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CU reps bankers unite against interchange bill

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WASHINGTON (6/19/08)—Credit union officials and bankers will join forces today to plead their case on Capitol Hill against government interference in interchange fees. The Credit Union National Association (CUNA) and banking organizations, who comprise the Financial Services Roundtable, will participate in more than 30 meetings with federal legislators and their staff. CUNA, along with banks and thrifts, strongly oppose proposed legislation that would, in part, set up a government tribunal as mediator in disputes that could occur relating to the interchange fees charged based on consumer use of credit and debit cards. Scheduled to represent credit unions at the “fly-in” meetings are:
* Mike Ligon, CFO, Belvoir FCU, Woodbridge, Va.; * John Harwell, Apple FCU, Fairfax, Va.; * James H. Norris III, CEO, AFL-CIO Employees FCU, Washington, D.C.; and * Susan Enis, CEO, U.S. Senate FCU, Washington, D.C.
CUNA strongly opposes any statutory and rulemaking changes, including those in the Credit Card Fair Fee Act introduced in both U.S. House (H.R. 5546) and Senate (S. 3086), that would regulate interchange fees. CUNA believes such action would adversely affect consumer options, competition and technological innovation. Interchange revenue enables a credit union to offer credit cards or debit cards by covering the costs and risks the credit union incurs in the card system, including the risks of consumer nonpayment and fraud. Credit unions believe the interchange rates represent a balance of factors for both sides: the merchants and the consumers’ card-issuing institutions and that the balance of interchange brings stability and is best determined by the marketplace.

Slight boost in CDRLF CDFI gets early approval

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WASHINGTON (6/19/08)—The Community Development Revolving Loan Fund (CDRLF) would get a slight boost in FY 2009 under an appropriations bill approved late Tuesday by a House subcommittee. The House Appropriations subcommittee on financial services and general government approved $1 million to fund the National Credit Union Administration’s CDRLF, up from $975,000. The Fund provides grants and loans to low-income credit unions to help underserved communities. The subcommittee also approved a small increase for the U.S. Treasury Department’s Community Development Financial Institutions (CDFI) Fund for FY2009. It voted in favor of a $10 million increase to $104 million for FY 2009. The CDFI Fund provides grants, loans and technical assistance to community development credit unions, banks, housing investment funds and other local financial entities committed to helping disadvantaged communities. Earlier this week, CDFI Fund Director Donna Gambrell noted credit unions’ CDFI participation, saying it was second only to that of loan funds. Also falling under the subcommittee’s comprehensive Treasury Department funding measure was $880 million approved for the Small Business Administration, including $100 million for regional development centers, $100 million for loan guarantees, and $22.5 million for direct loans and technical assistance. The subcommittee approval was just the first necessary vote for the appropriations bill. The House Appropriations Committee is scheduled to consider the package on June 24. If approved, it still must be voted on the by the House and Senate.

NCUA to seek comment on MBL changes

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ALEXANDRIA, Va. (6/19/08)—The National Credit Union Administration (NCUA) has one item on its agenda for today’s open board meeting and that an Advanced Notice of Proposed Rulemaking regarding member business loans, Part 723 of the federal regulator's rules and regulations. The agency is expected to ask for comment on whether the NCUA should make changes to its rules that govern loan-to-value (LTV) and waiver requirements. In 2007 comment letter to the NCUA regarding the reduction of regulatory burdens on credit unions, the Credit Union National Association urged the agency to change the MBL rule to allow items such as LTV requirements to be set by credit unions rather than in the regulation. After today, the NCUA’s meeting schedule takes on its summer routine. The agency’s next open session is planned for July 24. There is no meeting scheduled for August and then the regular monthly schedule resumes on Sept. 25.

Inside Washington (06/18/2008)

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* WASHINGTON (6/19/08)--The Federal Deposit Insurance Corp. (FDIC) Tuesday approved a rule that would prepare large banks to handle a failure and also cost them $2 million to $10 million in upgrades (American Banker June 18). Under the rule, about 159 financial institutions would be required to bring customer data systems in line with the FDIC’s systems. They also would be required to hold a small portion of deposits to prevent depositors from withdrawing funds because it’s determined whether they’re insured in the event of a failure. The rule applies to institutions with $2 billion in domestic deposits and assets of $20 billion. The rule’s approval comes after three years of three different proposals and opposition from the banking industry ... * WASHINGTON (6/19/08)--Legislation to steady the housing market may not pass by Independence Day as originally anticipated by the financial services industry. On Tuesday, House Financial Services Committee Chairman Barney Frank (D-Mass.) rejected the Senate’s version of the bill (American Banker June 18). Senate Banking Committee leaders had changed the original bill to align with the House measure, but did not go far enough, Frank said. Sen. Christopher Dodd (D-Conn.) and Sen. Richard Shelby (R-Ala.) amended the bill to include a cap increase to $625,000 on the amount of mortgages Fannie Mae and Freddie Mac can purchase. Dodd said he would have written the legislation differently if he didn’t have to earn the approval of the House. Though some had expected the bill to pass through Congress sooner, the delay is acceptable, Frank said ... * WASHINGTON (6/19/08)--Higher capital requirements could be required for national banks if changes to guidance proposed by regulators Tuesday is approved. “The principles are based on the fundamental premise that a bank’s liquidity risk framework should ensure it maintains sufficient liquidity to withstand a range of stress events, including those that affect secured and unsecured funding,” said Nigel Jenkinson, co-chairman of the Basel Committee’s Working Group on Liquidity and executive director of the Bank of England, in a statement. The principles underscore the importance of liquidity risk management framework that is well integrated into the bank-wide risk management process. The principles also strengthen expectations about the role of supervisors, including the need to intervene quickly to address deficiencies and the importance of communication with other supervisors and public authorities, both within and across national borders ...

Comment sought on permissible powers plan

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WASHINGTON (6/19/08)—The Credit Union National Association (CUNA) is asking credit unions to comment on a plan to update federal rules addressing permissible incidental powers. In May, the National Credit Union Administration (NCUA) proposed amendments to its incidental powers regulation (Section 721) to clarify and update definitions of permissible activities in correspondent and operational programs, and finder activities. The proposal would add examples of activities that have been recognized as permissible since Part 721 was last amended in 2001. Also, the proposed rule would recognize that federal credit unions (FCUs) may provide correspondent services to foreign as well as federal or state-charted credit unions. The following are among the questions that CUNA would like credit unions to address:
* What issues may arise from the provision of the proposal to include foreign credit unions under the correspondent services category? *Are there any unforeseen problems that may arise in including payroll services within the operational programs category? * Are there any specific concerns with the provision of the proposal to clarify that finder activities include an FCU’s negotiation of group discounts? * Are there any specific concerns with the provisional to clarify that finder activities include the performance of administrative functions for outside vendors?
Comments are due to CUNA by July 15 and to the NCUA by July 28. For more on CUNA’s comment call and more information of the NCUA proposal, use the resource link below.