Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Washington Archive

Washington

Inside Washington (08/10/2010)

 Permanent link
* WASHINGTON (8/11/10)--Investors have a healthy demand for Troubled Asset Relief Program (TARP) warrants, according to a report the Treasury Department released last week (American Banker Aug. 10). The Warrant Disposition Report follows an earlier report released in January. It indicated that a number of banks still have their federal aid. After banks repay the government, they have two weeks to decide whether to buy the warrants back or auction them off. Holders of the warrants can buy a company’s common shares at a set price for up to a decade. Most warrants expire by 2018 or 2019, the Banker said. Thirteen of the 50 banks that repaid the government as of June 30 decided to go the auction route. Only one of 13 banks that went to auction route--Wells Fargo--chose to buy back its securities ... * WASHINGTON (8/11/10)--Fannie Mae and Freddie Mac could garner profits in the next couple of quarters, according to analysts (American Banker Aug. 6). The enterprises lost $230 billion in the past two and a half years, and $9 billion in the last quarter, but their financial pictures are improving. If their finances improve, the debate over their futures could change, the Banker said. Freddie posted a net loss of $6.01 billion Monday, after a $1.3 billion preferred dividend payment to the government. Last quarter, Freddie lost $7.98 billion. The amount of money it set aside to cover future losses dropped 11% from the second quarter of last year to $5.03 billion. Fannie and Freddie were taken into conservatorship in September 2008, and lawmakers have not reached a consensus about their futures. The regulatory reform bill, which was signed by President Barack Obama last month, did not address how the government will handle Fannie and Freddie. Next week, the White House will host a conference on their futures ...

Fed is reviewing checkhold rules

 Permanent link
WASHINGTON (8/11/10)--In reviewing the new financial reform law, comprised of more than 2,000 pages of text, Mike McLain has noted that among the big changes are nestled some seemingly small ones of which credit unions should be aware. McLain, who is senior compliance counsel and assistant general counsel for the Credit Union National Association (CUNA), noted recently that one such change is a provision amending the Expedited Funds Availability Act to raise the next-day-availability dollar requirement. “The law will require credit unions to make up to $200, rather than the current limit of $100, available the day after certain checks are deposited,” explained the CUNA rep. “What looks like a minor change will require new disclosures, data processing changes and staff training for many credit unions.” As currently required by the Fed’s Reg. CC for changes that expedite the availability of funds, credit unions and other depository institutions would have to notify members or customers of the increase within 30 days of the effective date of the increase to $200. “Contrary to what credit unions may have read on the Internet, this change was not effective the day President Obama signed the Dodd-Frank bill into law,” emphasized McLain. “The provision goes into effect when the new Consumer Financial Protection Bureau is established, which we expect could happen sometime in 2011.” At the end of 2009, the Federal Reserve Board staff assured CUNA that it planned to revisit the out-of-date Regulation CC, which implements the Expedited Funds Availability Act. The Fed said at the very least it would reconsider current check-hold exemptions in light of the need for depository institutions to better protect themselves from fraud due to the elimination of “nonlocal checks” that occurred in February 2010 when the Fed centralized all its check-processing operations in Cleveland. The regulation and the model forms have not yet been updated to correct the numerous references to “nonlocal checks.” “We understand that the Fed is busy reviewing Reg CC and will have a proposal out this fall, maybe as early as sometime in September, which will incorporate the new $200 figure,” McLain said. “CUNA will emphasize in its comment on the proposal the need for credit unions to have adequate time to comply with the higher next-day-availability requirement.”

FDIC announces savings pilot for underbanked

 Permanent link
WASHINGTON (8/11/10)--To encourage banks to offer unbanked and under-banked households affordable basic banking services, the Federal Deposit Insurance Corp. (FDIC) will launch a pilot program to test offering safe, low-cost transactional and savings accounts to low- and moderate-income consumers. At its open board meeting Tuesday, the FDIC approved a one-year plan for the “Model Safe Accounts Pilot” and encouraged banks to submit applications to become one of nine institutions the agency will choose to be in the test program. Under the pilot, according to an FDIC announcement, participating institutions will offer electronic deposit accounts with product features identified in the FDIC Model Safe Accounts Template (see resource link). Accounts offered by pilot institutions will be FDIC-insured, have “reasonable” rates and fees that are “proportional to their cost,” and be subject to applicable consumer protection laws, regulations and guidance. Participating institutions may not charge fees for non-sufficient funds or overdrafts for these accounts. Citing its 2009 “National Survey of Unbanked and Underbanked Households,” the FDIC said that more than one-quarter of U.S. households are underserved; 7.7% lack any banking relationship and 17.9% percent are "underbanked," which means that they have bank accounts but rely on non-bank alternative financial services. Minorities and lower-income households are much more likely to be underserved. The FDIC added that one in five households earning under $30,000 are unbanked, and these households comprise over 70% of the unbanked total. Many credit unions provide a wide range of financial products and services to low-wealth consumers through REAL Solutions, the signature program of the National Credit Union Foundation (NCUF). In fact, NCUF research shows that two of the most popular REAL Solutions products are savings programs for emerging low-wealth markets. Figures from one year ago show 81% of REAL Solutions credit union were providing special savings accounts for youth from ages 11 to 17 total 81%; and about 68% were providing or planning to offer comprehensive savings programs, including financial education to help low-wealth members save and build wealth. Use the resource links for more.

CUNA comment urges legacy asset corp CU rule action

 Permanent link
WASHINGTON (8/11/10)—The Credit Union National Association (CUNA) this week submitted comprehensive remarks addressing each subject of the National Credit Union Administration (NCUA’s) 2010 Regulatory Review List. The agency examines one-third of its regulations as part of a yearly review process. The NCUA's Office of General Counsel maintains the schedule that identifies the agency regulations up for review each year. Among this year’s topics for examination were:
* Share insurance; * Administrative actions; * Member business loans; * Fidelity bond and insurance coverage; * Leasing; * Incidental powers; * Regulatory Flexibility Program (RegFlex); * Supervisory committee audits and verifications; * Privacy; * Fair Credit Reporting (FACT Act); and appropriately enough, * The process for identifying rules for review and soliciting comments.
Within its comments on share insurance issue, CUNA seized the opportunity to urge the agency to act by its Sept. 16 open board meeting on two key issues for credit unions; legacy assets and a new regulatory framework for corporate credit unions. “While no credit union official wants the agency to rush the development of the solution, we encourage the agency, to the extent feasible, to make public its decision regarding these assets at (the September meeting), the target date most recently indicated by the board for consideration of the final corporate credit union rule as well as the legacy assets,” wrote CUNA Deputy General Counsel Mary Dunn in the letter. CUNA also urged that if complications preclude such an announcement by the September date, the board should at least provide more information to the credit union system on the approaches being considered and any impediments to their implementation. The NCUA estimated that there were $64 billion in total legacy assets as of early 2009. CUNA has expressed two major concerns with these assets: First, if the actual losses turn out to be sufficiently less than expensed thus far, there should be an opportunity for the credit unions that took the losses to share in the gains; and, second, if the actual losses are greater than expensed thus far, that future capital contributors should not be liable for those losses. Regarding the corporate credit union rules, the NCUA has been reviewing over 800 comment letters submitted on it's proposed rule to strengthen corporate credit union regulation. For CUNA’s complete remarks on the NCUA 2010 rule review, use the resource link below.