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Cheney meets with Senate leader Reid

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WASHINGTON (7/22/10)—Credit Union National Association (CUNA) President/CEO Bill Cheney continued to press the case for credit unions in Congress, meeting with Senate leader Harry Reid (D-Nev.) and Sens. Spencer Bachus (R-Ala.), John Boehner (R-Ohio), Richard
Click to view larger image CUNA's Bill Cheney discusses credit union legislation pending in the Senate with Majority Leader Harry Reid (D-Nev.) during a meeting Wednesday in the leader's suite of offices in the U.S. Capitol. A key element of their discussion: credit union member business lending legislation. (CUNA Photo)
Click to view larger image House Minority Leader John Boehner, of Ohio, discusses the outlook for the congressional calendar with CUNA President/CEO Bill Cheney during a meeting Wednesday. (CUNA Photo)
Shelby (R-Ala.), Charles Schumer (D-N.Y.) and Patrick Leahy (D-Vt.) on Wednesday. As Senate Majority Leader, Reid is vital to any action the Senate takes, and is a central figure in the current debate over potential small business legislation. Reid is a cosponsor of Sen. Mark Udall’s pro-member business lending legislation. CUNA has estimated that lifting the MBL cap beyond the current limit of 12.25% could create over 108,000 new jobs and inject $10 billion in new funds into the economy, boosting the prospects for small businesses while removing taxpayer funds from the process. Cheney also continued to encourage the congressional leaders to consider allowing alternative capital for credit unions in this and upcoming congresses. The CUNA leader brought a similar message to their discussions with Rep. Barney Frank (D-Mass.) and Sen. Chris Dodd (D-Conn.) on Tuesday. Cheney also met with the National Credit Union Administration’s Chairman Debbie Matz and board member Gigi Hyland on Tuesday, and intends to meet with board member Michael Fryzel in the near future. Cheney has also scheduled a meeting with U.S. Treasury Assistant Secretary for Financial Institutions Michael Barr in early August, and CUNA is working with the Treasury on alternative capital and interchange fee legislation.

CUNA testifies about UIGEAs continued burdens

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WASHINGTON (7/22/10)—Testifying on behalf of the Credit Union National Association, Discovery FCU President/CEO Ed Williams on Wednesday told the House Financial Services Committee that fully licensing and regulating online gambling portals used by U.S. citizens would eliminate some of the uncertainty that credit unions face regarding compliance with the Unlawful Internet Gambling Enforcement Act (UIGEA).
Click to view larger image CUNA's Bill Cheney thanks Ed Willams (right), CUNA board member and a witness for the association before the House Financial Services Committee on Wednesday, for delivering the association's viewpoint during a hearing on Internet gambling legislation. With Cheney and Willams are (from left) CUNA staffers Chris Gaginis, John Hildreth and Ryan Donovan. (CUNA Photo)
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. In a prepared statement, Williams said that while the number of transactions that his credit union blocks due to UIGEA rules is “no more than a handful per month,” the transaction blocking process does create a number of false positives that “should not have been blocked.” Williams added that he supports H.R. 2267, which 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. However, regardless of the status of that legislation, Williams said that regulators and legislators should strengthen the safe harbor rules contained in the current legislation. The Treasury and the Department of Justice should also develop and maintain their own lists of both legal and illegal internet gambling providers and provide safe harbors to financial institutions that use those lists when deciding which transactions should be blocked.

Obama signs historic financial reg reform

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WASHINGTON (7/22/10)—President Barack Obama on Wednesday officially signed legislation that introduces a series of sweeping regulatory reforms that substantially restructure financial regulations and provides consumers with new protections. The legislation is mainly aimed at Wall Street and larger financial firms and seeks to help avoid a repeat of the country's recent crisis prompted by a meltdown of housing and mortgage markets. The legislation also addresses thrifts, deposit insurance reforms, hedge funds, credit rating agencies, executive compensation, and investor protections, among other items. The legislation, which was officially approved by the Senate last week, makes permanent an increase in federal deposit insurance to $250,000 per account, and extends on an equal basis for credit unions and banks unlimited federal insurance for non-interest bearing accounts. The legislation also establishes a consumer financial protection bureau, and credit unions with assets under $10 billion will not be examined by the new bureau once it is established. A similar $10 billion credit union exclusion applies to rules that allow the Federal Reserve to set interchange fees for debit cards. The interchange legislation was strongly opposed by the Credit Union National Association (CUNA) and credit unions. A July 16 News Now story erroneously noted the provision applied to credit cards. The error has been corrected. (See CUNA: Final reg reform has some CU improvements, July 16) Several other reforms are also of interest to credit unions. One such reform is the inclusion of the National Credit Union Administration chairman on a proposed financial stability oversight council. CUNA continues to analyze the impact that the regulatory reform provisions will have on credit unions.

Inside Washington (07/21/2010)

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* WASHINGTON (7/22/10)--The Treasury Department’s Community Development Financial Institutions (CDFI) Fund will conduct a series of conference calls about CDFI certification. The calls will serve as a forum for potential certification applicants to ask questions. All calls will be held from 3 p.m. to 4 p.m. ET. The number is 202-927-2255. The calls are scheduled for Aug. 19, Sept. 16, Oct. 14 and Nov. 18. The CDFI Fund certifies organizations as CDFIs, which provide financing to low-wealth individuals. Credit unions are eligible to become CDFIs ... * WASHINGTON (7/22/10)--Under the regulatory reform bill, the Federal Reserve will no longer be required to defer to functional regulators when it wants to examine an entity such as broker-dealer or bank affiliate. The Fed’s new authority signals a major change in the approach to functional oversight, according to American Banker (July 21). The Gramm-Leach-Bliley Act of 1999 instructed the Fed to avoid subsidiaries regulated elsewhere and to defer questions about such subsidiaries to other regulators. Under the reform bill, the Fed can consult with “the appropriate regulator” with reasonable notice when it suspects trouble. For nonbanks, the Fed can recommend that the functional regulator of a subsidiary initiate a supervisory action. If an acceptable response is not given to the Fed within 60 days, it can take an enforcement action as if the subsidiary was supervised by the Fed. Fed officials have not indicated how the central bank would handle the new rules, but said they aim to get a broad view of the companies they monitor. Assessing risk of a holding company and its subsidiaries requires a comprehensive assessment of activities within the company, said Jon D. Greenlee, Fed associate director of banking supervision and regulation ... * WASHINGTON (7/22/10)--Regulators at a Tuesday hearing before a Senate Banking subcommittee stressed the need for foreign regulators to follow the U.S.’ financial reforms. Capital rules need to be enforced internationally to be effective in the U.S., said Lael Brainard, Treasury undersecretary of international affairs (American Banker July 21). Also, without internationally consistent standards, large financial firms will move their activities to jurisdictions with looser standards. This could create a “race to the bottom” and make systemic risk more problematic, she added. Federal Reserve Board Gov. Daniel Tarullo noted that the U.S. agrees with the Group of 20 regarding minimum capital requirements. But, it’s not practical to negotiate all of those details internationally and the U.S. should be flexible to adopt prudential regulations, he said. Regulators at the hearing largely appeared to support the reform bill, because its pieces are align with the G-20’s efforts ...