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Inside Washington (07/16/2008)

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* WASHINGTON (7/17/08)--The Federal Deposit Insurance Corp. (FDIC) said Tuesday it will charge higher premiums to banks who rely on secured debt and advances. Taking over a troubled institution is costly for the agency, FDIC Chairman Sheila Bair said, referencing Indymac, which was closed by the Office of Thrift Supervision last week. The bank had $10 billion worth of advances (American Banker July 16). FDIC also published a final policy statement on the treatment of covered bonds in a conservatorship or receivership, which provides guidance on the availability of expedited access to collateral pledged for certain covered bonds after the FDIC decides whether to terminate or continue the transaction ... * WASHINGTON (7/17/08)--Skeptics voiced their concerns Tuesday regarding a Treasury plan to backstop government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac and create a new regulator for them (American Banker July 16). Treasury Secretary Henry Paulson said the department should have unlimited ability to buy debt from Fannie and Freddie. Sen. Richard Shelby (R-Ala.) and Sen. Jim Bunning (R-Ky.), opposed the idea. Federal Reserve Board Chairman Ben Bernanke said he thought the central bank would be helpful to a GSE regulator, while Rep. Spencer Bachus (R-Ala.) said he wasn’t sure if the GSEs’ credit needed to be expanded now that they have access to the discount window. Rep. Barney Frank (D-Mass.) said authority will be granted to the Treasury and Fed immediately, but additional regulations will happen later ... * WASHINGTON (7/17/08)--The Office of the Comptroller of the Currency will host a conference Sept. 9-10 in New Orleans on statistical analysis and modeling for fair lending risk assessment. During the conference, attendees will discuss current fair lending trends with regulators and industry experts, get an in-depth look at the OCC’s fair lending examination process, learn about credit scoring and pricing from a fair lending perspective, gain insights from bankers on their experiences with fair lending compliance and explore current issues in the consumer protection arena with representatives of the government agencies responsible for fair lending supervision and enforcement ...

Interchange bill may be dead for 08

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WASHINGTON (7/17/08)—A bill that would give merchants an antitrust exemption to negotiate interchange fees narrowly squeaked by the House Judiciary Committee Wednesday with a 19-16 vote. The committee approved a number of changes to the original bill as it marked up the Credit Card Fair Fee Act (H.R. 5546). The Credit Union National Association (CUNA) opposes government intervention in setting interchange fees. CUNA believes that the tight vote and a short remaining legislative calendar will combine to preclude a final vote on an interchange bill this year. CUNA President/CEO Dan Mica stated, “The close, 19-16 vote in the Judiciary Committee today for the Interchange Fee bill indicates that this measure may have run its course, at least for this Congress. “With such little time left for congressional action, and with other key measures waiting their turn, the bipartisan opposition – split 50-50 – to the bill makes it difficult to imagine such controversial legislation can precede much, if at all, further in the House for this Congress.” As approved, the bill would provide that credit unions regulated by the National Credit Union Administration (NCUA) and other financial institutions with under $1 billion in assets may “opt out” of interchange negotiations. The opt-out was added as an amendment offered by the committee chairman, Rep. John Conyers (D-Mich.) However, CUNA remains concerned that the opt-out option does not address credit unions’ underlying concerns with the legislation. Mica said, “As for the ‘opt-out’ provision for credit unions, we appreciate Chairman Conyers’ efforts to address credit union concerns with the bill. He was clearly listening to the significant concerns expressed loudly by credit unions. “However, we also believe that the so-called ‘opt out’ has some very practical shortcomings that make it, essentially, unworkable for credit unions.” Mica added that CUNA does not assume HR 5546 is dead, and will remain active on the Hill in “beating the legislative drums against floor consideration and passage.’ “HR 5546 is not necessary for credit unions and will work against consumers in the long run. We will continue to oppose it,” Mica added. The bill underwent other transformations during the mark-up session. The committee:
* Jettisoned a provision in the original bill that would have established a three-member panel of lawyers appointed by the U.S. Department of Justice and the Federal Trade Commission (FTC) to settle fee disputes between merchants and card providers; and * Adopted a provision that prohibit the use of an unlawful boycott by merchants under the antitrust exemption.

CU-backed candidates win Ala. Ga. races

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WASHINGTON (7/17/08)-- Two candidates with credit union support, vying for U.S. House slots in Alabama, have succeeded in their runoff races and will go on to the general election. In Alabama’s second district, State Rep. Jay Love defeated State Sen. Harri Ann Smith, a community banker, in a GOP runoff. Love next will face Montgomery Mayor Bobby Bright, a Democrat, in the November 15 election. They are vying for a House seat vacated by retiring Rep. Terry Everett (R-Ala.). In the fifth district GOP runoff, credit union-backed candidate and casualty insurance executive Wayne Parker prevailed over Huntsville-based attorney Cheryl Guthrie. Parker is seeking to replace retiring incumbent Rep. Bud Cramer (D-Ala.) and will face State Sen. Parker Griffith (D) in November. The Credit Union National Association (CUNA) and state league supported both successful candidates. Alabama CU League President Gary Wolter has said of Love and Parker that each has shown himself to be a leader who understands “credit unions, and our issues, and how important credit unions are for so many people.” In a separate race, CUNA Political Director Trey Hawkins noted that in a Georgia primary Rep. John Lewis, a Democrat, easily won what was supposed to be his toughest election in years. “All incumbents in Georgia won their primaries, but our biggest concern was the race involving Lewis, a strong supporter of credit unions,” Hawkins said noting that Lewis is one of 149 co-sponsors of the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537). The Georgia CU League mobilized on Lewis’ behalf providing such support as campaign volunteers. “Lewis should have no trouble in the general,” Hawkins predicted. CUNA’s Credit Union Legislative Action Council (CULAC) made contributions to the successful candidates - $10,000 to each.

NCUA liquididates tiny CU

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ALEXANDRIA, Va. (7/17/08)--The National Credit Union Administration (NCUA) announced Wednesday it has liquidated Meriden F. A. FCU. Call report data shows the Meriden, Conn. credit union was well capitalized with a 24% net worth ratio the end of the first quarter, but it appears burgeoning loan delinquencies may have sunk the tiny credit union. The agency announcement said simply that its decision to liquidate was made after determining the credit union was insolvent and had no prospects for restoring viable operations. Meriden FCU served 206 members and had assets just under $338,000 at the time of liquidation. The NCUA Asset Management and Assistance Center will issue checks to individuals holding verified share accounts in the Meriden F. A. Federal Credit Union within one week.

Fryzel Johnson work through transition

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National Credit Union Administration (NCUA) Board Chairman Designate Michael E. Fryzel (left) and Chairman JoAnn Johnson. (Photo provided by NCUA) Click for larger view
ALEXANDRIA, Va. (7/16/08)--National Credit Union Administration (NCUA) Board Chairman Designate Michael E. Fryzel met with Chairman JoAnn Johnson and senior NCUA staff during a two-day visit to Washington July 15-16, as part of his preparation for assumption of the NCUA Chairmanship later this month. "Chairman Johnson and I had an excellent discussion," said Fryzel. "It was a very useful opportunity to draw on her knowledge and experience, and she continues to be extraordinarily helpful and gracious during this transition. That discussion, along with numerous other meetings I had during my visit, will no doubt prove beneficial when I commence service as NCUA Chairman." Fryzel last month reiterated his priorities as NCUA chairman: “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,” he said. “It is my commitment to conduct my chairmanship in that manner."