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Cheney YouTube video urges interchange delay action

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WASHINGTON (6/6/11)--A new YouTube video posted by Credit Union National Association (CUNA) President/CEO Bill Cheney points to the massive data breach at Michaels stores as a prime example of why credit union members should urge Congress to delay the pending debit card interchange rules. Otherwise, Cheney said, credit unions will be left “holding the bag” when these breaches occur. Michaels, a nationwide big-box craft store, last month notified customers of data breaches that occurred throughout the country. Following these types of breaches, all merchants must do is notify affected customers. Credit unions and other financial institutions are ultimately required to gather additional information on the breach, reissue cards, cover transaction costs, refund funds to victims of fraud, and among other things, Cheney noted. Cheney also noted that while customers will likely have their debit cards reissued, at no cost, as a result, credit unions and other financial institutions, and not the retailer, will pay for the new cards. The Federal Reserve Board's proposed interchange regulations could limit debit card transaction fees to as little as seven to 12 cents per transaction. A proposed exemption for issuers with under $10 billion in assets is included in the proposal, but CUNA, leagues and credit unions have been emphasizing that the exemption is flawed and will not work in practice. Sens. Jon Tester (D-Mont.) and Bob Corker's (R-Tenn.) S. 575 would delay implementation of the debit interchange provisions by 15 months. A study of their impact on consumers, credit unions and other financial institutions, and merchants would also be ordered. Similar legislation has been offered in the House, but House members have said that they would wait for the Senate to act first on the interchange issue, since that legislation was first offered in the Senate. National Journal on Friday reported that a vote on this bill could come up for a vote in the U.S. Senate this week. Sixty votes are needed to approve the delay. CUNA, the leagues, and credit unions have been active ahead of a potential vote, with over 200,000 of them reaching out to email their legislators through CUNA's CapWiz program.

CUNA Reg CC changes could spike compliance costs

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WASHINGTON (6/6/11)—A Federal Reserve proposal to amend Regulation CC to increase next business day availability and encourage electronic check processing and returns “would substantially increase fraud-related and compliance costs if adopted,” the Credit Union National Association (CUNA) said in a Friday comment letter. CUNA is concerned by several aspects of the Fed proposal, which aims to facilitate the development of a fully-electronic check system. The proposal implements portions of the Dodd-Frank Act that increase next business day availability. Credit unions would need to make these changes by July 21. CUNA criticized portions of the proposal that would shorten the reasonable additional hold extension from 5 to 2 business days for most checks, saying that this decrease in time would likely increase check fraud risk and loss exposure for credit unions. Increased instances of fraud are also a risk presented by portions of the amendments that would force credit unions and other financial institutions to increase to $200 the amount of deposited funds that will be made available for next business day availability. CUNA said that increasing this threshold is consistent with Dodd-Frank Act requirements, but noted that the change could increase the amount of funds that are lost due to check fraud. The Fed’s requirement that expeditious check returns only be provided to institutions that receive returned checks electronically was also questioned, with CUNA noting that many smaller institutions “disproportionately rely on paper returns” and “have fewer resources to manage fraud risk and exposure.” CUNA did, however, support the proposed elimination of references to nonlocal checks as well as keeping case-by-case holds. For the full comment letter, use the resource link.

Inside Washington (06/03/2011)

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* WASHINGTON (6/6/11)--A letter signed by 89 House Democrats urging President Barack Obama to name Elizabeth Warren director of the Consumer Financial Protection Bureau by recess appointment, if necessary. was sent to the White House Thursday. The letter outlines threats by Republicans to hold up any nominee unless the bureau is drastically scaled back, leaving the president no choice other than making a recess appointment for the post. “Since you appointed Professor Warren to ‘stand up’ the bureau, she has laid the foundation as a strong advocate for consumers--something that seems to strike fear among those who are opposed to reform,” the letter states. “Regretfully, Republicans in the Senate have now made it clear that they oppose reform.” The letter was initiated by Rep. Carolyn Maloney (D-N.Y.), who led the effort to collect signatures … * ALEXANDRIA, Va. (6/6/11)--The National Credit Union Administration (NCUA) in a Friday release announced that it would post credit union comments on its proposed corporate credit union assessment prepayment plan. An NCUA representative told News Now that the agency initially decided to keep credit union comments private out of “concern that some comments might include sensitive business or financial information.” However, the agency has found that none of the comments it has received thus far contain sensitive information. The NCUA will begin releasing the comments to the public on June 10 … * WASHINGTON (6/6/11)--The Treasury Department on Thursday said it will begin selling off Small Business Administration (SBA) securities it acquired as part of the Troubled Asset Relief Program (TARP). Treasury originally invested in 31 SBA 7(a) securities with a value of roughly $368 million. The securities comprised 1,001 loans from 17 different industries. EARNEST Partners, which has acted as Treasury’s financial agent for the SBA 7(a) securities portfolio, will execute the securities disposition on behalf of Treasury …