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Inside Washington (06/16/2009)

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* WASHINGTON (6/17/09)--The Arkansas Credit Union League and credit union representatives traveled to Washington, D.C., to hike Capitol Hill June 10 and meet with Arkansas Reps. Marion Berry (D), Vic Snyder (D), John Boozman (R) and Mike Ross (D).
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The group also met with the staff of Sens. Mark Pryor (D) and Blanche Lincoln (D). During the meetings, the group discussed member business lending, the corporate structure of credit unions and interchange fees with their delegates. The event began with a legislative briefing at Credit Union House with Credit Union National Association (CUNA) Director of Federal Legislative Affairs Michele Johnson, followed by a reception with the Arkansas delegation at Credit Union House. From left, front row are: Reta Kahley, Arkansas league president; Gina Williams, CEO of UARK FCU; Joyce Judy, CEO of Arkansas Employee FCU; Landon Splawn; Carolyn Ashcraft; Windy Campbell, CEO of Electric Coop CU; and Claudetta Harrod. From left, back row are: Snyder; Boozman; Dwayne Ashcraft, CEO of Arkansas Superior FCU; Ross; Jan Hanna, CEO of Northwest Arkansas FCU; and Ron Harrod, Arkansas league lobbyist. (Photo provided by Credit Union House) ... * WASHINGTON (6/17/09)--On Monday, the Treasury released a proposal that would require loan originators to retain 5% of a loan’s credit risk when selling the loan into secondary markets (American Banker June 16). The proposal, which is part of the Obama administration’s broader restructuring plan expected to be released today, also would forbid loan originators from transferring the risk they are required to retain. House Financial Services Committee Chairman Barney Frank (D-Mass.) circulated a similar measure that passed the House May 7, but Frank’s measure would apply only to certain subprime loans and would allow regulators to lower the mandatory 5% mark ... * WASHINGTON (6/17/09)--Without the Federal Reserve Bank’s emergency lending powers, the nation would have seen a much more severe outcome in the current financial crisis, according to Fed Gov. Elizabeth Duke. She spoke at a recent Women in Housing and Finance meeting. Events involving “specific institutions” came up quickly and the Fed had to act quickly, she said. It would have been preferable if another government agency had the funding and authority to help, but nobody else acted, she said. Duke’s comments were made after Republican and Democratic leaders suggested scaling down the Fed’s authority. A plan by Republican lawmakers unveiled last week would prevent the Fed from lending to individual institutions. Barney Frank (D-Mass.), chair of the House Financial Services Committee, said the Fed’s powers should be re-evaluated ...

Compliance What goes into FACTA readiness

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WASHINGTON (6/17/09)--This month’s Compliance Challenge gives credit unions guidance on how best to comply with the Fair and Accurate Credit Transaction Act (FACTA) accuracy regulations. FACTA’s accuracy and integrity and direct dispute provisions, contained in Section 312 of the Act, were approved for activation by the National Credit Union Association, the Federal Trade Commission, and other various banking agencies earlier this year, and require financial institutions to create policies and procedures to ensure the “accuracy” and “integrity” of information provided to credit bureaus. These regulations should become effective during the third quarter of 2010. For credit unions, these regulations define “accurate” information as information that reflects the overall state of the account, including balances and customer performance. Information that has been substantiated by the provider’s records, is provided in a way that limits the potential for the information to be incorrectly reflected in consumer reports, and provides the most central details of the consumer’s creditworthiness would be considered to have “integrity,” according to the regulations. For more information on FACTA, use the resource links below.

Information-sharing protections reviewed by FinCEN

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WASHINGTON (6/17/09)--The Financial Crimes Enforcement Network (FinCEN) in recent guidance said that financial institutions that take part in an information sharing list created by section 314(b) of the USA Patriot Act would be protected from any liabilities that may result from the sharing of certain information with other financial institutions. These institutions would be protected from liability by safe harbor provisions of Section 314(b) of the Act. However, FinCEN said, the information shared must be related to transactions that the financial institution “suspects may involve the proceeds of one or more specified unlawful activities,” including “money laundering or terrorist activity.” The financial institution must also ensure that both it and the institution it is sharing the information with have notified FinCEN of the exchange. Both institutions must also obey any restrictions governing the use of the information. For FinCEN’s release, use the resource link.

Wait for report info CUNA says of interchange issue

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WASHINGTON (6/17/09)--The Credit Union National Association has asked Congress to oppose any action on potential interchange fee legislation that could disrupt the consumer lending market and would ultimately harm consumers. In a letter delivered to members of Congress on Tuesday, CUNA said that H.R. 2695, “The Credit Card Fair Fee Act,” would “unfairly disrupt a functioning marketplace by giving merchants an enormous competitive advantage over card-issuing credit unions in interchange negotiations.” The legislation, introduced by Rep. John Conyers, Jr. (D-Mich.) earlier this month, would allow merchants to negotiate credit card transaction fees with financial institutions via an antitrust exemption. Granting this sort of leverage to retailers would limit the availability of credit, and could result in higher fees for those that do qualify for lines of credit. A number of credit unions would also be forced out of the credit card market altogether if interchange fees are “artificially” lowered, CUNA added. The bill is currently awaiting action from the House Judiciary Committee. Another piece of related legislation, H.R. 2382, “The Credit Card Interchange Fees Act,” would aim to limit unfair practices in electronic payment systems. According to CUNA, this legislation could allow merchants to reject credit union customers in favor of other payment systems. Retailers could also steer their consumers toward preferred forms of payment. H.R. 2382 has been referred to the House Financial Services Committee. CUNA has asked that any legislation addressing interchange fees be delayed until the Government Accountability Office can complete its study of interchange fees, as directed by the recently passed Credit Cardholders Bill of Rights Act of 2009. To see the full text of the letter, use the resource link.