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Inside Washington (08/13/2010)

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* WASHINGTON (8/16/10)--Elizabeth Warren, who chairs the Congressional Oversight Panel and is a leading candidate to head the Consumer Financial Protection Bureau, met with White House officials last week. A presidential spokesperson said that while a decision has not been made, Warren could be chosen to lead the consumer bureau (The Washington Post Aug. 13). The consumer bureau was largely Warren’s idea, and if President Barack Obama doesn’t choose Warren, “he may risk infuriating his liberal supporters who see Warren as the only logical candidate,” the newspaper said ... * WASHINGTON (8/16/10)--It’s likely that higher standards for bigger banks will be passed onto smaller institutions, according to financial industry representatives. Under the regulatory reform bill, banks with more than $50 billion in assets are considered systemically significant and will be subject to liquidity, capital and leverage rules. Banks under the $50 billion standard also should pay attention to the standards, observers told American Banker (Aug. 13). Some requirements already are taking effect--one example is a provision by Sen. Susan Collins (R-Maine), which states that trust-preferred securities no longer count toward Tier 1 capital after a six-year transition period. Companies with less than $15 billion in assets will be grandfathered in, while companies with $500 million in assets are exempt. Paul Miller, managing director at FBR Capital Markets Corp., said trust-preferreds are phasing out and are a “moot point” ... * WASHINGTON (8/16/10)--The Federal Deposit Insurance Corp. (FDIC) announced Thursday an open door policy so the public can give input and track the rulemaking process as the agency implements the Dodd-Frank Act and Consumer Protection Act. The FDIC will have roundtable discussions with external parties on implementation issues to provide balanced public input throughout the rulemaking process. The discussions will be available for public viewing via webcast. The agency also will release the names and affiliations of private sector individuals who meet with senior FDIC officials to discuss implementing the new law through independent or joint rulemakings. The FDIC will also release the subjects of the meetings and webcast all open board meetings, including those regarding regulatory reform ...

CUNA E-guide covers ADA guidelines for ATMs

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WASHINGTON (8/16/10)—The ATM machines provided by credit unions and other financial institutions will be required to be usable by individuals that are blind or have low vision under changes to the U.S. Department of Justice’s (DOJ) Americans with Disabilities Act (ADA) regulations, the Credit Union National Association (CUNA) reports. ATMs must also have modifications that allow them to serve the needs of deaf or hard of hearing members, as well as members that are wheelchair bound, according to the DOJ. Specifically, at least one ATM at a given location must be provided to ensure compliance with Section 707 of the ADA. The adapted ATMs must also be able to provide a member with all the functionality of a conventional ATM. ATMs that are installed on the outside and inside of a given credit union would be considered separate locations, according to CUNA. For additional details, follow the resource link to access CUNA’s e-Guide.

NCUA argues record supports Kappa Alpha Psi FCU closure

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WASHINGTON (8/16/10)--The ordered liquidation of failed Kappa Alpha Psi FCU was neither “arbitrary” nor “capricious,” and did not represent an “abuse of discretion,” the National Credit Union Administration (NCUA) said in court papers filed on Friday. The NCUA in its statement filed with the U.S. District Court for the District of Columbia added that the potential liquidation of the approximately $750,000-in-asset credit union, which was ordered on Aug. 3, was supported by the “administrative record” created by NCUA. The credit union attempted to obtain an injunction against the NCUA following the announcement of the liquidation, alleging that a "significant drop" in its net worth ratio between 2007 and 2009 "was attributable to 'full accrual' accounting” and the costs created by the NCUA’s assessments to replenish its Temporary Corporate Credit Union Stabilization Fund. John McKechnie, director of public and congressional affairs at NCUA, said early last week that the credit union was involuntarily liquidated due to its inability to “generate consistent operational profits; build its net worth position; maintain its records in a sound manner; grant quality loans; or adequately collect on delinquent loans." "Newly founded credit unions have 10 years to reach an adequate capital level, which is a 6% net worth ratio; however, Kappa Alpha Psi FCU has never been able to show it can reach that level of capitalization," McKechnie told News Now. The community development credit union, which was established to serve members of the Kappa Alpha Psi fraternity and affiliated organizations, reported a net worth ratio of 0.58% as of Dec. 31. In its statement, the NCUA noted that while Kappa Alpha Psi said that it was liquidated by a “surprise” order, current credit union regulations do not require the NCUA to serve prior notice in situations where the credit union in question is “determined to be insolvent or bankrupt.” Further, the NCUA said that while the credit union claims that it’s net worth ratio had improved from 1.95% to 3.67% during the 2010 second quarter, “such a showing would not preclude liquidation under the applicable NCUA regulations.” The NCUA's filings dispute the net worth level reported on the credit union's second quarter call report, claiming that the credit union's board failed to properly accrue approximately $20,000 in data processing expenses. Kappa Alpha Psi will have until noon today to respond to the NCUA statement, and the NCUA will then need to reply by noon on Tuesday. A full hearing on the case is scheduled for Wednesday.

Freddie Mac reports record 15- 5-year mortgage rates

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WASHINGTON (8/16/10)--Freddie Mac’s weekly mortgage rate survey recorded a five-year adjustable rate of 3.56% during the week ended Aug. 12, a record low since Freddie Mac began reporting on that rate in 2005. That five year rate averaged down from last week when it averaged 3.63 percent. A year ago, the 5-year ARM averaged 4.75 percent. Fifteen year mortgage rates also reached a record low during the week, with a reported average of 3.92%. Freddie Mac Vice President/Chief Economist Frank Nothaft said that these and other low mortgage rates “are helping to heal many battered local housing markets by increasing home-purchase activity.” Thirty-year fixed rate mortgages averaged 4.44% during the week, down from the 5.29% average recorded during the previous year, while one-year Treasury-indexed adjusted rate mortgages averaged 3.53%. For the Freddie Mac release, use the resource link.