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Inside Washington (06/02/2010)

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* WASHINGTON (6/3/10)--The structure of a proposed consumer protection agency will soon be determined as lawmakers begin hashing out the House and Senate regulatory reform bills next week (American Banker June 2). The House bill would create an independent agency, while the Senate version would form an autonomous unit in the Federal Reserve Bank. Under the Senate bill, the agency also would be funded by the Fed--$500 million--while the House bill would fund the agency from 10% of the Federal Reserve System’s operating costs, assessments on large financial institutions and $200 million from Congress each year. Consumer groups and proponents of the agency as a stand-alone unit say the Senate’s funding approach is better because the House bill’s appropriations process could hamper the agency by adding conditions on how to use the funding it receives. The Senate bill also allows the agency to be run by an independent director appointed by the president and confirmed by the Senate. The House bill provides for a director to be appointed by the president and then be transitioned to a commission structure. The Obama administration has said it has no preference on how the agency is housed ... * WASHINGTON (6/3/10)--The National Association of State Credit Union Supervisors (NASCUS) reiterated its position that the National Credit Union Administration (NCUA) should defer to state law for merger and conversion issues of federally insured, state-chartered credit unions. NASCUS’ comments were in response to NCUA’s proposed rule regarding mergers and conversions. NASCUS said it shares NCUA’s concerns that important decisions regarding the future governance of a credit union must be handled fairly and transparently. However, NCUA’s rulemaking should be limited to federal credit unions, NASCUS said. With regard to the provisions impacting credit union mergers into mutual savings banks, NCUA is substituting its standard of fiduciary duty for that of the states, which concerns NASCUS. NASCUS recommended that “NCUA work with state regulators of non-federally insured credit unions to craft mutually acceptable standards that would address NCUA’s concerns without eviscerating the state authority that allows credit unions to choose their share insurance option” ... * WASHINGTON (6/3/10)--The Federal Reserve Board has named Maeve Elise Brown, executive director of Housing and Economic Rights Advocates in Oakland, Calif., to fill a vacancy on its Consumer Advisory Council. The council advises the board on its responsibilities under the Consumer Credit Protection Act and on other consumer financial services matters. Previously, Brown worked at the National Housing Law Project, where she directed the organization's initiatives on predatory lending, Section 8 homeownership and Rural Housing Service foreclosure avoidance. Brown also founded and served as the director of the community economic development unit at a community law center in Berkeley, Calif. Alan Cameron, president/CEO of the Idaho Credit Union League, is a representative on the council. His term runs through 2010 ...

NCUA extends corporate share coverage through Sept. 2012

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ALEXANDRIA, Va. (6/3/10)--The National Credit Union Administration (NCUA) on Wednesday announced that it has extended the expiration date of its Temporary Corporate Credit Union Share Guarantee Program (TCCUSGP) to Sept. 30, 2012. The TCCUSGP, which was scheduled to expire on June 30, 2012, backs up the National Credit Union Share Insurance Fund's (NCUSIF) coverage of all shares, excluding paid-in-capital and membership capital accounts, at corporate credit unions. The NCUA in March had extended the program until June 30, 2012. The program became effective for Central Corporate CU, Corporate America CU, Kansas Corporate CU, Kentucky Corporate FCU, Southeast Corporate FCU, and VACORP FCU on May 29, 2009. Existing deposits will continue to be covered, as will new investments with maturities of two years or less in participating corporate credit unions that are made before Sept. 30, 2010.

CUs post 1.1B in returns in first quarter reports NCUA

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ALEXANDRIA, Va. (6/3/10)--In its recent analysis of the first quarter call reports of all 7,498 federally insured credit unions, the National Credit Union Administration (NCUA) reported credit union net income “posted a positive return of $1.1 billion, with a return on average assets ratio of 0.47%.” Total assets rose by 5.86% during the quarter, which ended on March 31. The NCUA report, which was released on June 2, also noted a 4.68% increase in credit union net worth and a 1.35% rise in total credit union membership. Investments, cash and cash equivalents also increased to a total of $290.1 billion during the quarter, a 28.61% rise from the previously reported amount. Total shares in credit unions increased by nearly 11%, but the NCUA noted that slowed loan growth, when combined with this total share increase, resulted in a decline in credit union loan to share ratios. The NCUA noted that credit unions are “challenged by a declining demand for loans across the board.” The NCUA reported a loan-to-share ratio of 73.16% as of March 31, down from the 76.06% reported in 2009. In an NCUA release, Chairman Debbie Matz said that while “some of the short-term numbers are moving in the right direction,” credit unions “still have a long way to go before overcoming all of the residual issues from the economic downturn of the past two years.” The NCUA is “working diligently to ensure that credit unions maintain strong balance sheets so that they can continue to serve members well through the economic recovery and beyond,” Matz added. For the NCUA release, use the resource link.

Interchange battle receives national local coverage

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WASHINGTON (6/3/10)—National online publication The Motley Fool recently backed up credit union claims regarding pending interchange legislation, saying in an editorial that while it seems like “what's bad news for the banks” would be good news for consumers, “it's far from clear whether ordinary consumers will benefit at all from the legislation.” “For the most part, customers have never seen the direct impact of interchange fees,” the story said, adding that those same customers “may never see any direct benefit from new limits” on interchange fees. Retailers have argued that reducing interchange fee expenses would allow them to pass on savings to consumers, but, as the story notes, “if the changes are extended to credit card interchange fees, then some consumers could actually end up being worse off.” “With another source of revenue under attack, it's even more likely that customers will face annual fees and other direct costs to offset lost interchange fee income,” the story added. A more local perspective on the interchange fight was provided by the Dayton Business Journal, which noted that credit unions depend on interchange income to offset the costs of offering a debit card system to their members. The story focused on the efforts of Ohio-based Wright-Patt CU and Day Air CU and also cited Ohio Credit Union League claims that “debit cards issued by credit unions not complying with the rate enacted by the Fed could be turned down by retailers at the point of purchase, giving merchants the authority to discriminate against certain cards.” The Credit Union National Association (CUNA) has called on credit union members, employees and supporters nationwide to urge their legislators to oppose changes to the current interchange fee structure. CUNA is backing grassroots actions, and has also met with the U.S. Treasury this week to outline credit union concerns regarding the current interchange fee legislation.