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Senate stalls student lending vote

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WASHINGTON (5/9/12)--A Senate bill that would prevent federal student loan interest rates from doubling from 3.4% to 6.8% this summer failed to collect the votes needed to ensure debate by the full Senate on Tuesday, but could still be brought up for Senate approval in the future.

The Stop Student Loan Interest Rate Hike Act (S. 2343) would extend the reduced interest rate for Federal Direct Stafford Loans beyond the current cutoff date of July 1.

The 52 to 45 vote mainly followed party lines, but many Republicans and Democrats reportedly agree that federal student loan interest rates should remain low. The difference between the two sides appears to be how the cost of subsidizing student loans would be paid for.

S. 2343 would not alter credit union student lending, but other pieces of legislation that would impact credit union student loan practices have been offered in the Senate.

The Know Before You Owe Act of 2012 (S. 2280) was unveiled by Sens. Richard Durbin (D-Ill.) and Tom Harkin (D-Iowa), and has been referred to the Senate Banking Committee. That bill would require prospective borrower's school to confirm the student's enrollment status, cost of attendance and estimated federal financial aid assistance before the private student loan is approved, and a number of loan disclosures would also need to be provided to new loan recipients. Lenders would also need to frequently update students or loan holders on the status of their loan.

The Fairness for Struggling Students Act (S. 1102), which was also offered by Durbin in 2011, would make it easier for student loan debtors to discharge privately issued student loans in bankruptcy proceedings.

The Consumer Financial Protection Bureau is also addressing student loan issues, working with the U.S. Department of Education and launching the "Know Before You Owe" project to help borrowers, including student borrowers, understand debt implications. A full study on the role of schools in the private student loan marketplace, student loan underwriting criteria, repayment terms and behavior, loan servicing and loan modification, and other student loan issues is expected to be released by the agency this summer.

CUNA trades urge Senate to pass NFIP extension

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WASHINGTON (5/9/12)--The National Flood Insurance Program (NFIP) is scheduled to expire on May 31, but the Credit Union National Association (CUNA) and others are urging the Senate to reauthorize the NFIP "and avoid the costly consequences that would result in a lapse from failure to act," in a letter sent to elected officials and a full-page ad in D.C. publications.

Sen. David Vitter's (R-La.) S. 2344, would extend the NFIP through the end of this year. The bill is currently co-sponsored by fellow Louisianan Sen. Mary Landrieu (D), and was placed directly on the Senate's legislative calendar. It has not been marked up by the Senate Banking Committee. LEgislation that would extend the NFIP for five years has also been approved in the House and by the Senate Banking Committee.

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Credit unions, as well as other lenders, cannot write certain mortgages without NFIP coverage. In the past the program has lapsed for brief periods--three times in 2010.

The letter, which was sent to Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.), noted that more than 5.6 million policyholders in 21,000 communities nationwide depend on the NFIP as their main source of protection against property losses that result from flooding. "Without flood insurance, many residential and commercial real estate transactions across the country will come to a stop," potentially jeopardizing as many as 40,000 mortgage closings per month, the letter added.

The letter is co-signed by CUNA, the National Association of Home Builders, the Council of Insurance Agents and Brokers, and many other finance, insurance and construction groups. Many of those same associations have teamed up for a pro-NFIP extension advertisement that seeks to remind senators that "floods are not just a coastal issue," and that flood disasters have been declared in every state. "By continuing to ensure access to affordable flood insurance, Congress can provide certainty for the housing market and strengthen our economic recovery," the ad says.

The full-page ad will run through Thursday in Washington political papers Politico, Roll Call, Congress Daily, CQ Today, and The Hill.

CUNA strongly supports the NFIP program and backs short-term extensions, but also advocates for longer-term approval.

Democrats and Republicans, including Senate Banking Committee Chairman Tim Johnson (D-S.D.) and ranking minority member Richard Shelby (R-Ala.), have agreed that the NFIP is in need of reform, but a comprehensive reform package has not been agreed to in the House or Senate.

FinCEN releases archived CTRSAR webinar

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WASHINGTON (5/9/12)--An archived version of the Financial Crimes Enforcement Network's (FinCEN) May 8 webinar, which featured overviews of the e-filing specifications for FinCEN's new Currency Transaction Reports (CTR), Suspicious Activity Reports (SAR), and Designation of Exempt Person (DOEP) reports, has been released by the agency.

The webinar was created to aid information technology (IT) professionals who are responsible for integrating FinCEN's new technical specifications into batch filing processes. These may be vendors of batch filing programs as well as in-house IT staff of financial institutions.

A review of FinCEN's Bank Secrecy Act e-filing test site and testing process and other e-filing specifications was also included in the webinar.

FinCEN is expected to offer additional webinars for financial institution employees and compliance professionals with BSA-related responsibilities at a future date.

For the archived FinCEN webinar, use the resource link.

Inside Washington (05/08/2012)

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  • WASHINGTON (5/9/12)--Banks are pressing the Federal Reserve to rework proposed Dodd-Frank Act regulations on stress tests, capital and liquidity requirements. The Fed has received 90 comment letters on the 173-page proposal, which would apply to all bank holding companies with more than $50 billion of assets and nonbank financial firms designated as systemically important by the Financial Stability Oversight Council. Some banks are concerned the proposal does not differentiate among institutions of different sizes. As part of its capital requirements, the proposal includes a risk-based capital surcharge. Banks complained that the amount of the surcharge is not specific. Banker concerns about liquidity requirements include how often stress tests must be performed, definitions of highly liquid assets and a one-size-fits-all approach. Banks also criticized the stress test requirements of the proposal. Among the concerns were the Fed's lack of transparency in the models used, overlapping tests with other regulators, scheduling and the disclosure of results …
  • WASHINGTON (5/9/12)--Paul Nash will succeed John Walsh as Office of Comptroller of Currency's (OCC) senior deputy comptroller and chief of staff.  Walsh announced that he is retiring this summer. Nash will join the OCC on May 21. He has been the deputy to the chairman for external affairs at the Federal Deposit Insurance Corp. since March 2009.  In that role, he oversaw the agency's Office of Legislative Affairs, the Office of the Ombudsman and the Office of Minority and Women Inclusion …
  • WASHINGTON (5/9/12)--Meg Burns, the Federal Housing Finance Agency's senior associate director for housing and regulatory policy, downplayed expectations of a government program to convert foreclosed properties into rental units. The Real Estate Owned (REO) Initiative was developed in conjunction with the Treasury Department, Department of Housing and Urban Development, Federal Deposit Insurance Corp., Federal Reserve, Fannie Mae and Freddie Mac. The goals of the program were "fairly limited" and focused only on markets with supply-demand imbalance, Burns said. The application process is demanding and only applicants with deep operational expertise in both asset management and property management are approved, she added. "The enterprise portion of the REO market is limited, so the future benefit of the program may be more applicable to private financial institutions that choose to sell their inventory in this manner," Burns said …