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Inside Washington (06/18/2010)

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* WASHINGTON (6/21/10)--The Federal Housing Administration (FHA) is looking for outside help to prevent defaults in its single-family mortgage portfolio, which is worth $760 billion. FHA said its loan-level reviews are lacking the detail needed to identify loans that could end up in delinquency, default or foreclosure (American Banker June 18). The agency is planning to hire a third-party contractor to find and repair deficiencies in its systems, and better the agency’s ability to detect fraud and monitor risk. FHA insures 20% to 25% of home loans written today, said the Banker ... * WASHINGTON (6/21/10)--Regulatory reform bill conferees agreed Thursday to scale down a provision sponsored by Sen. Susan Collins (R-Maine) that would eliminate use of trust-preferred securities as Tier 1 capital. Conferees agreed to exempt institutions with less than $500 million in assets and grandfather existing trust-preferreds for some bank holding companies. Senate and House conferees clashed on how to grandfather in the institutions, and it is not clear how the final provision will look. House Financial Services Committee Chairman Barney Frank (D-Mass.) said the House would provide its counter on the measure on Tuesday. Collins’ amendment originally would have treated all holding companies the same and would be effective immediately. The financial services industry raised concerns that the provision might cause some institutions to be considered undercapitalized ...

CUNA again pushes interchange ahead of conf. committee debate

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WASHINGTON (6/21/10)--With the financial regulatory reform conference committee set to discuss interchange fees on Tuesday, members of credit union leagues nationwide will make a final push today to urge their legislators to remove interchange language from the final bill. As currently written, the financial regulatory reform bill would, among other things, allow the federal government to impose controls on the fees paid to use electronic payment networks. The interchange provisions as written would hurt consumers by driving up debit card fees, with no compensatory advantages to consumers, the Credit Union National Association (CUNA) has said. CUNA President/CEO Dan Mica said that CUNA’s ultimate goal is “the elimination of the entire interchange amendment.” Credit union backers also continue to contact their representatives, with the number of phone calls and emails to D.C.-based legislators totaling over 600,000 as of last Friday. Overall, the efforts of CUNA and credit union backers have seen interchange opposition gain some traction. Over 130 members of the House last week came out publicly to oppose Sen. Richard Durbin’s (D-Ill.) legislation. The interchange opposition has also received significant coverage in both local and national media outlets, and hip hop entrepreneur Russell Simmons, who also owns a debit-card service for the under-banked, has urged Congress not to make well-intentioned financial reforms “at the expense of the poor.” Simmons’ editorial appeared in The Huffington Post late last week.(See related story in News Now's System section, "Russell Simmons: Interchange amendment hurts 'underserved.'") The bicameral conference committee is expected to continue through the end of this month, and legislators have said that the final version of the negotiated financial reform bill would make its way to President Barack Obama’s desk in early July.

Pressing compliance issues CUNA offers June 24 audio conference

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WASHINGTON (6/21/10)—The status of compliance with interagency Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act regulations that require residential loan originators to register with the Nationwide Mortgage Licensing System and Registry will be among the pressing compliance issues featured in a June 24 Credit Union National Association (CUNA) audio conference. The session also will address compliance challenges associated with the following rules:
* Regulation Z (Reg Z) open-end credit rules that go into effect on July 1; * Reg Z credit card rules that go into effect on Aug. 22; * Regulation E overdraft rules for ATM and one-time debit card transactions, effective July 1 (or Aug. 15 for accounts in existence before July 1); * Fair and Accurate Credit Transactions Act (FACTA) accuracy and direct dispute rule, effective July 1); * The Credit Card Accountability, Responsibility and Disclosure (CARD) Act's credit card and gift card rules, effective Aug. 22; * Federal Financial Institutions Examination Council's (FFIEC) revised “Bank Secrecy Act/Anti-Money Laundering Examination Manual”; * Status of the National Flood Insurance Program (NFIP); and * A brief update on provisions of interest to credit unions in the financial regulatory reform bill, which currently being hammered out by a House-Senate conference committee.
The Pressing Compliance Issues Audio Conference is offered by CUNA on a quarterly basis. In addition to CUNA compliance staff, the June 24 session will feature a special presentation on the SAFE Act regulations by National Credit Union Administration (NCUA) attorney Regina Metz. The NCUA and all of the federal banking agencies except the Office of Thrift Supervision have approved the interagency regulations. The NCUA and the federal banking agencies are working with the Conference of State Bank Supervisors to modify the Registry so that it accepts registrations from all covered individuals. When fully operational, credit union mortgage loan originators will have six months to complete initial registrations on the system. They also will have to obtain a unique identifier and maintain this registration. Use the resource link below for registration information.

All fed benefits to be paid electronically after March 2013 Treasury says

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WASHINGTON (6/21/10)--All federal benefits that are filed on or after March 1, 2011 will be paid electronically, the Treasury said last week. Those payments will be made via either direct deposit or the Direct Express Debit MasterCard card, the Treasury added. Individuals that are currently receiving their benefit payments via paper check will be asked to accept their benefits electronically by March of 2013. The change will save over $125 million annually, according to the Treasury. “Electronic payments are widely acknowledged as providing a safer, more convenient and cost-effective way for people to get their payments,” and the Treasury’s electronic initiative “will provide significant, measurable benefits to the American people, in terms of saving taxpayer dollars, decreasing the impact on the environment and reducing the administrative burden on government,” the Treasury added. The Treasury said that the proposal would have “no immediate impact” on its Go Direct campaign. The Treasury will accept comments on the proposal until August 18, and the Credit Union National Association (CUNA) will soon review the proposal with its payments and consumer protection subcommittees. CUNA will also discuss the proposal with the credit union councils. The Treasury began its Go Direct program, which encourages Americans to switch to direct deposit, in 2004. CUNA is a Go Direct national partner and supports the check-safety and cost-savings goals for the program. For the Treasury release and the proposal, as published in the Federal Register, use the resource link.

NCUA schedules closed board meeting for June 24

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ALEXANDRIA, Va. (6/21/10)--The National Credit Union Administration (NCUA) on Friday announced that it will hold a closed session on June 24. According to an NCUA release, the board will discuss supervisory activities during the meeting. The meeting will take place at 9:30 am E.T. For the full NCUA release, use the resource link.

CUNA concerned by Treasurys garnishment review requirements

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WASHINGTON (6/21/10)--Credit Union National Association (CUNA) on Friday said that credit unions have serious concerns with a U.S. Treasury proposal that would implement statutory restrictions on the garnishment of federal benefit payments. The Treasury, the Social Security Administration, the Department of Veterans Affairs, the Railroad Retirement Board, and the Office of Personnel Management issued the proposal in April. The agencies said that the rule was a response to "recent developments in technology and debt collection practices that have led to an increase in the freezing of accounts containing federal benefit payments." Specifically, the Treasury proposal would “establish procedures that financial institutions must follow when a garnishment account order is received for an account in which there is a direct deposit of Federal benefit payments,” CUNA said. This would include requiring institutions to review the account history during the 60-day period prior to the receipt of the garnishment order. According to CUNA, many credit unions lack the data processing capability to conduct these reviews and would be distracted from their true goal of serving their members if the proposal became law. Credit unions that have the data processing capabilities necessary to execute these reviews “may not have the capability to review a 60-day historical period,” CUNA added. CUNA has suggested that the Treasury modify its rules by allowing financial institutions to “use a flat amount that the account holder would have access to, such as the lesser of $2,200 or the balance in the account,” rather than imposing an across the board 60-day review requirement. The $2,200 figure was considered by the agencies as a possible alternative to the proposal, although they did not indicate how this thresold was determined. CUNA in the comment letter also spoke in support of portions of the proposal that would not require financial institutions to undertake additional reviews if funds are transferred from a primary to a secondary account. For the full comment letter, use the resource link.