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Washington Archive

Washington

NCUA declares disaster assistance for Indiana Iowa

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ALEXANDRIA, Va. (6/16/08)--The National Credit Union Administration (NCUA) has activated its disaster relief policy to assist credit unions and their members affected by the storms, flooding, and tornadoes in Indiana and Iowa. As of Friday in Iowa alone, an estimated 20 to 30 credit unions had been affected by numerous Midwest storms and subsequent flooding, according to the Iowa Credit Union League. President George W. Bush has declared an emergency exists in Indiana and Iowa and has ordered federal aid to supplement state and local response efforts. Under its disaster assistance policy, NCUA announced it will, where necessary:
* Encourage credit unions to make loans with special terms and reduced documentation to affected members; * Reschedule routine examinations of affected credit unions if necessary; *Guarantee lines of credit for credit unions through the National Credit Union Share Insurance Fund; and *Make loans to meet the liquidity needs of member credit unions through the Central Liquidity Facility.
The NCUA announcement noted that the agency works with individual state league organizations and state regulators to ensure all federally insured credit unions are aware of NCUA’s available assistance. Region III and Region IV examiners are closely monitoring the situation and will provide assistance as needed. When operating under disaster conditions, the NCUA instructs its personnel to operate maintaining three priorities. First is to determine the safety of credit union staff and operational condition of credit unions. Second is to provide needed material and technical assistance to affected credit unions. The final priority is to return credit unions to normal operations as quickly as possible. The NCUA reiterated that member accounts in all federally insured credit unions, including those affected by the storms, are insured by the National Credit Union Share Insurance Fund, a federal fund backed by the full faith and credit of the U.S. government.

Comment sought on NCUA underserved plan

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WASHINGTON (6/16/08)—Credit unions are asked to comment on proposed changes to the current federal regulatory process for approving multiple group credit unions' applications to serve underserved areas. In a comment call to credit unions, the Credit Union National Association (CUNA) noted that since the adoption of the Credit Union Membership Access Act in 1998, NCUA has revised the FOM provisions on underserved areas three times. In 1999 the NCUA made changes to implement the Credit Union Membership Access Act (CUMAA); in 2002 there were changes to include underserved area criteria from the Community Development Financial Institutions (CDFI) Fund; and in 2006 NCUA acted to prohibit community and single group credit unions from adding new underserved areas, as a result of a legal challenge launched by banking groups. At its May open board meeting, the agency again proposed changes to its “Chartering and Field of Membership Manual for Federal Credit Unions. This proposal:
* Requests comments on whether a supporting letter should be necessary when a multiple group credit union seeks to add an underserved area; * Would change the criteria for "economic distress" for determining if the community is an investment area so that it would be more compatible with the criteria used by the Community Development Financial Institutions Fund; * Would also require a one-page narrative statement that describes significant unmet needs for loans or other financial services in the proposed area; and * Would not apply to applications that already have been approved.
CUNA's Federal Credit Union Subcommittee is be reviewing the proposal and developing CUNA's comments. The proposal has not yet been published in the Federal Register, which is a necessary step for a federal agency seeking public comment. Once it appears in that publication, interested parties will have 60 days to comment. Use the resource link below for more details on the NCUA’s complex proposal and to read CUNA’s complete comment call.

Inside Washington (06/13/2008)

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* WASHINGTON (6/16/08)--More than half of national banks tightened commercial and retail lending standards for 2008, according to survey results released by the Office of the Comptroller of the Currency Thursday. About 52% of banks tightened their commercial underwriting standards and 68% tightened their retail standards. Reasons cited for tightening standards include: the overall economic outlook, the downturn in residential real estate, a changing risk appetite and a decrease in market liquidity. Examiners reported that risk in both commercial and retail portfolios has increased over the past year and they expect portfolio risk to continue increasing over the coming year. Factors that contributed to the higher risk include a weakening economy, rising energy costs, turbulence in the secondary credit markets, the downturn in the housing market and anticipation of relaxed underwriting standards over the past few years ...