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Risk retention comment deadline extended to Aug. 1

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WASHINGTON (6/8/11)--Comments on a joint federal agency proposal that aims to address abuses in the mortgage lending market by altering risk retention requirements will now be accepted until August 1. The previous deadline for comment on the risk retention provisions, which are required by the Dodd-Frank Wall Street Reform Act, was June 10. The Federal Deposit Insurance Corp., the Securities and Exchange Commission, the Office of the Comptroller of the Currency, the Federal Reserve, the Department of Housing and Urban Development, and the Federal Housing Finance Agency (FHFA) in a joint release said that the additional time was allotted to allow commenters more time to analyze the proposal and prepare their comments. The proposed rule, which was released in March, would require loan securitizers to retain a 5% economic interest in a material portion of the credit risk for any asset that they transfer, sell, or convey to a third party. Loan originators would generally be exempt from the credit risk retention requirements as long as they contribute less than 20% of the loans or other collateral to a given pool of asset-backed securities. The majority of credit unions would likely be exempted under this threshold. If the credit union’s or other mortgage originator's loans make up 20% or more of a pool of asset-backed securities, the originator would then be required to take on a portion of the loan securitizer's risk retention requirement in the same percentage amount as its contributions to the asset pool. Qualified residential mortgages and U.S. government-guaranteed mortgages, such as FHFA and Veterans Administration mortgages, would be exempt from all risk-retention requirements, and government-sponsored entities Fannie Mae and Freddie Mac would also be exempt from the securitzer risk-retention requirements for as long as those entities are held under government conservatorship. CUNA has said that while credit unions did not participate in the types of abusive practices that the rule seeks to address, it is concerned that credit union mortgage lending will be impacted by these rules and standards that develop in the marketplace. For the joint agency release, use the resource link.

CUNA to Senate Support amended interchange delay

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WASHINGTON (6/8/11)--The Credit Union National Association (CUNA) has urged senators that when a scheduled vote comes up at 2 p.m. (ET) today to vote in support of a revised delay provision for the debit interchange fee cap rules. The revised legislation, which was introduced by Sens. Jon Tester (D-Mont.) and Bob Corker (R-Tenn.) yesterday, would shorten the implementation delay to a maximum of one year. CUNA President/CEO Bill Cheney on Tuesday said that the amendment presents “a fair approach” to the interchange fee cap issue and “ensures that small issuer and consumer impact is taken into consideration when the [Fed] regulates debit interchange fees." Under the delay proposal, the Federal Reserve, the National Credit Union Administration, the Federal Deposit Insurance Corp., and the Office of the Comptroller of the Currency would be given six months to determine whether or not the Fed's current proposal accounts for all fixed and incremental costs to financial institutions, whether the proposed debit interchange cap would adversely impact consumers, and if a small issuer exemption would work as planned. The Fed would then be given six months to rework the interchange rules if the Fed and one of these other regulators determine that the rule needs revision. The current rules would be implemented as planned if no issues are detected by the study. The Fed would be required to review its interchange regulations within two years of their implementation. The amended legislation has bipartisan support, with Sen. Mike Crapo (R-Idaho), who voted in favor of the Durbin amendment, among its cosponsors. Sens. Kay Hagan (D-N.C.), Tom Carper (D-Del.), Roy Blunt (R-Mo.), John Kyl (R-Ariz.), Chris Coons (D-Del.) and Michael Bennet (D-Colo.) are among the cosponsors of the amendment, and Senate Banking Committee Chairman Tim Johnson (D-S.D.) also said he would support Tester's amendment in a Tuesday release. The is being offered as an amendment to a bill to reauthorize the Economic Development Administration (EDA), and Sen. Majority Leader Harry Reid (D-Nev.) on Tuesday said a vote on the amendment would take place early this afternoon. The amendment will need 60 yes votes to be added to the EDA reauthorization bill. For the full CUNA letter, use the resource link.

NCUA issues CandD order to Phillys Borinquen FCU

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ALEXANDRIA, Va. (6/8/11)—Borinquen FCU of Philadelphia has agreed to a National Credit Union Administration (NCUA)-issued cease and desist order. The NCUA notice, which was released to the public by the agency on Tuesday, orders the 8,600 member, Philadelphia, Penn.-based credit union to:
* Obtain an opinion audit and member account verifications from a certified public accountant; * Reconcile its cash and bank accounts; and * Establish a Bank Secrecy Act compliance program by June 30.
The NCUA noted that the credit union has had “serious and persistent record keeping problems” and had failed to perform yearly audits. For an NCUA release on the order, use the resource link.

Inside Washington (06/07/2011)

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* WASHINGTON (6/8/11)--U.S. Treasury Secretary Timothy Geithner on Monday urged global regulators to keep pace with U.S. financial regulation reforms. Geithner, speaking before the International Monetary Conference in Atlanta, said the U.S. government seeks to reduce the risk that markets will move overseas to avoid stringent regulations. “We live in a global financial marketplace, with other financial centers competing to attract a greater share of future financial activity and profits,” Geithner said. “As we strengthen the protections we need in the U.S., we have to reduce the chance that risk just moves outside the U.S. Allowing that would not just weaken the relative strength of U.S. firms and markets, it would also leave the world economy vulnerable to future crises” … * WASHINGTON (6/8/11)--Nearly a year after the Dodd-Frank Act’s passage, more than two dozen of the legislation’s rule changes have fallen behind schedule (The New York Times June 7). Many of the rule changes have been resisted by Wall Street and Congress, and regulators have extended the comment periods on some proposals. With the delays, some mandates are in danger not being implemented before the next elections, which could give newly elected officials an avenue to back away from the overhaul, according to the Times. So far, 28 of Dodd-Frank’s deadlines have been missed, according to Davis Polk, a law firm that tracks the rules. Of the 385 new rules to be written, 24 requirements have been completed--41 such actions were scheduled for completion by now … * WASHINGTON (6/8/11)--Nobel laureate Peter Diamond, President Barack Obama’s three-time nominee for the Federal Reserve’s board of governors, has withdrawn his nomination because of Republican opposition. Diamond, a professor at the Massachusetts Institute of Technology, made the announcement in an opinion-page article in The New York Times on Monday. In the article, Diamond criticized the bipartisan nature of the confirmation process in which his credentials were questioned. “We need to preserve the independence of the Fed from efforts to politicize monetary policy and to limit the Fed’s ability to regulate financial firms,” Diamond wrote …

NEW Amended interchange delay bill introduced

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WASHINGTON (UPDATED: 4:00 P.M. ET, 6/7/11)--Sens. Jon Tester (D-Mont.) and Bob Corker (R-Tenn.) have introduced a revised version of their debit interchange fee cap implementation delay legislation. The revised legislation, which is being offered as an amendment to a bill to reauthorize the Economic Development Administration (EDA), would shorten the implementation delay to a maximum of one year. The EDA reauthorization bill was still being discussed on the Senate floor at press time. The Federal Reserve, the National Credit Union Administration, the Federal Deposit Insurance Corp., and the Office of the Comptroller of the Currency would be given six months to determine whether or not the Fed’s current proposal accounts for all fixed and incremental costs to financial institutions, whether the proposed debit interchange cap would adversely impact consumers, and if a small issuer exemption would work as planned. The Fed would then be given six months to rework the interchange rules if the Fed and one of these other regulators determine that the rule needs revision. The current rules would be implemented as planned if no issues are detected by the study. The Fed would be required to review its interchange regulations within two years of their implementation. The Credit Union National Association followed up on the release of the legislation by urging Senators to support the proposed delay, calling the measure a “common sense” approach to the issues surrounding the interchange cap. The amended legislation has bipartisan support, with Sen. Mike Crapo (R-Idaho), who voted in favor of the Durbin amendment, among its cosponsors. It is not expected that a vote on the revised interchange delay amendment will take place today.