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CUs CUNA dig in on playground renovation

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ST. PETERSBURG, Fla. (6/14/12)--A group of more than 60 volunteers from the Credit Union National Association, the League of Southeastern Credit Unions, Florida credit unions, the Republican National Convention committee, hospital staff, and the National Journal Group all chipped in this week to boost playground renovation efforts at All Children's Hospital in St. Petersburg, Fla.

The "leave behind" project, which is in honor of this summer's 2012 Republican National Convention taking place in nearby Tampa, will retrofit an existing playground with special play equipment for the hospital's young patients.

The volunteers gathered at the hospital to help the playground construction process, planting 1,400 plants and helping build a retaining wall for the playground. Volunteers also assembled toys for the playground.

Click to view larger image Seth (shown seated in a wheelchair) stopped by the playground renovation project at All Children's Hospital, where he has been a patient, on his birthday to cheer on volunteers from CUNA, state credit union leagues, local credit unions, the National Journal, the Republican National Convention, and the hospital, all of whom are involved in the convention "leave-behind" project to benefit the hospital's young patients. (All Children's Hospital photo)
More specialized equipment will be installed by contractors later in the construction process.

Florida House Majority Leader Jim Frishe (R) also visited to take part in the volunteer efforts, which were covered in the St. Pete Times and local Tampa television affiliate ABC Action News.

The Republican National Convention is scheduled to begin on Aug. 27 and end on Aug. 30 in Tampa.

A similar playground project is underway at Levine Children's Hospital in Charlotte, N.C. Charlotte is the location of the 2012 Democratic National Convention. A volunteer day, like the one this week in Tampa, is schedule in Charlotte for June 27.

Since 2000, credit unions have honored the host cities for each national convention with a "leave behind" project that benefits local communities.

The two 2012 projects will cost a combined $600,000, and credit unions nationwide, as well as the Carolinas Credit Union Foundation and the League of Southeastern Credit Unions Foundation have raised funds for the projects.

2011 housing market economy created issues for Fannie Freddie

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WASHINGTON (6/14/12)—Instability in housing markets and the economy in general continued to challenge government-sponsored enterprises Fannie Mae and Freddie Mac in 2011, but all Federal Home Loan Banks (FHLBanks) reported positive annual earnings in that same year, the Federal Housing Finance Agency (FHFA) said in an annual report sent to the U.S. Congress Wednesday.

The FHFA annual report, which is its fourth on the GSEs, noted that Fannie and Freddie were "critical supervisory concerns" for the FHFA in 2011. It said the continued losses at those GSEs were mostly tied to mortgage loans that were originated between 2005 and 2007.

Fannie and Freddie guaranteed around $100 billion in new mortgages per month in 2011, accounting for three of every four mortgages that were originated during that year, the FHFA added.

While FHLBank performance and financial condition remained stable, they "continued to be negatively affected by their exposure to private-label mortgage-backed securities," the report added. FHLBanks ended 2011 with $766.4 billion in total assets, a decline from the $878.3 billion in assets reported in 2010, the FHFA said.

For the full FHFA report, use the resource link.

Long-term NFIP extension back for Senate debate

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WASHINGTON (6/14/12)—Legislation that would extend the National Flood Insurance Program (NFIP) into 2013 could soon be considered in the U.S. Senate.

The bill, S. 1940, was introduced by Senate Banking Committee Chairman Tim Johnson (D-S.D.) late last year, and has passed that committee. In addition to extending the NFIP, it would also grant the Federal Emergency Management Agency (FEMA) the authority to issue up to $20.7 billion in debt obligations for the NFIP, until 2016. However, that funding authorization would be subject to presidential approval under the terms of the bill.

Legislation that extends the NFIP until July 31 was approved in the House and Senate late last month, just before the insurance program expired on May 30. The NFIP has been funded by a series of short-term extensions for some time, and Johnson and others in the Senate and House have repeatedly called for substantial reforms to the program to be made if and when the program is reauthorized for a longer term.

Credit unions, as well as other lenders, cannot write certain mortgages without NFIP coverage, and the Credit Union National Association has noted that lapses in NFIP authorization have caused significant disruption in the mortgage underwriting process for thousands of prospective homeowners.

The NFIP lapsed three brief times in 2010.

Senate Majority Leader Harry Reid (D-Nev.) and Sen. David Vitter (R-La.) are reportedly working on legislation that would extend the NFIP for five years. Vitter earlier this year introduced his own yearlong NFIP extension, but that bill (S. 2344) has not received a vote.

Sen. Richard Shelby (R-Ala.) last year said that every aspect of the NFIP must undergo significant revision for it to survive and continue on a sustainable path. He suggested the committee examine the relationship between the NFIP and participating insurance companies, with particular attention paid to increasing transparency and accountability. The types of properties that the NFIP is covering should also be examined to ensure that its resources are spent effectively, and privatization of portions of the program should also be considered, Shelby added.

CFPB should review repay rule impact on small biz CUNA

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WASHINGTON (6/14/12)--The Consumer Financial Protection Bureau (CFPB) recently delayed the release of its ability-to-repay mortgage rule until later this year, and the Credit Union National Association (CUNA), the U.S. Chamber of Commerce, and other partners have suggested the agency use the extra time to consider how the mortgage rule could impact small businesses.

Under the still developing ability-to-repay rule, mortgage originators would be required to consider a homebuyers ability to repay their loan before a loan could be offered. The ability-to-repay rule was scheduled to be released as a final version in July, alongside a number of other CFPB mortgage disclosure and rule changes, but the agency delayed its release after new mortgage information came to light. The CFPB has added time to its process to consider new comments from the financial services industry, and CUNA has released a comment call. (See June 8 News Now story: New ability-to-pay comment process may be burdensome: CUNA)

In a joint letter to CFPB Director Richard Cordray, CUNA and several finance- and business-oriented partners suggested the CFPB conduct a Small Business Advocacy Review (SBAR) panel and publish the recommendations of the SBAR panel in conjunction with issuing the final rule. The letter noted that the agency is required to conduct SBAR panels when issuing rules that will significantly impact small businesses. A thorough examination of how the rule would impact small businesses, combined with recommendations gained from the SBAR panel, will help build consensus that will improve the efficacy of the final product, the letter said.

The letter was also signed by the American Bankers Association, the American Financial Services Association, the Community Mortgage Banking Project, the Community Mortgage Lenders of America, the Independent Community Bankers of America, the Mortgage Bankers Association, the National Association of Federal Credit Unions, the National Association of Mortgage Brokers, the National Association of Realtors, the National Federation of Independent Business, the Real Estate Services Providers Council, Inc., and the Small Business & Entrepreneurship Council.

Disclosure changes must not increase CU burden CUNA to iN.Y. Timesi

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WASHINGTON (6/14/12)--While consumers would benefit from greater simplicity and clarity in checking account disclosures, any disclosure changes that are made must be achieved without exacerbating credit unions' already heavy regulatory burden, Credit Union National Association (CUNA) President/CEO Bill Cheney said in a New York Times blog post this week.

The Times this week covered a recent Pew Charitable Trusts study that found that credit unions and banks could both stand to improve their checking account disclosures. The Pew study analyzed checking account data from the nation's 12 largest credit unions and 12 largest banks.

In the study, Pew noted overall that financial institutions "do not summarize important policies and fee information in a uniform, concise, and easy-to-understand format" and "do not provide accountholders with clear and comprehensive information about overdraft options and their costs."

Cheney told The Times that account disclosures "to a large degree are dictated by regulatory requirements," but said CUNA has discussed account disclosure issues with the Consumer Financial Protection Bureau.

The study also focused on overdraft programs and fees, noting that the median overdraft fee charged at credit unions mentioned in the study was $25. This fee was $10 below the median bank fee of $35. Median non-sufficient fund fees charged by credit unions totaled $26, lower than median bank fees, which totaled $35, the study said.

Cheney said credit unions need the flexibility to "reasonably and fairly" price their overdraft programs, and said CUNA is developing overdraft program best practices that it will share with member credit unions.

Overall, credit unions charged fewer account fees, on average, than banks, and a greater percentage of credit unions offered interest-bearing accounts, the study said.

For the New York Times post and the Pew Charitable Trusts study, use the resource links.

Inside Washington (06/13/2012)

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  • WASHINGTON (6/14/12)--Federal Reserve Governor Daniel Tarullo on Tuesday offered details for reforming the shadow banking system--that collection of financial intermediaries such as hedge funds, finance companies and securities dealers without access to central bank liquidity or public sector credit guarantees. The first of three steps that regulators could take is to create greater transparency among the transactions and markets that compose the shadow banking system, Tarullo said. Second, the risk of runs on money market mutual funds should be reduced to improve the resiliency of those funds, he said. The Securities and Exchange Commission is considering several possible reforms--in addition to those it made in 2010--including a floating net asset value, capital requirements and restrictions on redemption. A third short-term priority is to address the settlement process for three-party repurchase agreements. An industry-led task force was established in 2009 to initiate some improvements to the settlement process, but Tarullo said the reforms are not sufficient. "The shadow banking system today is considerably smaller than at the height of the housing bubble six or seven years ago," Tarullo said. "And it is very likely that some forms of shadow banking most closely associated with that bubble have disappeared forever. But as the economy recovers, it is nearly as likely that, without policy changes, existing channels for shadow banking will grow, and new forms creating new vulnerabilities will arise" …
  • WASHINGTON (6/14/12)--JPMorgan Chase traders "did not have the requisite understanding of the risks they took" when making the trades that led to the firm's massive trading losses suffered in May, JPMorgan President/CEO Jamie Dimon told the Senate Banking Committee on Tuesday. The company's strategy for reducing the synthetic credit portfolio was poorly conceived and vetted, Dimon added. Also, its strategy was not carefully analyzed or subjected to rigorous stress testing, Dimon said. JPMorgan is "embarrassed" by the incident, but Dimon urged lawmakers to put the loss into perspective. "We will lose some of our shareholders' money--and for that, we feel terrible--but no client, customer or taxpayer money was impacted by this incident." At the end of the first quarter, the company held $190 billion in equity and more than $30 billion in loan loss reserves, Dimon said. Since the loss, the company has hired a new chief risk officer, chief financial officer, global controller and European head, and also established a new risk committee structure …
  • WASHINGTON (6/14/12)--Thomas Hoenig and Jeremiah Norton, both recently sworn in as members of the Federal Deposit Insurance Corp.'s (FDIC) board, said Tuesday they are concerned that new bank-capital rules may not sufficiently limit financial system risk (The Wall Street Journal June 13). FDIC and Office of the Comptroller of the Currency earlier this week approved draft rules based on an agreement reached by international regulators in Basel, Switzerland, about a year ago. Banks have 90 days to comment on the proposed rules, which are identical to those released last week by the Federal Reserve Board. Hoenig expressed concern that the proposal's complexity will make it costly to implement and increases its chances of being "gamed." Norton said the capital requirements under the Basel proposal might not be high enough for the largest U.S. banks …