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Inside Washington (07/19/2010)

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* WASHINGTON (7/20/10)--The Treasury Department is considering appointing board members to government-supported banks that are struggling to make dividend payments to taxpayers (American Banker July 19). The banks are participants in the Troubled Asset Relief Program. A Treasury spokesperson, Mark Paustenbach, told the Banker that the department is considering several options to protect taxpayers’ interests, including appointing board members... * WASHINGTON (7/20/10)--Although a proposed bank tax was stripped from the regulatory reform bill, President Barack Obama has indicated that he wants to push for the tax after reform is enacted. The tax would increase to $90 billion from $19 billion. Some policymakers originally did not support the tax as a part of reform, but others say the tax could garner enough support to pass as a separate measure, said American Banker (July 19). The tax “has a chance,” but it won’t be easy to pass, noted Karen Shaw Petrou, managing director at Federal Financial Analytics Inc. However, Scott Talbott, senior vice president at the Financial Services Roundtable, said that the need for such a tax is decreasing ... * WASHINGTON (7/20/10)--The Federal Reserve Board has released a list of names of the chairs and deputy chairs for each of the Federal Home Loan Banks. Each bank has a nine-member board of directors. The Fed appoints three of these directors and each year designates one of its appointees as chair and a second as deputy chair ...

CUNA preps for new reg reform rules

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WASHINGTON (7/20/10)—The Credit Union National Association (CUNA) continues to analyze the recently passed financial regulatory reform package, and CUNA is springing into action ahead of the expected signing of the reform package. CUNA’s interchange task force will reconvene later this week to discuss that portion of the legislation, and following CUNA’s discussions with Federal Reserve staff, the group will be providing detailed recommendations as the regulations are developed. While passage of the interchange provisions, which were attached to the larger financial regulatory reform package, was certainly a negative for credit unions overall, the legislation includes an exemption for debit card issuers with less than $10 billion in assets. Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, has stated that the terms of the exemption would be closely watched. CUNA remains concerned that while most credit unions will be exempt from the Fed’s interchange fee rules, they won’t be untouched by their total impact on the debit and credit markets. CUNA is also working to address the overall bill, and will continue to discuss issues with representatives from the Fed and the U.S. Treasury to help address credit union concerns. CUNA will also continue discussions with the Federal Reserve’s consumer protection division and will seek meetings with members of the Consumer Financial Protection Bureau once it is established under the regulatory reform legislation.

Feds semiannual monetary report tops hearings this week

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WASHINGTON (7/20/10)--Federal Reserve Chairman Ben Bernanke this week will deliver the semiannual monetary policy report to the Senate Banking Committee this Wednesday. The House Financial Services Committee will receive the same report on Thursday. Finance will also be discussed in the Senate on Tuesday as the banking committee’s subcommittee on security and international trade and finance discusses the oversight of international cooperation to modernize financial regulation. Closer to home, Discovery FCU’s President/CEO Ed Williams will testify on behalf of the Credit Union National Association as the House Financial Services Committee holds a hearing on H.R. 2267, the Internet Gambling Regulation, Consumer Protection and Enforcement Act. H.R. 2267, which was introduced by Rep. Barney Frank (D-Mass.), would give the U.S. Treasury the authority to license internet gambling operators to accept bets and wagers from U.S. citizens and to create regulations for those gambling operators. CUNA has said that while it supports efforts to eliminate payments to unlawful Internet gambling businesses, the regulations imposed by the Unlawful Internet Gambling Enforcement Act (UIGEA) are overly burdensome.

Gov. Duke calls for CRA review

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ARLINGTON, Va. (7/20/10)--Federal Reserve Governor Elizabeth Duke on Monday called for a comprehensive update of the Community Reinvestment Act (CRA). CRA was enacted in 1977 in response to a practice known as "redlining," which refers to the failure to lend to lower-income and minority neighborhoods by banks and thrift institutions during the 1960s and early 1970s. The purpose of the law is to ensure that for-profit financial institutions adequately meet the financial service needs of all parts of the communities from which they draw deposits. According to Dow Jones Newswires, panelists taking part in the discussion, which was one of four CRA hearings being held by the Fed, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Office of Thrift Supervision, recommended that CRA be broadened. The panelists also called for additional enforcement, and suggested that CRA rules also be applied to credit unions. The Credit Union National Association (CUNA) opposes any effort to include credit unions under CRA requirements. CUNA maintains that by their nature and mission of "people helping people," credit unions already meet the financial needs of a broad spectrum of people that fall within their fields of membership, and play an active role in community development and growth. By virtue of their membership requirements, credit union products and services are offered within local communities and CRA requirements would add an unnecessary and costly regulatory burden to credit unions that already meet and exceed the intent behind CRA, CUNA has said.

MBLs could be front and center in Senate

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WASHINGTON (7/20/10)--The Senate resumed discussion of the small business lending bill on Monday, and Sen. Mark Udall (D-Colo.) still hopes that legislation that would lift the member business lending cap for credit unions to 27.5% of total assets can be added to that bill. The small business legislation would provide $30 billion in funds that small banks could then lend to small businesses. The Credit Union National Association (CUNA) is backing Udall’s amendment, and CUNA has also asked credit unions and credit union leagues to urge their senators to support the legislation. CUNA President/CEO Bill Cheney this week will meet with several key lawmakers to seek their support for the MBL provision. Udall’s legislation has the support of Democratic, Independent, and Republican senators, with Sen. Susan Collins (R-Maine) becoming the latest legislator to back the bill on Monday. CUNA’s Vice President of Legislative Affairs Ryan Donovan said that it is “vital” that the Senate version of MBL legislation has “the same level of bipartisan support that the House version of the bill has.” Similar legislation that was introduced in the House by Rep. Paul Kanjorski (D-Pa.) currently has 123 cosponsors, including 33 Republicans. CUNA has estimated that lifting the MBL cap, a move that has been endorsed by groups as disparate as the National Association of Manufacturers and Americans for Tax Reform, would create over 108,000 new jobs and inject over $10 billion in funding into the economy. The small business legislation and, potentially, Udall’s member business lending bill, is expected to be one of the many items on the docket this week, as the Senate recently completed its work on comprehensive financial regulatory reform.