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Senate housing vote moved to today

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WASHINGTON (5/6/09)—The Senate late Tuesday recessed for the evening without completing work on its housing bill, the Helping Families Save Their Homes Act (S. 896). The Senate will reconvene this morning at 9:30 and is expected to take a series of up to ten roll call votes on remaining amendments to the bill—and then a final vote on the package. The bill is expected to pass and be the vehicle for several important credit unions provisions, such as:
* Creation of a temporary Corporate Credit Union Stabilization Fund; * Authorization for credit unions to spread the cost of National Credit Union Share Insurance Fund (NCUSIF) replenishment over a longer period of time; * Raising the National Credit Union Administration’s (NCUA) borrowing authority to $6 billion, from the current ceiling of $100 million, and also authorize $30 billion in NCUA emergency borrowing authority; and * Extension—for four years--the higher, $250,000 federal share and deposit insurance ceiling due to expire at yearend.
If approved by the Senate, the bill would next be sent back to the House in an attempt to address differences between the Senate’s version and the House-approved H.R. 1106. The NCUA plan for a stabilization fund wasn’t included in the House package; however key members said last week that they would favor acting expeditiously and including the language in a final bill.

Fee relief will promote CU investment

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WASHINGTON (5/6/09)--The Credit Union National Association (CUNA) this week praised a proposed rule change that would allow credit unions to remove investments in CU SIP or CU HARP from their total operating fee calculations. The Credit Union System Investment Program (CU SIP) and the Credit Union Homeowners Affordability Relief Program (CU HARP) were created by the National Credit Union Administration (NCUA) to prop up the corporate credit union system. Under CU SIP, credit unions may invest funds that are borrowed from a Central Liquidity Facility (CLF) in corporate credit union. CU HARP allows credit unions to invest money borrowed from the CLF in two-year guaranteed CU HARP notes that are issued by corporate credit unions. These funds may then be used to modify at-risk mortgages. Although NCUA continues to encourage credit union participation in these programs, the agency has said that increased operating fees could prevent some credit unions from participating. In a comment letter posted Monday, CUNA said that removing these investments from operating fee calculations would “facilitate participation in the [CU SIP and CU HARP] programs by removing the disincentive related to the calculation of the operating fee.” CUNA asked for individual credit unions to provide their comments on the proposal in a March 25 comment call. To read more about CUNA’s comment letter, use the resource link below.

Inside Washington (05/05/2009)

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* WASHINGTON (5/6/09)--An amendment that would have narrowed a “safe harbor” to protect mortgage servicers who modify troubled loans was defeated by the Senate Tuesday (Reuters May 5). If the safe harbor amendment had passed, some mortgage investors could have sued mortgage servicers for lowering a borrower’s monthly loan payment. Mortgage investors usually lose money when terms of a mortgage are modified, so some investors worried that mortgage servicers would modify loans without regard for investors ... * WASHINGTON (5/6/09)--Results of the Federal Reserve Board’s April 2009 Senior Loan Officer Opinion Survey on Banking Lending Practices released Monday indicate that a significant majority of banks expect that credit quality for all types of loans likely will deteriorate over the year if the economy progresses according to consensus forecasts. The survey addressed changes in the supply of, and demand for, loans to businesses and households over the previous three months. Respondents indicated that demand for loans from both businesses and households continued to weaken for nearly all types of loans over the survey period, except demand for prime mortgages. About 50% of domestic respondents indicated that they had tightened their lending standards on prime mortgages the previous three months, and about 65% of the 25 banks that originated nontraditional residential mortgage loans during the survey period reported tightening their lending standards on such loans. About 35% of domestic respondents saw stronger demand, for prime residential mortgage loans during the previous three months, compared with the roughly 10% that reported weaker demand in the January survey ... * WASHINGTON (5/6/09)--In a speech Monday, Federal Reserve Bank of Kansas City President Thomas Hoenig said that breaking up large companies may be an option to prevent “such institutions from holding us hostage in the future.” Commenting on the notion that some banks are perceived as “too big to fail,” Hoenig said some institutions should be subject to size or activity limit, higher capital requirements and other limitations on the systemic risks they impose on the financial system. “I fear that if we pour in enough public funds to see us through the current crisis, we will then breathe a sigh of relief and back off from implementing any comprehensive solutions to controlling the use of government guarantees and to addressing the problems posed by systemically important institutions,” he added ...

Interchange fee reg changes opposed in CUNA ad

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WASHINGTON (5/6/09)--The Credit Union National Association (CUNA) continued to oppose legislation that would potentially affect merchant-paid interchange fees by running a May 5 ad in the Washington Post. The ad, which will also appear at other times in select Washington-based publications, online media outlets, and some nationwide markets in the coming weeks, voices credit union opposition to any legislative action involving interchange fees. The credit card billing practices legislation, S. 414, the Credit
Click to download a pdf version Click to download a pdf version.
Card Accountability, Responsibility and Disclosure Act (CARD Act), currently calls for a General Accounting Office study of interchange. CUNA is concerned that a senator could offer an amendment that would substantially change the payment processing system and reduce the interchange that credit unions rely on to offer debit and credit cards to their members. Merchants could ask the government to intervene by capping the fees that payment networks charge merchants for each credit or debit card transaction. Such a move would enhance retailers’ profits while costing consumers an estimated $400 in additional annual expenses on a per-household basis, the CUNA ad said. CUNA believes that such legislation would also limit consumer options and would harm competition. Further, CUNA has said that allowing the government to interfere in what should be a free market issue would equally harm consumers, merchants and financial institutions. Other trade groups in the Electronic Payments Coalition, of which CUNA is a member, plan to run ads opposing any changes to the interchange fee regulations.

Economy key factor in CUNA 08 financial results

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WASHINGTON (5/6/09)—The Credit Union National Association (CUNA) finished 2008 with a positive operating margin of $221,000, but the down economy’s impact on investments and the association’s employee pension plan resulted in an $8 million adjustment to assets from unrealized losses and accounting adjustments. CUNA President/CEO Dan Mica noted that at a time when national associations, as well as the members they represent, are facing financial challenges from the strains of a prolonged recession, CUNA implemented a number of measures to reduce costs and increase efficiency, resulting in the positive operating margin for the year. “The area where we, as a management team, have direct control is on operating results,” he noted. Further, Mica noted that CUNA continues to follow a policy in which all dues revenue ($21.6 million in 2008) goes to support CUNA’s advocacy functions—legislative and regulatory affairs, compliance, political action, public relations and communications, research and economics. However, the declining value of CUNA’s investment portfolio and accounting adjustments related to the continued decline in the funding status of CUNA’s defined benefits plan resulted in a change in restricted net assets of $7.9 million. Mica said CUNA is evaluating actions it can take this year to help address the situation, which also could be aided if, as many economists currently forecast, the economy begins to improve later in 2009. Full details of CUNA’s 2008 year-end financial results will be in the association’s annual report, which will be distributed with the June issue of Credit Union Magazine and posted online.

Loan mod scam hearing today

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WASHINGTON (5/6/09)—Loan modification and foreclosure rescue scams are the topic of a hearing today by the House Financial Institutions subcommittee on housing and community opportunity. The subcommittee will focus its attention primarily on legislative proposals that would fight such fraud schemes. The subcommittee is not alone in its concern that struggling homeowners are being swindled by pseudo help plans. The Financial Crimes Enforcement Network (FinCEN) issued a warning in April that growing numbers of unscrupulous persons or companies could attempt to abuse the Obama administration’s loan modification and foreclosure prevention programs. FinCEN asked credit unions and other financial institutions to help law enforcement identify such crimes via their suspicious activity report (SAR) filings. FinCEN, backed by an alert from the National Credit Union Administration, asked financial institutions to be on the look out for such things as a statements by homeowners that they have been making payments to a party other than the mortgage holder or servicer, among other things. FinCEN Director James Freis is among those scheduled to testify. Use the resource link below to see the full list of witnesses.