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Inside Washington (06/22/2011)

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* WASHINGTON (6/23/11)--Financial services representatives told a Senate panel on Tuesday they would support a national standard for how financial institutions notify members and customers of a data breaches. The Obama administration released a proposed national standard May 12 (American Banker June 22). The White House proposal would make penalties for cyber-crimes more stringent by tying them to other laws, such as the Racketeering Influenced and Corrupt Organizations Act, which is often used to fight organized crime but doesn’t apply to cyber-crimes. Senate Banking Committee Chairman Tim Johnson also expressed support for more robust cyber lows, citing several high profile financial services data breaches. Citigroup Inc. was the most recent high-profile data breach. Citi disclosed a hacker had accessed customer information for more than 360,000 credit card accounts last month. Citigroup has been widely criticized for waiting nearly a month to go public with the news. The bank said it discovered the breach on May 10, but didn’t begin notifying customers until June 3. It initially said 200,000 cards were breached (News Now June 20.) … * WASHINGTON (6/23/11)--The first meeting of the Federal Deposit Insurance Corp. (FDIC) Advisory Committee on Systemic Resolution considered how best the agency can use its new powers to unwind a large, systemically important bank. Among the first concerns raised by the newly formed panel was convincing the market that regulators have the will to shut down “too big to fail” firms, preventing a resolution from creating panic within the banking system and using pre-drawn resolution plans with the details of the next crisis still to be determined (American Banker June 22). During the meeting, FDIC officials presented findings from a recent agency report on how it would have handled Lehman’s demise with the new powers. The report determined it could have recovered 97 cents on the dollar for creditors. But former Federal Reserve Board Chairman Paul Volcker asked the panel what if the Lehman failure created a ripple effect and other institutions began to fail en masse? Volcker said the FDIC would have to be prepared to exercise its authority at other institutions …

Financial Capability Council to meet July 12

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WASHINGTON (6/23/11)--The President's Advisory Council on Financial Capability, created by executive order in 2010 to work to increase the financial literacy of the American public, has slated its third meeting for July 12. It will be webcast starting at 2:30 p.m. (ET). The council will receive reports on the progress of its subcommittees on financial access, research and evaluation, partnerships, and youth, and will discuss any recommendations made in those areas. This third session follows the format of the council’s meeting earlier this year, on April 21. During the April, each council subcommittee presented a progress report and the recommendations it thought the council as a whole should make to the President and the Treasury secretary. At that time, the council agreed to forward two recommendations: That Treasury support the Workplace Leaders in Financial Educations Award, administered by the American Institute of Certified Public Accountants and the Society for Human Resources Management; and that the Treasury issue a challenge to the private sector to create applications for mobile devices that promote financial capability and financial access. Treasury is currently looking into how to implement those recommendations. Use the link below for details on how to access the audio webcast, which will be posted closer to the date of the meeting. (Click on Resource Center, then Office of Financial Education and Financial Access, and then on the President's Advisory Council on Financial Capability) or call (202) 622-5770.

Treasury seeks CUs to be iGo Directi Community Ambassadors

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WASHINGTON (6/23/11)--Credit unions and other financial institutions with fewer than 100 branches can now apply for Community Ambassador status for the U.S. Treasury Department’s direct deposit campaign, known as Go Direct. To be a Community Ambassador, a financial institution need only to fill out and submit an online commitment form stating that their financial institution commits to support the campaign--and then spread the message about direct deposit by completing campaign activities between June 20100 and January 2013. The Credit Union National Association (CUNA) is a Go Direct national partner and supports the safety and convenience goals of direct deposit. By promoting direct deposit for federal benefit payments, the Treasury’s Go Direct program notes, your financial institution will:
* Gain recognition from the U.S. Department of the Treasury; * Be part of the Treasury Department’s effort to pay all federal benefits electronically; * Help seniors, veterans and others make a smooth transition to direct deposit before the official deadline requiring all to receive benefits payments electronically; and * Retain current customers or members and potentially gain new ones.
Use resource links below for more information.

Lawmakers urge flexible mortgage QRM down payments

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WASHINGTON (6/23/11)--As federal regulators wrestle with setting the definition of a qualified residential mortgage (QRM)--which under the Dodd-Frank Wall Street Reform Act would be exempt from risk-retention rules--a bi-partisan group of U.S. House and Senate lawmakers urged regulators not to be rigid in setting the rules. At a press conference Wednesday, the lawmakers said a current proposal to require a 20% down payment for a loan to be defined as a QRM would “shut out responsible homebuyers and further cripple the housing market.” Dodd-Frank requires a lender to retain 5% of the credit risk for securitized loans, but allows QRMs to be exempted. A coalition of consumer, housing and business groups, including the Credit Union National Association, appeared on the podium with the House and Senate members to show support for a more flexible down payment requirement. The press conference was called by Sens. Johnny Isakson (R-Ga.), Kay Hagan ( D-N.C.), and Mary Landrieu ( D-La.), Reps. John Campbell ( R-Calif.), and Brad Sherman (D-Calif.). The lawmakers said the proposed 20% down payment required for a qualified residential mortgage would prevent too many borrowers from obtaining loans: It is unduly narrow and would necessarily increase consumer costs and reduce access to affordable credit. “Drawing on my experience over 30 years in the real estate business, I understand the devastating consequences this proposed rule would have on qualified, creditworthy homebuyers and our fragile housing market,” said Isakson told reporters. He added that the proposed rule does not follow legislative intent: “We don’t have a down payment problem in this country, but rather an underwriting problem. I strongly urge regulators to rework their overly rigid down payment requirement for QRM. If left as is, it would make recovery in the housing market almost impossible.” Earlier this month, a bipartisan group of 39 senators sent a letter urging regulators to expand the proposed exemption from risk-retention rules mandated by the Dodd-Frank Act, and also argued the proposed regulation goes beyond the intent and language of the statute by imposing unnecessarily tight down payment restrictions.

Changes at NCUA include GC Fenners retirement

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ALEXANDRIA. Va. (6/23/11)--After 30 years dedicated to service at the National Credit Union Administration (NCUA), Robert (Bob) Fenner has announced that he will retire from the agency on August 1. “Working with every administrator, chairman and board member in NCUA’s history, Bob Fenner has provided invaluable counsel and extraordinary leadership in building and guiding the agency’s legal framework, regulatory policy and ethics program since 1974,” said NCUA Chairman Debbie Matz of Fenner’s role at the agency. “Bob’s dedication, loyalty and reputation are unsurpassed. It is hard to imagine NCUA without him.” Credit Union National Association (CUNA) General Counsel Eric Richard, upon hearing the announcement, said of Fenner: "For more than three decades, Bob has been a devoted public servant who has played a vital in the regulation of credit unions. “He has seen many stages in the growth of credit unions in the United States and is widely respected around the movement. I am sure I speak for credit union lawyers around the country in wishing him every success in his future endeavors." Richard added that Fenner’s influence on NCUA legal matters has been significant. Fenner’s vacated post at the NCUA will be filled by current Deputy General Counsel Michael McKenna, who, Matz said, has the “intellect, creativity and leadership skills” needed to meet the challenges of the job. “He has big shoes to fill, but I am confident he will do so splendidly,” she said. CUNA’s Richard noted that CUNA looks forward to working with McKenna as credit unions continue to grapple with critical issues involving NCUA. Other senior personnel changes announced by the agency include:
* Melinda A. Love, director of the Office of Examination and Insurance (E&I), will replace Larry D. Fazio as NCUA’s deputy executive director until her retirement in December. Fazio has served as NCUA’s deputy executive director since May 2008; * Fazio will take over as director of E&I director; and * The Office of Capital Markets, directed by J. Owen Cole, Jr., will become a division of E&I.
The agency explained the realignment of the Office of Capital Markets, to become a third division within E&I, this way: The organizational change will better integrate all examination program activities within one office and facilitate the establishment of consistent national standards for credit unions.