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Inside Washington (07/06/2010)

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* WASHINGTON (7/7/10)--Sen. Maria Cantwell (D-Wash.) announced Thursday that she intends to support the regulatory reform bill, providing a boost to the bill’s prospects in the Senate, said American Banker (July 2). The Senate could take up the bill this month after the Fourth of July recess. Originally, the Senate was expected to tackle the bill this week, but the death of Sen. Robert Byrd (D-W.Va.) and Republicans’ objections to a mechanism that would pay for the bill caused a delay. The objections prompted the regulatory reform conference committee to meet Tuesday to come up with a substitute payment mechanism. Sixty votes are needed to pass the bill. Democrats controlled 59 seats before Byrd’s death. Cantwell opposed an earlier version of the bill passed in May. She, along with Sen. Russ Feingold (D-Wis.), argued the bill did not “go far enough” ...

FHFA Energy retrofit loan programs need re-examined

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WASHINGTON (7/7/10)—The Federal Housing Finance Agency (FHFA) on Tuesday determined that “certain energy retrofit lending programs present significant safety and soundness concerns that must be addressed by Fannie Mae, Freddie Mac and the Federal Home Loan Banks.” The FHFA said that programs that are presented as Property Assessed Clean Energy (PACE) programs, many of which ease the lending process for energy-saving property retrofitting projects, can “pose unusual and difficult risk management challenges for lenders, servicers and mortgage securities investors.” Credit Union National Association (CUNA) Senior Assistant General Counsel Jeffrey Bloch said that CUNA shares concerns "similar to those expressed by the FHFA." "For credit unions making mortgage loans, these types of energy loans that are paid through the property tax bills adversely affect the lien position of credit unions, and the increased payments can cause repayment problems later, neither of which were contemplated at the time the loans were made," he said. "CUNA is also concerned "that those selling these energy improvements will be concerned primarily with selling the product, as opposed to whether the borrower can afford these higher payments. Although we all can support energy efficiency, these programs can pose risks to credit unions," Bloch added. As explained in The New York Times on July 1, the program works by having local governments issue bonds or borrow money that can then be used for home loans that cover the upfront costs of solar installations or other energy improvements. Homeowners who take part in these loans can then repay them over time through their property-tax bills. As reported in News Now on Tuesday, the U.S. Department of Energy is trying to expand the program, and the Obama administration has tagged $150 million in stimulus money for the program. The FHFA also urged state and local governments to pause and re-evaluate these programs, adding that “the size and duration of PACE loans exceed typical local tax programs” and lack the “traditional community benefits associated with taxing initiatives.” The FHFA directed Fannie, Freddie and the Federal Home Loan Banks to waive their uniform security instrument prohibitions against senior liens and adjust their loan-to-value ratios, loan covenants, and borrower debt-to-income ratios to adapt to the needs of PACE program loans. For the full FHFA release, use the resource link.

CUNAs Cheney to CUs Keep the volume up on interchange MBLs

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WASHINGTON (7/7/10)--With Congress remaining out of session until July 12, the Credit Union National Association (CUNA) and credit unions nationwide are activating grassroots at home to urge Congress to lift the credit union member business lending (MBL) cap and continue to oppose passage of the financial regulatory restructuring bill containing interchange. The House passed the financial regulatory reform conference report by a 237 to 182 vote last week, and CUNA opposes the bill as long as it contains language that would allow government intervention in interchange fees. However, CUNA noted that, without interchange, the remainder of the bill "strikes a careful balance in protecting consumers while providing meaningful financial reform." It is not known when the Senate will officially take up the bill for a vote, but credit unions continue to reach out to key senators who have expressed some caution over the interchange changes via phone calls, e-mails, and the mass media. CUNA President/CEO Bill Cheney said that it is "vital" that credit unions keep up their grassroots efforts during the Independence Day in-district work period by "voicing to senators their opposition to the financial regulatory reform bill, because of interchange, and to voice support for the Udall amendment on member business loans -- refuting any banker rhetoric they may hear." Credit unions and CUNA are specifically targeting the Senate to grow the base of support for lifting the MBL cap. Sen. Mark Udall (D-Colo.) last week proposed adding an MBL cap amendment to H.R. 5297, the Small Business Lending Fund Act. Udall’s amendment would increase the MBL cap to 27.5% of total assets, pending certain criteria. Credit unions this week are meeting directly with their senators to stress the aid that an MBL cap lift would bring to the nation’s economy. Those credit unions will also enlist the support of small business owners who have worked with their local credit unions. CUNA has estimated that lifting the MBL cap to 25% of a credit union’s assets would inject over $10 billion in new funds into the economy, creating over 108,000 new jobs. Similar legislation, introduced by Rep. Paul Kanjorski (D-Pa.) in the House, has over 100 co-sponsors. To contact local representatives via CUNA's credit union grassroots action center, use the resource link.