, by Sen. Tom Carper (D-Del.), preserves state attorneys general’s role in protecting citizens against abusive practices, said Senate Banking Committee Chairman Christopher Dodd (D-Conn.), who authored the regulatory reform bill (American Banker May 19). Under Dodd’s bill, the Office of the Comptroller of the Currency (OCC) could follow the “Barnett” standard, which would allow OCC to pre-empt state laws case by case. Some industry representatives have said the provision would require the agency to take more steps, including proving that the issue a state law is addressing is already being addressed by a federal standard. Carper’s measure removes that language from the reform bill, giving the OCC more flexibility. The amendment “strikes a balance,” Dodd said ...

Senate reg reform cloture vote fails

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WASHINGTON (5/20/10)—The Senate’s financial regulatory reform package failed to move one step closer to potential passage on Wednesday when the Senate did not agree to bring the legislation to a final vote. The cloture vote, which was brought up by Sen. Majority Leader Harry Reid (D-Nev.) earlier this week, failed to pass by a three vote margin. It is not known when a final vote could happen. Debate on the legislation, which would have ended on Wednesday with the cloture vote, will now continue. One of the many amendments that were recently added would place new restrictions on interchange fees, and the Credit Union National Association is currently working to mitigate the amendment's effects on credit unions. That amendment, which was offered by Sen. Richard Durbin (D-Ill.), attempts to shield credit unions from the impact of the new interchange rules, but CUNA remains concerned over the potential impact that the on credit unions. CUNA is also opposing an amendment from Sen. Sheldon Whitehouse (D-R.I.) that would permit states to apply usury ceilings based on where the borrower resides rather than where the financial institution is located, as well as an amendment that would cap ATM-related fees at 50 cents. That amendment has not been successfully brought up for a vote. CUNA continues to pursue improvements to the legislation in the Senate, and will continue to do so as the bill is conferenced with the House-passed legislation.

NCUA plans to scrutinize SAFE Act rule today

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WASHINGTON (5/20/10)—The National Credit Union Administration (NCUA) later today will discuss a final rule that implements the Secure and Fair Enforcement (SAFE) for Mortgage Licensing Act. 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. Under the SAFE Act, credit union staffers that are involved in originating mortgage loans, including home equity loans, will be required 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 had hinted that the final rule would be made publicly available ahead of the NCUA meeting, that document was not made available at press time. The NCUA will also 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. The agency earlier this week removed a Member Business Loan Waiver Appeal from the schedule for the closed portion of today’s meeting, and will only address some supervisory activities during that session.