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Bill of Rights for CUs is focus of CUNA exam subcommittee

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WASHINGTON (7/21/10)—The rights, as well as obligations, of a credit unions within the context of the examination and supervision process are being fully explored by the Credit Union National Association (CUNA). The CUNA examination and supervision subcommittee this week committed to reviewing CUNA's current policy regarding examinations, including the “Credit Union Bill of Rights,” CUNA developed to help ensure credit union leaders are aware of their obligations as well as their due process when supervisory issues arise. “Credit unions want to understand their obligations but also their rights of due process when they are involved in a supervisory action, ” said CUNA Deputy General Counsel Mary Dunn Tuesday. Dunn noted that while CUNA does not focus on individual supervisory cases, CUNA does pursue universal credit union concerns that may be presented by individual cases, such as issues that have arisen in California. She added that CUNA is a forming a working group under the auspices of the CUNA Examination and Supervision Subcommittee, chaired by Ohio League President Paul Mercer. "We want to work with all stakeholders on this endeavor, including credit unions, leagues, NCUA, and NASCUS to ensure credit unions are aware of the proper role and duties of the regulator as well as their own appropriate roles. The subcommittee set a goal to have strong and comprehensive report by early fall.

Four barred by NCUA from CU work

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ALEXANDRIA, Va. (7/21/10)--The National Credit Union Administration (NCUA) issued orders prohibiting the following individuals from participating in the affairs of any federally insured financial institution.
* Tiffany Churchill, a former employee of Maine Family FCU, Lewiston, was convicted of theft and subsequently sentenced to 18 months imprisonment, with all but 30 days suspended, and three years of supervised release. Churchill will also pay $15,352 in restitution; * Nathan Douglas Cranney, a former employee of Salt Lake City, Utah’s Deseret First FCU, without admitting or denying fault, signed an order of prohibition; * Lisa Zimmerman Dodson, a former employee of Tyler, Texas’s Cooperative Teachers CU, was convicted of theft and subsequently sentenced to five years of supervised release and 160 hours of community service. Dodson will also pay $69,655 in restitution; and * Richard Koenig, a former employee of Cudahy, Wisc.’s Prime Financial CU, without admitting or denying fault, signed an order of prohibition.
Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million. Use the resource link below to view NCUA enforcement orders online.

CUNA to testify UIGEA remains unreasonable burden

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WASHINGTON (7/21/10)--Discovery FCU President/CEO Ed Williams later today will discuss the “inappropriate and unreasonable compliance burden” that the Unlawful Internet Gambling Enforcement Act (UIGEA) imposes on credit unions during a House Financial Services Committee hearing on H.R. 2267, the Internet Gambling Regulation, Consumer Protection and Enforcement Act. Williams is testifying on behalf of the Credit Union National Association (CUNA), and is the only finance industry representative that will speak during the hearing. UIGEA regulations currently require credit unions and other financial institutions to establish and implement policies and procedures to identify and block restricted internet gambling transactions, or rely on those procedures established by the payments system. Williams, who’s Reading, Pa.-based credit union currently holds $130 million in assets from 10,500 members, will tell lawmakers that it is “unreasonable to assign the liability for policing internet gambling activity to depository institutions, many of which are small, without giving them the means necessary to determine which transactions are illegal.” CUNA has repeatedly stated that while it supports efforts to eliminate payments to unlawful Internet gambling businesses, the regulations imposed by the UIGEA are overly burdensome. CUNA notes that while regulators have attempted to make improvements in the rulemaking process, more work is needed. H.R. 2267, which was introduced last year 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. Frank’s legislation currently has 69 cosponsors. The hearing, which should be chaired by Committee Chairman Barney Frank (D-Mass.), will also feature testimony from the Commerce Casino’s Tom Malkasian, the Mohegan Tribe of Connecticut’s Tribal Chairwoman Lynn Malerba, terrorism/law enforcement consultant Michael Fagan, and professional poker player Annie Duke, who is testifying on behalf of the Poker Players Alliance. The hearing will take place at 2:00 P.M. E.T.

Inside Washington (07/20/2010)

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* WASHINGTON (7/21/10)--Witnesses have been named for a Senate Banking Committee hearing that was scheduled for Tuesday by its security, international trade and finance subcommittee on international cooperation in modernizing financial regulation. Witnesses include Federal Reserve Board Gov. Daniel Tarullo; Lael Brainard, Treasury undersecretary for international affairs; and Kathleen Casey, Securities and Exchange commissioner (American Banker July 20). Fed Reserve Board Chairman Ben Bernanke also is scheduled to appear today before the Senate Banking Committee to provide an update on monetary policy and economic performance ... * WASHINGTON (7/21/10)--Different agencies have different challenges, which have different kinds of responses, according to Comptroller of the Currency John Dugan. As “an exclusive supervisor-focused regulator on the commercial banks, we provided the kind of vocal leadership that we should have,” he told American Banker (July 20). Dugan, who will step down from his role Aug. 14 after a five-year term, reflected on his tenure at the Office of the Comptroller of the Currency (OCC). Dugan, often seen by some as a quiet, “behind-the-scenes operator,” the Banker said, noted that the OCC spoke its mind when it needed to. The agency was up front on nontraditional mortgages and commercial real estate guidance. It also was “outspoken” on several issues, he added ... * WASHINGTON (7/21/10)--The Federal Reserve Board Tuesday agreed Treasury that it was appropriate for the Treasury to reduce to $4.3 billion from $20 billion the credit protection provided for the Term Asset-Backed Securities Loan Facility (TALF) under the Troubled Asset Relief Program. The board authorized up to $200 billion in TALF loans, but when the program closed on June 30, there were $43 billion in loans outstanding. TALF was designed to increase credit availability and support economic activity, the Fed said ...

Cheney makes Hill NCUA rounds on CU issues

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WASHINGTON (7/21/10)—Credit Union National Association (CUNA) President/CEO Bill Cheney reached out to legislators and regulators on behalf of credit unions on Tuesday. Cheney first met with Rep. Barney Frank (D-Mass.), who serves as chairman of the House Financial Services Committee, and outgoing Sen. Chris Dodd (D-Conn.), who leads the Senate’s top financial services committee. In both meetings with the Senate and House committee leaders, Cheney emphasized the importance of alternative capital to credit unions and urged the congressional leaders to consider the issue in this and upcoming congresses.
Click to view larger image CUNA CEO Bill Cheney pumps up the prospects of credit unions’ pro-business, pro-growth MBL cap lift legislation during his discussion with Sen. Chris Dodd (D-Conn.)
CUNA has said that while the credit union system faces many issues, there is none more important for beleaguered credit unions than the issue of alternative capital. CUNA has steadily worked with the U.S. Treasury Department, all the while stressing the importance of credit union alternative capital authority. Cheney also stressed the importance of approving legislation that would lift the cap on member business lending (MBL) for credit unions to 27.5% of total assets. Member business lending legislation, which was recently introduced into the Senate by Mark Udall (D-Colo.), has been touted as a possible addition to a still-developing small business bill. The small business legislation could see a vote this week. Legislation that would have gifted small banks with $30 billion in government-backed funds to kick start their lending to small businesses was dropped by Senate democrats on Tuesday.
Click to view larger image Rep. Barney Frank (D-Mass.), a frequent credit union supporter, hears Cheney out as he outlines the many issues facing credit unions
CUNA has consistently backed lifting the MBL cap beyond the current limit of 12.25%, saying that doing such could create over 108,000 new jobs and inject $10 billion in new funds into the economy, at no cost to taxpayers. Cheney also lost no time in addressing credit union regulatory issues in separate meetings with National Credit Union Administration (NCUA) Chairman Debbie Matz and Board Member Gigi Hyland, along with senior agency staff. Cheney underscored CUNA’s continued willingness to work with the agency to achieve legislative victories for credit unions on such issues as increased member business lending authority and alternative capital for credit unions. CUNA commended NCUA for the improvements to its field of membership final rule and its new merger guidance, which CUNA had urged. The CUNA leader also addressed credit union examination and enforcement issues, as well as communication issues, and expressed credit union concerns regarding the proper funding of the allowance for loan and lease loss accounts (ALLL). Other topics raised with the regulators were NCUA's corporate credit union stabilization efforts, the timing of the highly anticipated corporate credit union rule, and dealing with “legacy " or undervalued assets held by the corporates. CUNA is following up with NCUA on all these matters. "I appreciated our meetings today, which I felt were beneficial,” Cheney said after the NCUA meetings. “There will always be some tension between the regulator, on the one hand, and regulated entities, such as credit unions, and their chief advocates, such as CUNA, on the other," Cheney observed. "We are in difficult times now and such times can magnify that tension.” He added, “One of my objectives as CUNA CEO is to work with the regulators when appropriate and to press for reasonable solutions when significant issues arise.” The new CUNA president/CEO has scheduled a meeting with U.S. Treasury Assistant Secretary for Financial Institutions Michael Barr in early August. He is also seeking a meeting time with the third NCUA board member, Michael Fryzel.