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NCUA to address writedowns in corp stabilization discussion

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WASHINGTON (6/16/09)--Among the items for discussion at the National Credit Union Administration (NCUA) board ’s Thursday meeting will be how credit unions that have already expensed their National Credit Union Share Insurance Fund (NCUSIF) costs associated with NCUA's corporate stabilization efforts can recover or reverse those expenses. The NCUA in an April memo said that credit unions should book the write down of their NCUSIF deposits as an impairment as of March 31. NCUA also said that credit unions could potentially delay reporting those impairments if the delay was consistent with generally accepted accounting principles. However, this determination was prior to the passage of H.R. 2351, which will direct credit unions to spread their NCUSIF costs over a seven or eight-year period. The NCUA will likely discuss its corporate credit union stabilization plan in greater detail at the June 18 meeting, and is expected to present related guidance to credit unions during an interactive webinar on June 24. The board will also discuss a final rule on operating fees and an interim rule on exceptions to the maturity limit on second mortgages during this week’s meeting.

Reg restructuring plans outlined by Geithner Summers

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WASHINGTON (6/16/09)--Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers in a Monday op-ed in The Washington Post said that the Obama administration’s upcoming financial regulatory reform plan would offer enhanced protections to investors and consolidate some aspects of the financial oversight process under a council of multiple regulators. The administration representatives said the plan, set for release on Wednesday, seeks to impose new reporting standards on creators of asset-backed securities, and would require the creators of any securities to maintain a financial stake in that asset. Regulations covering futures would also be harmonized with those covering securities. Oversight of so-called “over the counter” derivatives would also be strengthened. The regulatory reforms would increase the existing capital and liquidity requirements for financial institutions and cluster existing regulators together to, under the supervision of the Federal Reserve, oversee larger interconnected financial firms. Capital and liquidity requirements for larger firms would also be higher under the plan. Additionally, the reforms would create new guidelines to help the government resolve any future failures of large financial institutions without bailing them out or simply letting them collapse. The U.S.-based regulators would also work alongside their foreign counterparts to strengthen financial regulations throughout the world’s markets.

Inside Washington (06/15/2009)

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* WASHINGTON (6/16/09)—House Minority Leader John Boehner (R-Ohio) and about two dozen other House Republicans are asking President Obama to identify what he will do with the $68 billion of rescue money that large banks and thrifts are expected to pay back to the U.S. Treasury Department’s financial rescue fund. In their letter to the chief executive, the House members asked whether the returned Troubled Asset Relief Program funds would be applied toward the federal debt, and they urged Obama to do so. (American Banker June 15)… * WASHINGTON (6/16/09)--The Office of Thrift Supervision received mixed reviews from the U.S. Treasury Department’s Inspector General (IG) for its actions in addressing PFF Bank and Trust. The IG agreed with the thrift regulator’s own assessment that more could have been done to limit PFF’s concentration of constructions loan. The Treasury assessment also said more could have been done to force the $3.7 billion-asset thrift to increase its capital level. On the other hand, the IG report said OTS’ delay in taking formal action against the thrift, while an investor considered a takeover, was appropriate. (American Banker June 15)… * WASHINGTON (6/16/09)--The Federal Reserve’s use of advanced emergency powers may have helped stave off the worst of the financial crisis, but House Republicans would look to reduce the Fed's future emergency authority by limiting its ability to intervene in a company’s affairs under “exigent” circumstances (American Banker June 15). Some have accused the Fed of acting irresponsibly and without accountability, and legislators, including House Financial Services Chair Barney Frank (D-Mass.), have said that some of the Fed’s current powers should be restricted. A new regulatory council to regulate systematically important institutions could address some of the issues and entities that the Fed is currently overseeing. Potential legislation could also require that Congress, the Treasury, or other regulators approve any emergency actions before they are undertaken, but some have said that such a move would only politicize the process of financial intervention…

Fryzel NCUA will remain independent

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PINEHURST, N.C. (6/16/09)—Chairman Michael Fryzel of the National Credit Union Administration (NCUA) said his agency believes the U.S. Congress and Obama administration will allow the agency to remain the independent federal regulator of credit unions, no matter what other reform plans are unveiled Wednesday. “That is the indication I have had to date,” Fryzel said Monday. Fryzel’s remarks were featured in a North Carolina CU League video, taped after the chairman’s remarks to the league’s 74th annual meeting. Fryzel also spoke to the credit union movement’s continued strength despite the country’s economic challenges. He said credit unions will continue to be “safe and sound under one regulator.” He added that the credit union federal share insurance fund also will remain separate, and will not be “co-mingled with other funds.” When asked what challenges credit unions can face cooperatively in the upcoming months, Fryzel said it is important for credit unions to work together to continue to support the corporate credit unions. He encouraged credit unions to “take an active part” in a plan to restructure the corporates to make them “strong into the future.” He said they should “continue to support their members, continue to work with regulator and the trades” so ultimately “once we get out of this difficult economy credit unions can again move forward to achieve goals they’ve never seen before.” “Credit unions have helped for 100 years and will do it for another hundred years” Fryzel declared. U.S. Treasury Secretary Timothy Geithner is expected to announce the administration’s plan for broad financial regulatory reforms on Wednesday. (See related story: Reg restructuring plans outlined by Geithner, Summers.) Use the resource link below to access NCCUL videos.

Geithner faces Congress after reg plan unveiling

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WASHINGTON (6/16/09)--Though the balance of this week's congressional schedule looks to be filled with appropriations-related discussions, Treasury Secretary Timothy Geithner will discuss the Obama administration's official plan for financial regulatory restructuring before the Senate Banking Committee and the House Financial Services Committee in separate hearings scheduled for Thursday. The Credit Union National Association (CUNA) has been meeting with administration and congressional officials on the regulatory plan, which is expected to frame debate on Capitol Hill as it moves forward. Legislators, including House Financial Services Committee Chairman Barney Frank (D-Mass.), have said that the National Credit Union Administration (NCUA) would maintain its independence in spite of the coming regulatory changes. NCUA Chair Michael Fryzel has also said that the NCUA will likely retain its independence under any future financial regulatory legislation. (See related story: Fryzel: NCUA will remain independent.) Other noteworthy hearings include a Tuesday hearing on systemic risk and insurance before the House Subcommittee on capital markets, insurance and government sponsored enterprises and a Thursday joint hearing between the House Financial Services Committee subcommittee on domestic monetary policy and the Ways and Means Subcommittee on select revenue measures on barriers to full minority participation in the new markets tax credit program. Healthcare reform also remains a topic of discussion, ensuring that Congress will stay busy in the lead up to its two-week independence day district work period, which begins on June 29.