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Inside Washington (06/27/2008)

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* WASHINGTON (6/30/08)--Regulators unveiled a standardized version of Basel II for financial institutions that would implement certain approaches for calculating risk-based capital requirements. The framework addresses expanding the number of risk-weight categories to which credit exposures may be assigned; using loan-to-value ratios to risk weight most residential mortgages to enhance the risk sensitivity of the capital requirement; providing a capital charge for operational risk using the Basic Indicator Approach under the international Basel II capital accord; emphasizing the importance of a bank’s assessment of its overall risk profile and capital adequacy; and providing for comprehensive disclosure requirements to complement the minimum capital requirements and supervisory process through market discipline. The rule also would expand risk categories for most financial institutions to 16 from five. Community bankers argue the rule would give larger bankers a competitive advantage over smaller ones because operational risk would be tied to capital levels (American Banker June 27). The Federal Reserve Board is seeking public comment on the rule for 90 days. The National Credit Union Administration has based its credit union prompt corrective action reform proposal on aspects of Basel reform ... * WASHINGTON (6/30/08)--Sen. Charles Schumer (D-N.Y.) is requesting information on IndyMac Bancorp from the Federal Home Loan Bank of San Francisco, the Office of Thrift Supervision and the Federal Housing Finance Board. Schumer is concerned about the company’s loan holdings (American Banker June 27). The senator wants to know if the Federal Deposit Insurance Corp. has verified that the company’s loans meet regulatory guidelines, and whether the FDIC has asked IndyMac to scale down its reliance on brokered deposits. Regulators also may not be ready to prevent a potential IndyMac collapse, he said. Indymac was downgraded by Moody’s Investors Service Tuesday ... * WASHINGTON (6/30/08)--Though she wants a provision for higher conforming loan limits for Fannie Mae and Freddie Mac included in a housing bill, Speaker of the House Nancy Pelosi (D-Calif.) said she will support the measure if House Financial Services Committee Chairman Barney Frank (D-Mass.) gives his approval. The Senate is not expected to accept the higher loan limits in the housing package, though Frank said the higher limits could help the economy. The legislation can and must be approved before the August recess, Frank said. Originally, the bill was expected to pass before July 4. Frank and Senate Banking Committee Chairman Christopher Dodd (D-Conn.) are expected to discuss the bill next week ... * WASHINGTON (6/30/08)--The Community Development Financial Institutions (CDFI) Fund is extending deadlines for the Notice of Award for the 2008 Native American CDFI Assistance program to July 7, and the Community Investment Impact System reporting deadline for the period ending Dec. 31, 2007, to July 11. The CDFI’s public website experienced technical difficulties June 20 and was taken down. It has been restored ...

Compliance Is the ubiquitous rate board required

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WASHINGTON (6/27/08)—Many credit unions—and financial institutions in general—feature lobby display boards for selected loan or account rates. But is there a rule that requires that kind of public display? The Credit Union National Association’s June Compliance Challenge asks readers to consider: Is the rate board required by either Regulation Z or Truth in Savings? The answer is no. Neither Regulation Z nor Truth in Savings requires a federal credit union to maintain a lobby rate board and post loan and share account rates. In fact, neither regulation requires any specific form of advertisement nor do they require a credit union to advertise at all, CUNA’s compliance experts note. According to the Challenge, once a credit union decides to advertise its products, it must comply with the requirements of Regulation Z if it is advertising a loan product or Truth in Savings if it is advertising a share account product. Credit unions should be aware that both Regulation Z and Truth in Savings define advertisements very broadly. Examples include:
* Messages in a newspaper, magazine, leaflet, promotional flyer, or catalog. Announcements on radio, television, or public address system; * On-line messages, such as on the Internet; * Direct mail literature or other printed material on any exterior or interior sign; * Point-of-sale displays; * Telephone solicitations; * Price tags that contain credit information; * Letters sent to customers as part of an organized solicitation of business; * Messages on checking account statements offering auto loans at a stated annual percentage rate; * Communications promoting a new open-end plan or closed-end transaction.
Use the resource link below to read more on this and other compliance guidance.

CDRLF CDFI funding approved by committee

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WASHINGTON (6/30/08)—The House Appropriations Committee approved a slight boost last week for a program that provides money for low-income credit unions and another that provides grants, loans and technical assistance to community development credit unions, banks, and other local financial entities committed to helping disadvantaged communities. By approving a FY2009 funding bill, the committee gave the nod to a small increase for the U.S. Treasury Department's Community Development Financial Institutions (CDFI) Fund for FY2009. The committee voted in favor of a $10 million increase to $104 million for FY 2009. The CDFI Fund provides grants, loans and technical assistance to community development credit unions, banks, housing investment funds and other local financial entities committed to helping disadvantaged communities. It is also expected that the committee backed $1 million to fund the National Credit Union Administration's Community Development Revolving Loan Fund (CDRLF), as approved earlier this month by its subcommittee, but that detail has not been released. That would be a slight increase, up from $975,000 this year. The CDRLF provides grants and loans to low-income credit unions to help underserved communities. It also gave the nod to a small increase for the U.S. Treasury Department's Community Development Financial Institutions (CDFI) Fund for FY2009. The committee voted in favor of a $10 million increase to $104 million for FY 2009. The CDFI Fund provides grants, loans and technical assistance to community development credit unions, banks, housing investment funds and other local financial entities committed to helping disadvantaged communities. Also falling under the committee’s comprehensive Treasury Department funding measure was $880 million approved for the Small Business Administration, including $100 million for regional development centers, $100 million for loan guarantees, and $22.5 million for direct loans and technical assistance. The $880 million is $311 million above the 2008 level and $222 million above the President’s request. The funding measure still must be approved by the full House and Senate. Both houses of Congress adjourned last week for a July 4 District Work Session. Congress is scheduled to resume session the week of July 7.

Fryzel notes priorities for NCUA board

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Click to view larger image NCUA Board nominee Michael Fryzel before his June 3 Senate Banking Committee hearing on Capitol Hill. (Photo provided by CUNA)
WASHINGTON (6/30/08)--The U.S. Senate confirmed Michael Fryzel Friday to replace JoAnn Johnson on the National Credit Union Administration (NCUA) board. President George W. Bush said he would name Fryzel chairman of the three-seat board. In a statement released by the NCUA shortly after the Senate’s action, Fryzel said, “As with the President’s decision to nominate me to the board of the National Credit Union Administration and confer the high honor of Chairman, I am deeply honored by my U.S. Senate’s confirmation. “In preparing to assume office, I want to reiterate the priorities stated during my recent Senate Banking hearing: vigilant and thorough supervision, emphasis on safety and soundness, and dedication to protecting the consumer. The credit union industry, now entering its second century, has proven itself valuable to America’s consumers and as such has a right to expect fair, consistent, common-sense regulation. It is my commitment to conduct my chairmanship in that manner.” Credit Union National Association (CUNA) President/CEO Dan Mica congratulated Fryzel after the Senate vote. "With his background in credit union law and regulation, he has a number of tools to draw upon during his tenure with the agency," said Mica. "We look forward to working with him to keep credit unions safe, strong and essential to their members." Fryzel was with the Illinois Department of Financial Institutions from 1977 to 1989 and headed the agency from 1982 to 1989. Upon leaving that position, Fryzel founded his private law practice, the Law Offices of Michael Fryzel, which specializes in financial regulatory and real estate law. At his nomination hearing before the committee early this month, Fryzel noted consumers not only place their money in credit unions, they also place their trust. Exiting chairman Johnson, who agreed to stay in the head position after her term ended last August, congratulated Fryzel on his confirmation. She said she ready stands to assist the new board member during his transition and eagerly anticipates her return to “my family, and my roots, in Iowa.”

NEW Senate confirms Fryzel for NCUA board

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Click to view larger image NCUA Board nominee Michael Fryzel before his June 3 Senate Banking Committee hearing on Capitol Hill. (Photo provided by CUNA)
WASHINGTON (6/27/08, UPDATED 1:45 p.m. ET)--The U.S. Senate today confirmed Michael Fryzel to replace JoAnn Johnson on the NCUA board. President George W. Bush said he would name Fryzel chairman of the three-seat board. CUNA President/CEO Dan Mica congratulated Fryzel after the Senate vote. “With his background in credit union law and regulation, he has a number of tools to draw upon during his tenure with the agency,” said Mica. “We look forward to working with him to keep credit unions safe, strong and essential to their members.” Fryzel was with the Illinois Department of Financial Institutions from 1977 to 1989 and headed the agency from 1982 to 1989. Upon leaving that position, Fryzel founded his private law practice, the Law Offices of Michael Fryzel, which specializes in financial regulatory and real estate law. At his nomination hearing before the committee early this month, Fryzel said his priority as a federal regulator would be oversight of the safety and soundness of credit unions. He said consumers not only place their money in credit unions, they also place their trust.