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Washington Archive

Washington

Inside Washington (05/05/2010)

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* WASHINGTON (5/6/10)--Support from lawmakers is growing for a provision that would tax the nation’s largest banks under regulatory reform legislation. Treasury Secretary Timothy Geithner endorsed adding the measure to legislation and he was supported by Sen. Charles Schumer (D-N.Y.), who said the tax would ensure banks pay for the costs of government bailouts (American Banker May 5). Geithner said the fee would apply to institutions with more than $50 billion in assets. Credit unions would not be included in the plan ... * WASHINGTON (5/6/10)--Banking industry representatives are fighting a plan that would force the divestment of swap desks. The provision would be counterproductive because it would increase risk by forcing derivatives trading to move offshore or to less regulated trading, such as hedge funds, representatives said. Sen. Judd Gregg (R-N.H.) is working on an amendment that would eliminate the measure but is concerned it may fail because of fears stemming from political backlash for supporting big banks. He said the provision would weaken the market and cause a “contraction in credit” (American Banker May 5). The provision, by Sen. Blanche Lincoln (D-Ark.), would require financial institutions that receive government support to divest their swaps trading desk ... * WASHINGTON (5/6/10)--Sens. Sherrod Brown (D-Ohio) and Ted Kaufman (D-Del.) are working on an amendment that would limit the size of the six biggest U.S. banks (American Banker May 5). The measure would impose a 10% cap on any bank holding company’s share of insured deposits. The amendment could be voted on this week as part of a debate on a regulatory reform bill by Senate Banking Committee Chairman Christopher Dodd (D-Conn.) ... * WASHINGTON (5/6/10)--Sen. Arlen Specter (D-Pa.) is pushing for tougher penalties on investment bankers who mislead customers on investment decisions. Specter said a fine is insufficient because it can be calculated as a cost of doing business. Criminal convictions might be more appropriate, he said (American Banker May 5). Specter spoke during a hearing on Wall Street. He chairs the Senate Judiciary Subcommittee on Crime and Drugs ... * WASHINGTON (5/6/10)--The Treasury Department is poised today to generate about $172 million from its auction of warrants to buy shares of Comerica Inc. The Treasury expects to sell 11.48 million warrants to buy common shares for $15 each. The department received the warrants through the Troubled Asset Relief Program (Dow Jones May 5) ...

CU issues in Senate reform spotlight

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WASHINGTON (5/6/10)—The Senate on Wednesday agreed to remove language that would have required the proposed Bureau of Consumer Financial Protection (BCFP) to collect deposit account data by census tract. The agreement, which came in the form of an amendment from Sen. Olympia Snowe (R-Maine), was one of many that were voted on during a busy afternoon in the Senate. In a letter sent to Snowe earlier this week, the Credit Union National Association (CUNA) said that credit unions were concerned about the data collection provision, which was part of S. 3217, the Restoring American Financial Stability Act, as it "could increase credit unions' regulatory and reporting burdens." The Senate also approved amendments that remove a proposed $50 billion resolution fund for failed entities and would prevent future taxpayer-funded bailouts of financial firms. 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. Another amendment that would add the National Credit Union Administration to a proposed Financial Stability Oversight Council was offered by Sen. Susan Collins (R-Maine), and CUNA President/CEO Dan Mica in a letter thanked Collins for offering that amendment. In the letter, Mica said that while credit unions do not “impose any systemic risk on the overall financial system,” there would be “value in having the federal credit union regulator on the Council.” Collins’ bill would “ensure that the credit union regulator has a voice in the review of the consumer regulations,” the letter added. NCUA Chairman Debbie Matz also spoke in support of the Collins amendment, thanking the Senator and saying in a Wednesday letter that the amendment would “harmonize” the House and Senate financial regulatory reform proposals. For the CUNA letter, use the resource link.

House committee to discuss small biz help

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WASHINGTON (5/6/10)—The full House Financial Services Committee on May 11 will discuss initiatives to promote small business lending, jobs and economic growth. Witnesses for the hearing, which will be chaired by Committee leader Rep. Barney Frank (D-Mass.), have not been announced at press time. The Credit Union National Association has suggested that small businesses would be helped by lifting the current statutory cap on small business lending by credit unions from 12.25% to 25%. Doing so would inject as much as $10 billion in new funds into the economy and could create up to 108,000 jobs, at no cost to taxpayers, CUNA has said. Legislation that would lift the current MBL cap is active in both the House and Senate.

CULAC backs Ohio Indiana primary victors

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WASHINGTON (5/6/10)--A pair of Credit Union Legislative Action Council (CULAC)-backed primary candidates will move on to their respective general elections after declaring victory on Tuesday. In one such race, Ohio Lieutenant Governor Lee Fisher (D) overcame Secretary of State Jennifer Brunner (D) in the primary for the seat of retiring Sen. George Voinovich (R). Fisher won with 55% of the total vote. Fisher will face Republican Rob Portman, who has served in both the House and as former president George W. Bush’s Director of the Office of Management and Budget. Fisher won the Democratic primary with the support of the Ohio Credit Union League and the maximum contribution of $5,000 from CULAC. A recent poll published by Quinnipiac showed Fisher with a narrow three-point lead over Portman, and most observers anticipate it being among the most competitive races this fall. Congressional incumbent Dan Burton (R-Ind.), who was also supported by CULAC, narrowly defeated his six primary rivals this week, while aspiring House member and current Indiana State Senator Brandt Hershman (R) fell short in his bid to take on Democratic candidate David Sanders (D). Both Hershman and Burton were also supported by CULAC with maximum donations of $5,000 each, and had the full support of the Indiana Credit Union League. Tuesday's elections marked the first of twenty four primaries over the next two months, and many races will involve credit union allies, noted CUNA Vice President of Political Affairs Trey Hawkins. "We look forward to working with leagues and credit unions to help our friends win tight races."

Comments on NCUA small loan plan due July 6

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WASHINGTON (5/6/10)—Comments on the National Credit Union Administration’s (NCUA) proposal that would permit credit unions to charge higher interest rates on short-term, small dollar loans must be submitted to the Agency by July 6. The NCUA proposal, which was published for public comment in the Federal Register on Wednesday, would cap the interest rates and amounts for these types of loans at 10% above the NCUA's loan ceiling and $1,000, respectively. The NCUA has also stated that credit union members would only be permitted to take out one loan at a time, and that the maximum lifespan of that loan would be six months. The loans, which are consistent with the Federal Credit Union Act, would not roll over. However, late fees and default fees would be permitted. At last month’s NCUA board meeting, Chairman Debbie Matz asked that comments on the proposal focus on safety and soundness concerns. Matz also asked for credit unions that currently offer these types of loans to provide input on whatever difficulties they may have had. The Credit Union National Association’s (CUNA) federal credit union subcommittee will be reviewing the full NCUA proposal and will, along with the CUNA Lending Council, develop a response to the NCUA. For the NCUA proposal, as published in the Federal Register, use the resource link.