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Inside Washington (05/21/2010)

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* WASHINGTON (5/24/10)--After the Senate Friday approved a regulatory reform bill, the National Association of State Credit Union Supervisors (NASCUS) said it will continue to encourage the House and Senate to defend against further federal preemption, to ensure a seat at the table on systemic risk for state regulators and encourage partnership with the states on consumer protection. “As the [House and Senate] bills are reconciled, NASCUS is hopeful we can ensure state regulators are part of mechanisms for systemic risk mitigation and that preemption of state consumer protection laws is not taken any further,” said NASCUS President/CEO Mary Martha Fortney. “It is critical that the state financial system is upheld and state regulators continue to play a role in consumer protection issues, systemic risk and national regulatory policy. State regulators’ local and regional supervisory roles are critical to the safety and soundness of our financial services system” ... * WASHINGTON (5/24/10)--Fannie Mae and Freddie Mac are not only de facto legislators of standards for home appraisals, they soon will also be enforcers, said American Banker. On Thursday, the Federal Housing Finance Agency (FHFA) said the two enterprises will field complaints from consumers, appraisers and others about violations to the Home Valuation Code of Conduct. The enterprises plan to create a way for people to submit complaints online (American Banker May 21). Originally an independent entity, with seed money from Fannie and Freddie, was going to police the complaints as part of a March 2008 agreement with New York Attorney General Andrew Cuomo. However, the enterprises can’t fund an independent entity. An FHFA spokesperson said Cuomo has agreed to the plans ... * WASHINGTON (5/24/10)--Financial industry lobbyists already are focusing on flaws they’d like to fix in the regulatory reform bill--passed by the Senate Friday--before it is enacted. The bill arrived to the floor without a bipartisan agreement, so some amendments were added with little debate, said American Banker (May 20). Some provisions the lobbyists hope to eliminate include an amendment by Sen. Dick Durbin (D-Ill.) that would require the Federal Reserve Board to make sure interchange fees on debit cards are reasonable; Sen. Susan Collins’ (R-Maine) measure to prevent banks from counting trust-preferred securities as Tier 1 capital; and a provision from the Senate Agriculture Chairman, Blanche Lincoln (R-Ark.) that would force banks to give up their swaps desks. The Credit Union National Association (CUNA) said it is concerned about interchange. CUNA cannot support the interchange provisions included in the Senate bill and must do all it can “to remove or improve them,” said CUNA President/CEO Dan Mica. CUNA supported the intent of the regulatory reform bill, noting that financial regulation needs to be improved (SEE RELATED: “Mica: Interchange amendment hurts CU capital condition” ...

CUNA update on Senate amendments

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WASHINGTON (5/24/10)—While interchange provisions in last week’s Senate-passed financial regulatory restructuring bill received most of the attention, there were a number of other provisions addressed in the bill of interest to credit unions. A total of 434 amendments were filed to be added to the bill, but only 43 of those came up for Senate discussion, and many of those amendments did not directly impact credit unions. However, a few of the amendments did matter to credit unions. Following is a rundown of the provisions, and their disposition, following last week’s action on the Restoring American Financial Stability Act (RAFSA):
* Limit on ATM Fees (Disposition: Not included in the bill): Would have imposed an arbitrary limit on the fee for an ATM transaction of 50 cents. The Credit Union Association (CUNA) strongly opposed it, and the amendment was not offered prior to Senate passage of the legislation. * Exemption for auto dealers (Disposition: Not included in the bill): Would have exempted auto dealers from the regulations, supervision and enforcement of the Bureau of Consumer Financial Protection. CUNA opposed it and the amendment was withdrawn. Note: CUNA expects Sen. Sam Brownback (R-Kan.) to offer a motion to instruct conferees on this subject next week. * Banks operating 529 Loan Programs (Disposition: Not included in the bill): Filed, but not offered, this amendment would have allowed banks to operate 529 student loan plans, but did not extend the same power to credit unions. The Missouri Credit Union Association has been working with amendment sponsor Sen. Claire McCaskill (D-Mo.) to make modifications to this amendment in the event that the language is considered during the conference. * Removal of requirement for deposit account data collection (Disposition: Included in the bill): Struck from the bill a section requiring the collection of deposit account data. Backed by CUNA, this amendment was approved by the Senate on a voice vote. * Mortgage Lending (Disposition: Included in the bill): Limits yield spread premiums and requires lenders to verify a borrower's ability to repay a mortgage loan (passed 63-36.) CUNA understands that there may be some concern regarding this amendment, especially as it relates to certain government loan guarantee programs.CUNA is analyzing and will work on it as the legislation is conferenced. * Risk Retention (Disposition: Included in the bill): Exempts certain qualified mortgages from the credit risk-retention requirements. Supported by CUNA, it passed the Senate by unanimous consent.
Other provisions of interest that were not in the Senate-approved bill but supported by CUNA included:
* Permanent $250,000 share insurance coverage for the National Credit Union Share Insurance Fund (NCUSIF) (of two amendments filed, neither was offered; CUNA will continue to pursue in conference); * Fixing remittance language (CUNA is looking for conference committee to address); and * Including the National Credit Union Administration on Financial Stability Oversight Council (amendment not offered).

Mica Interchange amendment hurts CU capital condition

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WASHINGTON (5/24/10)--In a Friday letter sent to U.S. Treasury Secretary Tim Geithner, Credit Union National Association (CUNA) President/CEO Dan Mica said that Sen. Richard Durbin’s (D-Ill.) interchange amendment would “not only exacerbate” capital pressures for many credit unions, “but also will severely limit the ability to build and maintain capital of all the approximately 5,000 well-capitalized credit unions that offer debit cards.” While the majority of the regulatory restructuring legislation “will result in a balanced approach to a range of issues involving consumer protection and proper oversight of financial activities and large banks,” Mica said that CUNA “cannot support the interchange provisions included in the Senate bill” and must do all it can “to remove or improve them.” Again noting the “balance” that was achieved in many parts of the bill, Mica encouraged Geithner to help credit unions “pursue a favorable outcome on the interchange amendment.” Mica also urged the Treasury to support CUNA's efforts to protect credit unions to ensure consumers have viable choices in the financial marketplace. One step that CUNA is taking to respond to the Senate-passed legislation is encouraging credit union supporters to engage their elected representatives and urge them to oppose the interchange alterations. (See related story, Credit unions prepare full grassroots alert over interchange) Mica’s letter was also sent to House Financial Services Chairman Rep. Barney Frank (D-Mass.), House Capital Markets Subcommittee Chairman Rep. Paul Kanjorski (D-Pa.), National Credit Union Administration Chairman Debbie Matz, and Treasury Assistant Secretary for Financial Institutions Michael Barr. The letter noted that CUNA has “tried hard to avoid emotionalism and hyperbole in the deliberations regarding the regulatory restructuring bill.” However, Mica said, “It is no exaggeration that the impact of the interchange amendment will be severe across the credit union system and will result in limiting consumer choices in some areas.” Mica also called for more “meaningful capital reform” for credit unions to grant credit unions “a better definition of capital and mechanisms to raise additional capital.” For the full letter, use the resource link.

Credit unions prepare full grassroots alert over interchange

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WASHINGTON (5/24/10)--Credit unions should be prepared this week for a full grassroots action alert to both the entire Senate and House on interchange legislation once a conference committee on the regulatory restructuring legislation is "instructed," the Credit Union National Association (CUNA) advised its members Friday. In a preliminary message, CUNA advised all credit union leagues that the message to lawmakers would be, once the trigger is pulled on the alert, that:
* Conferees should be urged to oppose the Senate interchange amendment; and * Lawmakers should not support a financial regulatory restructuring bill that includes changes to the card payment system.
The Senate last Thursday approved S.3217, the Restoring American Financial Stability Act (RAFSA), a sweeping restructuring of the financial regulatory system. The Senate-approved bill, however, contains provisions that, in the view of credit unions, impose changes to the card payments system on interchange, which will increase costs and reduce choice for consumers. CUNA opposes the legislation as long as it contains the interchange provisions. “We will very likely be asking credit unions to mobilize their own members in this effort,” said Richard Gose, CUNA senior vice president of political affairs. “Our goal will be to show the Congress, and particularly the Senate-House conferees, how important this issue is to credit unions.” Gose added that credit unions will also likely be asked to contact their representatives and senators about the interchange issue over the Memorial Day district work period, when many lawmakers will be in their states and districts.