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Treasury CUNA meet on CU issues

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WASHINGTON (6/12/09)—As the financial services world awaits an expected June 17 announcement by the Obama administration regarding details of its regulatory reform plan, Credit Union National Association (CUNA) representatives met with new U.S. Treasury Assistant Secretary for Financial Institutions Michael Barr to discuss credit union issues. Regulatory restructuring, corporate credit union stabilization issues, increased member business lending authority and access to secondary capital were among the topics CUNA President/CEO Dan Mica raised with Michael Barr. Mica emphasized that the credit union system overall is strong and well-capitalized, but noted the economy has affected credit unions in several states. The CUNA leader also stressed the importance of an independent regulatory agency for credit unions, with a workforce that is well-trained, professional and highly competent. He discussed a number of other issues, including avenues for additional capital for some credit unions in need. "As a former official at Treasury in the Clinton administration, the author of a number of consumer financial publications and a financial institutions law professor, Mr. Barr returns to the agency with a keen understanding of the financial marketplace,” Mica said following the meeting. He added, “I was pleased that he wanted to hear about our concerns and wants to engage CUNA in an ongoing dialogue on significant issues impacting financial institutions and the credit union system.” The Treasury Department can play a critical role in credit union legislation and, sometimes, regulation. “Maintaining a positive relationship with the agency is a high priority for CUNA,” Mica noted. Other Treasury officials at the meeting included new Deputy Assistant Secretary for Consumer Protection Eric Stein, and Mario Ugoletti, recently named as director of the Office of Financial Institutions. CUNA senior staff accompanying Mica were General Counsel Eric Richard, Chief Economist Bill Hampel, Deputy General Counsel Mary Dunn and Vice President for Legislative Affairs Ryan Donovan.

Inside Washington (06/11/2009)

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* WASHINGTON (6/12/09)--On Wednesday, House Financial Services Committee Chairman Barney Frank (D-Mass.) released a statement responding to a European Commission report that investigated U.S. Internet and gambling laws and their enforcement against European Union companies. The U.S. measures constitute an obstacle to trade that is inconsistent with World Trade Organization rules, the report said. “This is further argument for repealing the law, which currently restricts the personal freedom of American adults to gamble online,” Frank said. He has tried to modify the law, the Unlawful Internet Gambling Enforcement Act of 2006, since it was passed. While the Credit Union National Association (CUNA) does not support or condone illegal Internet gambling, it is concerned that credit unions could be swamped by the law’s compliance burdens ... * WASHINGTON (6/12/09)--Treasury Secretary Timothy Geithner Wednesday unveiled principles regarding executive compensation and an interim rule that implements

CU CEO proposes total charter revamp

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WASHINGTON (6/12/09)—Wendell “Bucky” Sebastian, CEO of Tampa, Fla.-based GTE FCU, proposed a radical reinvention of the current credit union system at the National Credit Union Administration’s symposium highlighting the 75th anniversary of the 1934 Federal Credit Union Act. Under Sebastian’s concept, credit unions would change their title to financial services cooperatives. These financial cooperatives would continue to have voluntary directors and would hold direct elections. Organizations would be allowed to choose their own markets and determine which types of loans they wish to provide to their members. Supplemental and alternative capital would also be allowed. Fields of membership would not be determined by third parties, but by the cooperative’s board of directors. The compensation for CEOs would be capped at 20 times the salary of an average employee of the cooperative, and the salaries of CEOs and high-ranking executives would be published for public record purposes. These organizations would be taxed on earnings in excess of expenses, dividends, and any reserves beyond 12 % of their total assets, but would, like many other financial organizations, “be subject to taxation but pay no tax.” Community reinvestment act reporting rules would also be enforced. Oversight of these organizations would still be performed by the National Credit Union Administration. However, the name could be changed to the National Cooperative Regulatory Agency. Sebastian advocated maintaining the existing credit union charter for those that are satisfied with the current results for their organizations and members. However, he said, many existing credit unions would benefit from a new model that would still provide “first class, open, transparent, absent-of-greed financial institutions that are working in the best interest of their members and never in the interest of a third party group different from their members.”

Red Flags FAQs from regulators available

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WASHINGTON (6/12/09)—A set of identity theft frequently asked questions (FAQs) to help financial institutions and others comply with federal regulations was jointly released Thursday by federal financial institution regulators. The FAQs address the “Red Flags and Address Discrepancy Rules” that implement sections of the Fair and Accurate Credit Transactions Act (FACT Act). Those rules were issued jointly by the National Credit Union Administration (NCUA), federal bank and thrift regulators, and the Federal Trade Commission, in 2007. The rules require financial institutions and creditors to develop and implement written “Identity Theft Prevention Programs” and require issuers of credit cards and debit cards to assess the validity of notifications of changes of address. The rules also provide guidance for users of consumer reports regarding policies and procedures to employ when consumer reporting agencies send notices of address discrepancy. According to a release, the FAQs provide guidance on such aspects of the rules as:
* Entities and accounts covered; * Establishing and administering an Identity Theft Prevention Program; * Validation requirements applicable to card issuers; and * Obligations of users of consumer reports upon receiving a notice of address discrepancy.
Use the resource link below to find the FAQs.

Key lawmaker supports CU tax status MBL cap lift

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WASHINGTON (6/12/09)--Maintaining the existing tax-exempt status of credit unions and lifting the 12.25%-of-assets cap imposed on credit union member business lending (MBL) are hot topics for credit unions, and Rep. Ron Kind (D-Wis.) told attendees at the American Association of Credit Union Leagues' 2009 GAPS Conference that credit unions have his full backing regarding both of these issues. Addressing political and governmental affairs specialists from state credit union leagues, Kind said that he is a “strong critic” of taxing credit unions, adding that he would oppose any measure that could potentially tax credit unions to offset federal spending under pay-go budgetary rules. Taxing credit unions could also be one of a multitude of potential reforms studied by President Barack Obama’s tax reform panel, but Kind said that he would look out for the interests of credit unions when this panel reports its findings in late 2009. Credit union representatives nationwide should be prepared to contact their legislators and make their voices heard if the taxation of credit unions is proposed, Kind said. However, Rep. Paul Ryan (R-Wis.), speaking during a later session, said that he does not expect credit union taxation to be on the table this legislative session. Both Kind and Ryan are members of the powerful tax policy-writing House Ways and Means Committee. Commending credit unions for “stepping in to the void” and continuing to lend to small businesses when many other financial institutions have tightened their lending practices, Kind said that he favors lifting the MBL cap. There is also a “growing sentiment” among members of Congress that the MBL cap should be lifted, he added. Ryan took a more general tone, speaking in support of regulatory relief and credit relief, both of which would be a preferred means of stimulating the economy. Both lawmakers said that credit unions should be recognized for making the right decisions and avoiding the risky investments that have lead to the economic downturn, and encouraged credit unions to continue telling “their story” to both legislators and citizens.