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Washington Archive

Washington

FHFA reports 1Q spike in mortgage mods refinancings

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WASHINGTON (6/23/10)--The Federal Housing Financing Agency (FHFA) on Tuesday reported that loan modifications and refinancings by Fannie Mae and Freddie Mac “increased significantly in the first quarter as the volume of permanent modifications under the Administration’s Home Affordable Modification Program (HAMP) tripled, and refinancings steadily grew under the Home Affordable Refinance Program (HARP).” In a release, the FHFA said that foreclosure prevention activities increased 75%, with HAMP permanent modifications totaling 136,000 and HARP cumulative refinance volume increasing 53% during the first quarter of 2010. A total of 66% of loan modifications that were completed in the final quarter of 2009 reduced the monthly payments of participating mortgage holders by over 20%, the FHFA added. An administration official earlier this year said that the HAMP program, which aims to help struggling homeowners by modifying their mortgages, is currently on course to modify as many as 4 million mortgages by 2012. A total of 17 credit unions took part in the HAMP program in 2009. For the full release, use the resource link.

FinCEN plan would place more cards under BSA

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WASHINGTON (6/23/10)—The Financial Crimes Enforcement Network (FinCEN) has added prepaid debit cards to the list of financial services covered by the Bank Secrecy Act (BSA). The proposed rule applies to non-bank/credit union providers of prepaid access. FinCEN Director James Freis said that the rule, which will apply to cards, cell phones, electronic serial numbers, key fobs, and other funding sources that have been paid for beforehand, would address “vulnerabilities in the current prepaid access environment while maintaining the flexibility to permit new developments in technology, markets and consumer behavior.” FinCEN in the release said that the changes aim to address “regulatory gaps” that have grown as prepaid financial services have increased and became more complex. “The ease with which prepaid access can be obtained, combined with the potential for relatively high velocity of money through accounts involving prepaid access and anonymous use, may make it particularly attractive to illicit actors,” the release added. FinCEN hopes to remedy these situations by altering some terminology and imposing registration, suspicious activity reporting, and recordkeeping requirements on prepaid financial service providers. FinCEN will exempt some low-risk forms of prepaid financial products from these requirements, however. For the full FinCEN release, use the resource link.

Senate conferees accept House option on interchange

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WASHINGTON (6/23/10)--The Credit Union National Association (CUNA) on Tuesday repeated its call for credit unions to oppose Congress’s final financial regulatory reform bill, as the House Senate lawmakers voted to accept a House proposal that retained portions of that bill that would modify current interchange practices. Following the late afternoon decision by the Senators, CUNA Senior Vice President of Legislative Affairs said that CUNA "opposes the big bill with interchange in it, not the concept of financial regulatory reform." The agreed-to version of interchange legislation would allow the federal government to impose controls on the fees paid to use electronic payment networks. While the proposal does currently exempt financial institutions with under $10 billion in assets from the terms of the legislation, CUNA and others have said that that carve out is unlikely to matter, as smaller issuers will likely be pushed aside by favorable deals between merchants and big issuers. CUNA has repeatedly stated that, among other things, altering the current interchange rules would result in an artificially low debit interchange rate that would force small issuers to recoup losses through other means. The interchange provisions as written would hurt consumers by driving up debit card fees, with no compensatory advantages to consumers, CUNA has said. CUNA and various state credit union leagues continued to make their case to legislators during Hill visits on Tuesday, and hundreds of credit union representatives, alsong with over 650,000 credit union backers, have contacted their legislators to voice their opposition to the interchange fee changes in recent weeks. Legislators are aiming to wrap up the financial regulatory reform conference committee by the end of this week. House Financial Services Chairman Barney Frank (D-Mass.) and Senate Banking Committee Chairman Chris Dodd (D-Conn.) on Tuesday disclosed that the committee will discuss prudential regulation on Wednesday, with limited debate on derivatives set to take place on Thursday. Legislative offers, counter-offers, as well as votes, will take place on those days as well. The committee this week agreed to legislation addressing thrifts, deposit insurance reforms, hedge funds, credit rating agencies, executive compensation, and investor protections, among other items.

Inside Washington (06/22/2010)

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* WASHINGTON (6/23/10)--Federal regulators are working to remedy flaws in the executive compensation practices of large banking companies, said American Banker (June 22). In a review of the top 25 financial firms, the Federal Reserve Board spotted multiple deficiencies in the pay practices. The Fed did not detail which banks had problems, but it said it sent notices to the firms last month with information about areas that needed attention. Financial observers said the notices may indicate firms have not updated their pay practices. However, Fed officials noted Monday that they expect some improvements soon. Many large banking organizations already have made some changes in their incentive compensation policies, said Fed Gov. Daniel Tarullo, though he said more work needs to be done. The Fed issued proposed guidance in October on proper executive pay practices and said it would review the practices at the largest firms to see how they had done ... * WASHINGTON (6/23/10)--The Treasury Department has hired 12 small firms to help Morgan Stanley assist the government’s sale of Citigroup Inc.’s common stock. Morgan Stanley is acting as a sales agent for Treasury (American Banker June 22). Treasury is working to unload $7.7 billion shares of Citi common shares ... * WASHINGTON (6/23/10)--The Senate confirmed Marie C. Johns, a longtime advocate for small businesses, on Tuesday as Deputy Administrator of the U.S. Small Business Administration (SBA). Johns will be the second-ranking official at SBA, with responsibility for management, policy development and program supervision. Johns is a managing member of L&L Consulting LLC, an organizational effectiveness and public policy consulting practice ...