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Inside Washington (06/23/2011)

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* WASHINGTON (6/24/11)--The National Credit Union Administration (NCUA) has introduced two new online communication systems. NCUA Express is a voluntary electronic notification system that allows subscribers to receive email or RSS feed announcements anytime something gets posted to the NCUA website. NCUA Express subscribers can now customize and manage their announcement list to receive specific types of notifications. With the changes announced Thursday, anyone interested in credit union issues may register to receive updates about NCUA’s activities. New subscribers to NCUA Express can sign up online. Existing NCUA Express users will automatically be ported over within the next few weeks to the new platform, so no further action is required from current subscribers. NCUA Dispatch, a new e-mail notification service, will electronically blast notices to credit unions’ and state regulators’ official e-mail accounts. NCUA Dispatch will eventually replace most paper mailings. There is no need to sign up for the NCUA Dispatch service, as it will go to the intended audience as necessary … * WASHINGTON (6/24/11)--Three U.S. Senate Democrats have publicly called for the Obama administration to replace Acting Comptroller of the Currency (OCC) John Walsh, a Republican, after Walsh said regulators are in danger of going too far to stop risk-taking by big banks. Jack Reed (D-R.I.), Carl Levin (D-Mich.) and Jeff Merkley (D-Ore.) are upset about Walsh’s statements that bank capital requirements are too high and that regulators should be cautious about how much more they require the largest banks to hold, an issue foreign and U.S. regulators are currently negotiating (The Wall Street Journal June 23). “Mr. Walsh’s suggestions that capital requirements should be reduced are counter to what every other regulator has told us,” Reed said in a statement. “Just last week, staff from the OCC told the Senate subcommittee on financial institutions and consumer protection that the ‘financial crisis underscored the importance of strong capital cushions’ and that the OCC was working to ‘strengthen capital and liquidity standards.’” Walsh became the OCC’s interim head last August when John Dugan completed his five-year term …

NCUA to vote on prepay plan next week

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ALEXANDRIA, Va. (6/24/11)--The National Credit Union Adminstration (NCUA) has announced a special open meeting for next Wednesday, June 29, to consider its plan to allow credit unions, on a voluntary basis, to prepay their Corporate Stabilization Fund assessment. The NCUA proposed the prepayment plan at its May open board meeting and the public comment period ended June 20. CUNA has anticipated that, if the plan is approved, the NCUA will likely give credit union approximately 40 days after that to tell the agency whether or not they will commit any funds to the plan. CUNA has made recommendations to improve the complex prepayment plan, but has said overall it could help reduce credit unions' assessment for 2011 substantially, depending on credit unions' participation, and it would help even out assessments for subsequent years. Also expected on Wednesday: The Federal Reserve Board has said it will vote on a final rule to set a debit card interchange fee cap that day. Use the resource link to read CUNA's comment letter.

CFPB to meet on larger participant definition

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WASHINGTON (6/24/11)--The Consumer Financial Protection Bureau (CFPB) has announced it will meet with stakeholders July 8 to work on a definition of what non-depository institution “larger participants” in the financial services market should fall under the bureau’s purview. With its 90-minute meeting, to begin at 8:30 a.m. (ET), the CFPB intends to gather information on setting the parameters of it’s regulation of non-bank/non-credit union financial entities--and identifying what types of entities should be subject to CFPB examination. The Credit Union National Association (CUNA) will participate in those discussions. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB is authorized to supervise all sizes of nonbank payday lenders, private student lenders, and mortgage companies. For other nonbank markets for consumer financial products and services, the Act generally provides authority to supervise “a larger participant”, and requires the CFPB to define such “larger participants.” Dodd-Frank requires that the CFPB issue an initial rule on this subject no later than July 21, 2012, one year after the designated transfer date. Use the resource link below for more information on nonbank participants found on the CFPB website.

TCF wants court to demand Fed interchange rule now

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WASHINGTON (6/24/11)--Disagreeing with the Federal Reserve Board, TCF Bank told a federal court this week that the particulars of a final rule to set a debit card interchange fee cap do matter in the bank’s case to stop the cap, and the bank asked a federal judge to make the Fed hand over the rule even before it is issued for public comment on June 29. TCF Bank, of Minnesota, has sued to stop the Fed from implementing the fee cap that was ordered by the Dodd-Frank Wall Street Reform Act. The bank has argued, in part, that it is unconstitutional for the government to require a business to charge below-cost rates that negatively impact business. The interchange statute excludes certain costs, which makes it an unusual and therefore unconstitutional regulation, TCF maintains. Oral arguments in the case, known as TCF National Bank v. Bernanke ( No. 11-1805), were heard June 16. Since that time the Fed notified the U.S. Court of Appeals for the Eighth Circuit that it would release its final rule on June 29. However, that release, the Fed said, “should not affect the court’s disposition” of this case. TCF then shot off its own letter to the court. The bank agreed the court could rule on its pending appeal in the absence of a final rule. However, TCF attorney Timothy Kelly wrote, the Fed’s rule is very much an issue. He disputed the Fed’s claim that TCF's challenge to the statute "does not implicate the regulation." “For example, the final regulation is relevant to TCF's contention that the language of the Durbin Amendment does not permit the Board of Governors to issue an interchange rate that is non-confiscatory,” Kelly said. TCF did not ask to view an advance copy of the Fed rule, only that the court be supplied with it in confidentiality. The Credit Union National Association, the Clearing House Association LLC, American Bankers Association, Consumer Bankers Association, The Financial Services Roundtable, Independent Community Bankers of America, Midsize Bank Coalition of America, and the National Association of Federal Credit Unions have earlier filed an amicus brief in support of some aspects of TCF's arguments against the interchange statute.

CUNA to testify in Senate Tuesday on housing reform

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WASHINGTON (6/24/11)--Rod Staatz, a member of the Credit Union National Association’s board of directors and its GSE Reform Task Force, is scheduled to testify next week at a Senate Banking Committee hearing on housing finance reform. Staatz, who is president/CEO of SECU of Maryland, in part will
Click to view larger image SECU of Maryland CEO Rod Staatz has been tapped to testify in the Senate next week on housing finance reform. In this photo, Staatz is shown testifying before a House panel on issues surrounding the Consumer Financial Protection Bureau. Staatz urged that credit unions, and the pro-consumer products they provide, should be exempt from any onerous rules the bureau might create. (CUNA Photo).
discuss credit union access to the secondary market for housing loans. Housing finance reform has been identified as an Obama administration priority, and the U.S. Congress has been studying the issue through hearings as well. CUNA has told the Obama administration that the needs of credit unions and other small mortgage lenders must be considered as the country moves forward on needed reforms. Earlier this year, the administration released a report on a tri-level plan for the future of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, both of which are operating under government conservatorships. One proposal would almost completely privatize the housing finance system, limiting the government's role to assisting low-income and veteran homebuyers. The report notes that smaller lenders could have a difficult time competing under such a system. Another proposal would create a system through which the government would back mortgages only in times of financial distress. Low-income individuals and military veterans would still be offered assistance under this structure. The government could also use a system of reinsurance to backstop private mortgage guarantors to a targeted range of mortgages. The administration plan notes that this option provides the lowest cost mortgages, and would likely benefit smaller lenders. Use the resource link to see a list of other witnesses.

NEW NCUA to vote on prepay plan next week

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ALEXANDRIA, Va. (6/23/11 UPDATED 3:00 p.m. ET)--The National Credit Union Adminstration (NCUA) just announced a special open meeting for next Wednesday, June 29, to consider its plan to allow credit unions, on a voluntary basis, to prepay their Corporate Stabilization Fund assessment. The NCUA proposed the prepayment plan at its May open board meeting and the public comment period ended June 20. CUNA has anticipated that, if the plan is approved, the NCUA will likely give credit union approximately 40 days after that to tell the agency whether or not they will commit any funds to the plan. CUNA has made recommendations to improve the complex prepayment plan, but has said overall it could help reduce credit unions' assessment for 2011 substantially, depending on credit unions' participation, and it would help even out assessments for subsequent years. Also expected on Wednesday: The federal Reserve Board has said it will vote on a final rule to set a debit card interchange fee cap that day.