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Region IIIs Swann is reassigned

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ALEXANDRIA, Va. (5/4/10)--The National Credit Union Administration (NCUA) late last week reassigned Alonzo Swann, who now serves as special assistant to Executive Director Dave Marquis. Swann had served as director of Region III, which counted St. Paul’s as one of the many credit unions under its supervision. Herb Yolles on Monday took over as Acting Region III Director. Yolles formerly served as the NCUA’s Region II Associate Regional Director of Operations. For the full NCUA release, use the resource link.

Inside Washington (05/03/2010)

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* WASHINGTON (5/4/10)--A bipartisan group of lawmakers is moving to restore the Federal Reserve Board’s powers over 800 state-chartered banks and 5,000 holding companies. Senate Banking Committee Chairman Christopher Dodd’s (D-Conn.) regulatory reform legislation would strip the Fed of its powers over all but 55 holding companies. Sen. Kay Bailey Hutchison (R-Texas) introduced an amendment Friday that would reverse Dodd’s measure. The amendment is backed by Sens. Bob Corker (R-Tenn.) and Jon Tester (D-Mont.), who said the Fed should “keep its window into smaller institutions” (American Banker May 3). Hutchison said excluding community banks from the Fed’s supervision would create inequality with larger institutions and give the impression that regulators believe some firms are too big to fail--which is what some lawmakers are “trying to get away from,” he said ... * WASHINGTON (5/4/10)--Last week, the Federal Reserve cleared its holdings of Commercial Paper Funding Facility (CPFF). The facility stopped lending on Feb. 1. CPFF was created in 2008 when companies struggled to obtain short-term loans, or commercial paper. Now, investors are willing to lend to companies that rely on commercial paper to pay their employees and landlords. Their need for such loans has fallen in the economy--and some have found better rates in the corporate bond market (Dow Jones May 3). Companies that used the CPFF include American Express Co., American International Group and General Electric Co. ... * WASHINGTON (5/4/10)--The Treasury Department sold PNC Financial Services Group Inc.’s bailout warrants for $324.2 million in the third-largest sale of TARP fund recipients’ warrants. The 16.9 million warrants from the banking company sold for $19.20 each, compared with the minimum bid of $15. PNC had granted the warrants and shares to Treasury in exchange for bailout money through the Troubled Asset Relief Program (TARP). The company received $7.58 billion in TARP funds, which it repaid in February ... * WASHINGTON (5/4/10)--The Federal Deposit Insurance Corp. (FDIC) has proposed to amend its regulations to revise how it assesses the premiums large financial institutions pay. The agency said it wishes to take a more forward view of risk and better account for losses the FDIC would incur if the institution fails (Federal Register May 3). Comments must be received in 60 days ...

NCUA shutters Ohio-based FCU

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ALEXANDRIA, Va. (5/4/10)--Eastlake, Ohio-based St. Paul’s Croatian FCU on Saturday was officially closed by the National Credit Union Administration (NCUA). The credit union was placed into conservatorship by the NCUA late last month. In a release, the NCUA said that the credit union was insolvent and had “no prospects for restoring viable operations.” St. Paul’s held $238.8 million in funds from 5400 members at the time of its closing. The NCUA will communicate directly with those members via a pending letter, and funds held by those members will be backed by the National Credit Union Share Insurance Fund’s typical $250,000 deposit guarantee. St. Paul’s was chartered in 1943 and served "members of St. Paul's Croatian Parish in Cleveland, Ohio, spouses of persons who died while in the field of membership of this credit union, employees of the credit union, persons retired as pensioners or annuitants from the credit union, members of their immediate families, and organizations of such persons." This was the ninth credit union to fail in 2010. For the NCUA release, use the resource link.

Amendments could alter Senate reg reform bill

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WASHINGTON (5/4/10)--Over 30 amendments to the financial regulatory restructuring bill have been filed as today the Senate, after numerous delays, resumes debate on the measure. The pending amendments, as the Senate resumes debate include a substitute amendment by Sens. Chris Dodd (D-Conn.) and Blanche Lincoln (D-Ark.) and a separate amendment by Sen. Barbara Boxer (D-Calif.) that would ensure that taxpayer funds are not used in any future corporate liquidations. The Credit Union National Association is also monitoring the Senate for any action on potential amendments that could establish a national usury ceiling, further regulate payday lending, eliminate portions of S. 3217 that require the collection of deposit account data, and eliminate a payday loan alternative program from the bill. CUNA is also watching for amendments that would expand the scope of the authority of the prudential regulators to review regulations promulgated by the consumer bureau, as well as possibly an amendment to add NCUA to the Financial Stability Oversight Council. Amendments that would address interchange fees and exempt auto dealers from the scope of the consumer bureau regulation and enforcement may also be filed, and additional amendments could be filed as the debate moves forward this week. CUNA commented directly on the amendment process on Monday, thanking Sen. Olympia Snowe (R-Maine) for introducing a measure that would prevent the proposed Bureau of Consumer Financial Protection (BCFP) from collecting deposit account data by census tract. In a letter sent to Snowe on Monday, CUNA said that credit unions have been concerned about the data collection provision, as it “could increase credit unions’ regulatory and reporting burdens.” Action in the House and committees will be considerably lighter, with the House on Thursday discussing H.R. 5019, the Home Star Energy Retrofit Act. The Senate Finance Committee later today will discuss proposed fees on financial institutions that take part in the Administration’s Troubled Asset Relief Program (TARP), with Treasury Secretary Tim Geithner scheduled to testify. A House Finance Committee subcommittee will also hold a hearing on debt and leverage later in the week. To see the full CUNA letter to Sen. Snowe, use the resource link.

Compliance Beware five UNtruths of new TIL rules

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WASHINGTON (5/4/10)--The Credit Union National Association (CUNA) is alerting credit union management to give appropriate time and attention to assuring timely compliance with new Federal Reserve Board changes that implement the first changes in a quarter of a century to Truth-in-Lending (TIL) Act rules. In the May 3 issue of Credit Union NewsWatch, CUNA warns of five ugly “Untruths” about new TIL rules. Stating five myths, misunderstandings and misperceptions about the new rules, CUNA then blasts those away with clear, concise, and accurate information. The “UNtruths” tackled in the article include:
* Untruth: Our data processor and forms supplier are taking care of everything that needs to be done by July 1 on the new Truth in Lending changes; * Untruth: The Federal Reserve Board didn’t eliminate multi-featured open-end lending (MFOEL), so my credit union doesn’t have to make any changes in our MFOEL program; * Untruth: We can make an automobile loan a closed-end sub-account under our open-end lending program; Untruth: We can just rely on our credit card vendor to handle all the Reg Z compliance requirements of the new Credit CARD rules; and Untruth: Once we get through next couple of months, things will settle down with Truth in Lending.
CUNA Senior Compliance Counsel Mike McLain reminds that in less than two months—by July 1—credit unions must make sure that open-end loans comply with the comprehensive changes made to account-opening disclosures, periodic statements, change-in-terms disclosures, and advertising, as well as credit card applications and solicitations. The article includes a box with extensive additional resources. Use the link below to access the article and resources.

Business group leader questions merchants interchange arguments

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WASHINGTON (5/4/10)—The president and chief executive of the Black Chamber of Commerce, writing to The New York Times, questioned why anyone would side with “giant retailers” on the issue of government controls on interchange fees. In his letter in the Sunday, May 3 issue, Harry C. Alford said those retailers are simply asking the U.S. Congress “to exempt them from antitrust laws so they can avoid paying market price for the use of credit card transactions.” He added, “The real truth: while everyone loves to grandstand when it comes to the credit card industry, its vast central nervous system drives much of today’s economy, allowing for efficient noncash transactions, better safety and recordkeeping, and convenience for consumers and retailers alike. The ‘interchange fee’ charged to retailers helps finance this global system.” Many retailers back legislation that would allow the government to limit the fees—known as interchange fees--that card issuers charge card processors for the ability to accept and process debit and credit card transactions. But Alford dismissed their claims that the "hidden" interchange fee system deprives customers of potential savings and cited a recent Government Accountability Office (GAO) report, which found, Alford noted, “that if giant retailers like Costco and Target are successful with this campaign, consumers could be hurt.” “Families would pay an estimated $400 a year that would otherwise be paid by the retailers. The retailers even opposed a (c)ongressional proposal that would ensure consumer benefit from any reduction in interchange fees,” Alford’s letter to the editor said. He was responding to an April 21 letter in support of the merchants’ position. Alford further pointed out that the GAO “found that retailers likely pocketed the $1 billion in ‘savings’ in Australia” when that government mandated lower interchange fees. The Credit Union National Association (CUNA), and other members of the Electronic Payment Coalition, have spoken in favor of the current interchange fee structure, saying that regulating interchange fees would adversely affect consumers, competition, and technological innovation. CUNA also has highlighted the positive aspects of interchange fees, saying that the fees help credit unions cover their expenses and losses while offering merchants a guaranteed source of payment at the time that the transaction is completed. CUNA continues its grassroots call to action urging credit unions to contact federal lawmakers to oppose efforts to change the interchange fee structure. As debate begins again this week on financial regulatory reform in the Senate, it is expected there will be amendments offered to address interchange issues. Also, in recent years there have been about a dozen merchant-backed interchange bills launched at the state level, but none of them have been enacted into law. Use the resource link below for resources on interchange.