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New chief economist named at NCUA

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ALEXANDRIA, Va. (7/28/10)--The National Credit Union Administration (NCUA) on Tuesday introduced its latest chief economist, John Worth. Worth, who took over as the NCUA’s Director of the Office of the Chief Economist on July 26, will monitor “international, national, and regional economic and financial market developments and trends,” the NCUA said. Worth will also take part in NCUA policy program development, the release added. In a statement accompanying the release, NCUA Chairman Debbie Matz said that Worth brings “a wide-range of governmental experience” to the position of chief economist. Prior to joining the NCUA, Worth served as policy research manager at the Federal Housing Finance Agency (FHFA). Worth has also held various positions in the U.S. Treasury. For the full NCUA release, use the resource link.

CUNA analyzes interchange rules impact

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WASHINGTON (7/28/10)--The Credit Union National Association (CUNA) has said that while credit unions with under $10 billion in assets are exempt from interchange regulations the Federal Reserve Board is writing, CUNA is particularly concerned that the law does not require the marketplace to accommodate higher fees for smaller issuers. CUNA has prepared a detailed review of the new interchange statutory provisions. The review focuses on provisions of the law as well as on concerns regarding the law and its implementation. The new interchange regulations, which are still in development will be the result of legislation that was added to recently enacted comprehensive financial regulatory reforms. The interchange law directs the Federal Reserve Board to write rules on interchange fees for debit card purchases, a move which CUNA and credit unions strongly opposed as the legislation was considered by the U.S. Congress. Though the new interchange law amends the existing Electronic Fund Transfer (EFT) Act by adding a new section, the interchange regulations will be implemented by the Federal Reserve, not the new Consumer Financial Protection Bureau, which will implement other laws, including other provisions of the EFT Act. The Fed will be required to consult with the National Credit Union Administration and other financial regulators, including the new Consumer Financial Protection Bureau, as it crafts the interchange regulations. According to CUNA's analysis, it is unclear whether the Fed’s rule will set the actual interchange rates or set standards for determining whether interchange fees are “reasonable and proportional” to an issuer's costs. There has been no definitive statement from any federal authorities on how interchange rates will be regulated. While CUNA is advocating two-tiered interchange fee system to accommodate credit unions, pressure from merchants to contain interchange fees will continue. It is also unclear to what extent and for how long networks will accommodate a two-tiered system, CUNA added. Even so, CUNA will be pursuing as favorable an outcome as possible from the Fed, with the assistance of CUNA's Interchange Working Group. As reported earlier in NewsNow, CUNA President/ CEO Bill Cheney met last week with House Financial Services Chairman Barney Frank (D-Mass.), who assured CUNA he would work with credit unions to head off unintended consequences of interchange regulation. The CUNA analysis also addresses certain prohibitions on exclusive arrangements, routing limits, and network fee regulations. The potential for merchants to provide certain discounts and to set transaction minimums for credit card purchases, as well as issues concerning merchant acceptance of debit and credit cards, are also covered in the CUNA analysis. For more information about the analysis, contact Eric Richard at erichard or Mary Dunn at For the full report, use the resource link.

Cheney Gaming legislation reduces CU UIGEA burdens

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WASHINGTON (7/28/10)--Proposed online gambling legislation could reduce the burdens that the Unlawful Internet Gaming Enforcement Act (UIGEA) has imposed on credit unions, Credit Union National Association (CUNA) President/CEO Bill Cheney said in a Tuesday letter to Reps. Barney Frank (D-Mass.) and Spencer Bachus (R-Ala.) H.R. 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act, would allow the U.S. Treasury to license internet gambling operators and would permit approved operators to accept bets from U.S. citizens. The legislation was one of several bills that were scheduled to be discussed by the House Financial Services Committee during a Tuesday markup session. However, Frank, who chairs the committee, postponed consideration of some of the bills until today, presumably due to time constraints. Under UIGEA, credit unions and other financial institutions are required 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. While CUNA does not take a position on the legality of online gambling, Cheney said in the letter that CUNA supports Frank’s legislation, as it would reduce the unnecessary compliance burden imposed by UIGEA. Cheney also encouraged legislators to direct the Treasury and the Department of Justice to develop and maintain a list of illegal Internet gambling providers, as well as the list of licensed operators, to further reduce the compliance burden on credit unions and other financial institutions. The legislation should also mandate safe harbors for financial institutions that use both the lists of legal Internet gambling providers and illegal Internet gambling providers when determining whether a transaction should be blocked. “Such an approach would promote compliance for institutions by providing them a much greater level of certainty as to whether a transaction for a particular entity should be prevented,” Cheney said. If approved by the committee, the legislation will move on to the full House of Representatives for a vote.

MBLs are no-cost help to small biz Cheney tells Senate

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WASHINGTON (7/28/10)--In a Tuesday letter to Senate leader Harry Reid (D-Nev.), Credit Union National Association (CUNA) President/CEO Bill Cheney said that credit unions would be forced to oppose pending job-creation legislation if that legislation does not include greater authority for credit unions to make loans to businesses. Cheney said that the U.S. Congress “will have left unused critical resources that credit unions could provide small businesses at no cost to the taxpayers" if member business lending (MBL) language is not added to H.R. 5297, the Small Business Lending Fund Act. Cheney noted that there is "no good public policy" reason to justify leaving credit unions out of the bill. The MBL amendment proposed by Sen. Mark Udall (D-Colo.) would lift the current cap of 12.25% to 27.5% of total assets. “Credit unions have proven for years that they are capable of doing this type of lending safely and soundly,” Cheney said. CUNA has estimated that lifting the cap even to 25% of assets would inject about $10 billion in new funds into the economy and create more than 100,000 new jobs, at no cost to taxpayers. There has been significant support for lifting the MBL cap in the media. And the Obama administration backs the increase, with the U.S. Treasury offering its own plans for an MBL cap lift in recent weeks, which was the basis for much of the Udall amendment. The small business jobs bill may come up this week for a vote, though it is not known whether leading senators can gather the votes needed to end debate on the measure and call for a final vote. CUNA and Udall will continue to work to attach the MBL provisions as an amendment to the small business legislation if it remains a viable option. For the full letter, use the resource link.

Inside Washington (07/27/2010)

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* WASHINGTON (7/28/10)--The Senate Committee on Banking, Housing and Urban Affairs will meet today to consider the nominations of Janet L. Yellen as a member and vice chair of the Board of Governors of the Federal Reserve System; Peter A. Diamond and Sarah Bloom Raskin, as members of the Board of Governors of the Federal Reserve System; Osvaldo Luis Gratacós Munet of Puerto Rico as inspector general of Export-Import Bank; and Steve A. Linick as inspector general of the Federal Housing Finance Agency ... * WASHINGTON (7/28/10)--International bank regulators Monday noted that they have agreed on principles that will shape capital requirements and liquidity rules for banks in the future (American Banker July 27). The agreement is a revision of an earlier set of principles by the Basel Committee on Banking Supervision in December 2009. The principles address what banks can count toward Tier 1 capital. Significant minority holdings in other banks can count up to 10% of Tier 1 common, while mortgage servicing rights and deferred tax assets can also each count 10%. The committee also endorsed contingent capital, which converts debt into equity in certain conditions. Jean-Claude Trichet, president of the European Central Bank, said the agreement will provide stability to the banking system. The committee will now focus on a transition agreement to ensure the banking sector can support the economy recovery, he added. The World Council of Credit Unions (WOCCU) has advocated for the past several years that the Basel Committee recognize the credit union difference. This year, WOCCU met with members of the Basel Committee on Banking Supervision and the Financial Stability Board to address pending revisions to the Basel II capital accord (News Now April 1) ... * WASHINGTON (7/28/10)--House and Senate committees have approved appropriation bills for the Department of Housing and Urban Development that would extend a $729,750 conforming loan limit through September 2011 (American Banker July 27). Without the extension, the limit would drop to $625,500 at year-end. The loan limit is the maximum size of loans that Fannie Mae and Freddie Mac can purchase through September 2011 ...