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Inside Washington (06/23/2009)

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* WASHINGTON (6/24/09)--The Federal Deposit Insurance Corp. (FDIC) has proposed extending coverage for non interest-bearing deposits, according to an FDIC financial institution letter released Tuesday. The FDIC proposed several options for the future of the Transaction Account Guarantee (TAG) program, which is a component of the FDIC’s Temporary Liquidity Guarantee Program. One option is extending TAG to June 30, 2010, with an increase in annual fees from 10 basis points to 25 basis points during the extension period. The agency also proposed allowing an insured depository institution (IDI) participating in TAG to opt out of the extension by Oct. 31. IDIs that choose this option would notify their customers that as of Jan. 1, deposits in qualifying non interest-bearing transaction accounts would not be covered by the FDIC beyond standard deposit insurance limits. A third alternative would result in no change to FDIC’s current regulation, and the FDIC’s guarantee for deposits held in qualifying non interest-bearing transaction accounts would expire Dec. 31 ...

iNY Timesi op-ed touts CU credit cards

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WASHINGTON (6/24/09)--Though many traditional banks have chafed at recent changes to credit card regulations, saying that they are too restrictive and would ultimately hurt consumers, a New York Times op-ed said that these fears are “largely unfounded,” as credit unions have long been able to turn a profit under these same conditions without charging high fees and/or penalties to their members. In the op-ed, published on Tuesday, the writers said that recent studies found that credit union credit cards generally offered “lower annual fees and longer grace periods” than cards from traditional banks. “Credit union fees for exceeding the credit limit are on average just half those of other issuers,” the op-ed added. Additionally, the study found that very few credit unions raise interest rates if a credit union member fails to pay their credit card payment on time. Kiplinger.com also praised credit union cards in a recently published feature, recommending that customers that are looking for a “hardworking portfolio of credit cards” look to credit unions and community banks for their consumer loans. The op-ed also sought to dispel the belief that the corporate income tax exemption for federal credit unions gave them a substantial edge when competing with bank-managed credit accounts, saying that credit union lending practices meant that they would still “make profits” if they were taxed, “they would just retain less of them.” Overall, according to the op-ed, the consumer loan model that is used by credit unions is “absolutely” feasible for traditional banks, and “credit union cards are a great test case for how regular cards will perform under the new law.” Additionally, the evidence collected shows that “the credit card act is likely to bring about moderate, and even positive, changes” in credit card policies.

Fannie Freddie 1st quarter loan mods jump

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WASHINGTON (6/24/09)—Loan modifications for the first quarter of 2009 were up 50% at Fannie Mae and Freddie Mac, according to the Federal Housing Finance Agency (FHFA), which regulates the government-sponsored enterprises (GSEs). The first quarter results were too early in the year to reflect the Obama administration's loan modification program, the Home Affordable Modification, which was still in development in March. Fannie and Freddie both have significant roles in the administration plan. Of the 50% increase in modifications, FHFA Director James Lockhart said, “The use of serious loan modifications by Fannie Mae and Freddie Mac has risen dramatically. As a result, more homeowners are seeing payments significantly reduced and fewer people will lose their homes.” The following were among the agency’s reported findings, as of March 31, regarding the GSEs’ 30 million residential mortgages:
* Modifications represented 43% of all completed foreclosure prevention actions in the first quarter of 2009, up from 33% in the prior quarter; * Modifications with more than 20% reduction in monthly payments rose from 2% in the first quarter of last year to 52% in the first quarter of this year; * Approximately 87,000 actions were completed actions to prevent foreclosure- including modifications, forbearance, repayment plans and other measures. That represented about a 20% over-quarter increase and about a doubling from the year earlier; * Home retention actions – actions that result in a borrower keeping his or her home – accounted for 90% of these actions completed during the first quarter consistent with the proportions of foreclosure prevention actions completed over the past year; and * The percentage of Enterprises’ mortgage loans that were at least two payments past due (60-plus-days delinquent) was 3.6%, which the FHFA compared to 6.1 % for VA loans, 10.2% for FHA loans and 9.2% for the industry average.

House holds hearing on consumer protections

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WASHINGTON (6/24/09)--Rep. William Delahunt (D-Mass.) will join a number of academics and industry insiders when he testifies at a House Financial Services Committee hearing on consumer protection today. The hearing, entitled “Regulatory Restructuring: Enhancing Consumer Financial Products Regulation,” will be the first of many upcoming hearings to address the Obama Administration’s financial regulatory restructuring proposal. The hearing is set to begin at 10 a.m. in the Rayburn House Office Building. Delahunt will testify alone during the opening panel discussion, with two grouped discussion panels to follow. The committee will take up further discussion of financial regulatory reform both this week and following the July 4 district work period, with hearings on the Federal Reserve and derivatives among the scheduled topics. The House Financial Services Committee’s subcommittee on financial institutions and consumer credit will discuss the role that financial literacy could play in the proposed Consumer Financial Protection Agency at a Thursday hearing. Topics covered by this discussion will also include how “transparent, consumer friendly products” can be implemented by the new regulatory agency. In statements accompanying a release on the subcommittee's hearing, subcommittee chair Rep. Luis V. Gutierrez (D-Ill.) said that financial literacy is “vital” to consumers, adding that consumers cannot stop worrying about fraudulent or misleading business practices “just because Congress has outlawed some of the most predatory mortgage and credit card practices.” The Financial Services Committee is expected to begin its markup of legislation in late July, which could be presented to the full House of Representatives beginning in September. For the full witness list, use the resource link.

NCUA covers corporate CU concerns in letter webinar

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ALEXANDRIA, Va. (6/24/09)--In the "first of many communications" with stakeholders, the National Credit Union Administration (NCUA) in a letter published on Tuesday outlined the "benefits and requirements" of its recently enacted corporate credit union stabilization fund. The letter also described "the actions taken to implement the legislation" and summarized how those actions will affect the National Credit Union Share Insurance Fund capitalization deposit and future premium assessments. The NCUA will publicly answer questions related to this letter in July. The content of the letter will also be discussed in greater detail during the NCUA's interactive seminar on the corporate credit union stabilization plan, which begins today at 1 p.m. Registration for credit union representatives that still wish to participate will remain open until 12:45 p.m. NCUA Examination and Insurance Director Melinda Love and Office of Corporate Credit Union official Scott Hunt will moderate the two hour webinar, which is expected to include discussion of recent board decisions related to the creation of the temporary corporate credit union stabilization fund. The NCUA staff will also discuss the possible impact that this fund could have on credit unions, and give a general update on the status of corporate credit unions. Audience members will also have an opportunity to have their questions directly answered by NCUA staff. The Credit Union National Association will also stream the webinar live for all attendees of the America's Credit Union Conference & Expo, which ends today. A registration link and a link to the NCUA letter can be found at the bottom of the page.