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Washington Archive

Washington

Inside Washington (08/19/2008)

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* WASHINGTON (8/20/08)--Fannie Mae and Freddie Mac shares have been negatively affected by recent speculation that the Treasury Department would have to nationalize the government-sponsored enterprises (American Banker Aug. 19). Treasury Secretary Henry Paulson asked Congress last month to approve the department to purchase Fannie and Freddie shares and give the enterprises a higher line of credit. Though the Treasury wasn’t planning to purchase any shares, the move would reassure Wall Street, he said. Congress approved his request. Fannie’s shares fell 25% to $4.39 a share, while Freddie’s fell 22%, at $6.15 per share. The enterprises’ troubles continued Monday when a planned debt sale was not well-received ...

CUNA seeks clarifications on risk-based pricing notices

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WASHINGTON (8/20/08)—The Credit Union National Association (CUNA) agrees that the standard annual percentage rate should generally be designated as the credit term for purposes of determining what borrowers should received a risk-based pricing notice, as proposed by the Federal Reserve Board and the Federal Trade Commission (FTC). The joint Fed.-FTC proposal, in its entirety, would implement section 311 of the Fair and Accurate Credit Transactions (FACT) Act of 2003, which amended the Fair Credit Reporting Act. However, in an Aug. 18 comment letter CUNA argued that the risk-based pricing notices should be simplified so creditors will be more likely to use those as opposed to using an exception that allows them to provide credit score information to all consumers, as opposed to the risk-based pricing notice. CUNA also said several clarifications are necessary to the agencies’ joint plan to require disclosures when a consumer is receiving credit on less favorable terms than other consumers with better borrowing histories. For instance, CUNA cited the following examples:
* The proposed rule will require that these notices go to consumers who are receiving “materially less favorable” credit terms. This needs clarification as it may lead to situations in which one creditor would send more risk-based pricing notices than another, even if both offer similar APRs to consumers with similar credit histories. * The terms “most favorable terms” and “substantial portion of consumers” also need further clarification. * The risk-based pricing rule needs further clarification with regard to indirect automobile lending as it is unclear in certain situations as to which party should provide the risk-based pricing notice. CUNA believes the dealer is in the best position to provide the notice. * The proposed rule should also clarify who receives these notices when there is a joint application for credit.
CUNA warns that, as proposed, the requirement to provide risk-based pricing notices will result in delay and inconvenience for members who participate in multi-featured, open-end lending. CUNA believes there should be an exception to the timing requirements in these situations. For CUNA’s compete comments on the Fed/FTC plan, use the resource link below.

Better rate cap eligibility identifier wanted by DoD

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WASHINGTON (8/20/08)—The U.S. Department of Defense (DoD) has asked Congress to more clearly define who may benefit form a 2007 law that caps interest rates on payday, vehicle title, and refund-anticipation loans for military servicemembers. In a report to the Senate Armed Services Committee, DoD said that the lending cap has generally worked well to protect military servicemembers and their dependents from abusive payday loans. (American Banker August 19) However, the department urged Congress to better define who is eligible for the lending cap and recommended that lenders have access to the Defense Manpower Data Center, the database that tracks those eligible for military benefits. That recommendation was first set forth in a comment letter from HSBC North America Inc. to the Defense Department. The department report noted that anyone found in the database would be covered under the law and the approach could allow lenders an efficient method to assure compliance with the law and regulators a more consistent way to evaluate compliance.

Newspaper spotlights CUNA league outreach effort

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WASHINGTON (8/20/08)—“Lobbyists rethink convention strategy,"
Click to view larger image Politico highlights the efforts of CUNA and the leagues to build relationships through benevolent works. (CUNA Photo)
proclaimed an Aug. 19 headline in Politico, indicating the days of using big-dollar donations to national party conventions to gain notice are over. But there are ways to grab the attention of both the Democratic and Republican parties during their convention weeks, the article said, and the Credit Union National Association’s (CUNA’s) Homes for Our Troops is highlighted as a successful effort to stand out in the crowd. CUNA is noted as a group trying a successful new approach to “capturing the notice of a few wavering lawmakers or impressionable senior aides as they race from banquet spread to open bar during the Democratic convention next week in Denver and the Republican gathering in St. Paul, Minn., the following week.” As 173 organizations have spent $1.5 billion on federal political contributions and lobbying expenditures since the 2004 presidential election, CUNA has broken through the morass with an approach Politico labeled “Hit Them in the Heart.” Politico, a Washington-based daily political journal, culled the spending figures from a new Campaign Finance Institute and Center for Responsive Politics report expected to be released today. “The quickest way to capture the attention of people accustomed to a life of free food, easy booze and fawning admirers is to shove some compassion for others in their face,” the article said. It then described CUNA President/CEO Dan Mica’s decision to link credit unions with Homes for Our Troops, an organization that helps veterans, and set out to build a new home for the family of a disabled veteran in each city hosting a convention. "Throughout the process, Mica and his team enjoyed other dividends when they had multiple conversations with party officials, local leaders and the offices of House or Senate members who would be invited to the key-passing event,” reporter Jeannne Cummings noted. Quoted in the article, Mica explained the motivation of the credit union effort: “One of our credos is ‘people helping people. I think we were able to blend our motto and credo with the work we need to do to build relationships and inform legislators.” The beneficiaries of the effort are, in Denver, Army Staff Sgt. Travis Strong, who lost his legs when a roadside bomb hit his patrol vehicle in Iraq and, in the St. Paul area, Army Sgt. Marcus Kuboy, whose legs were severely injured when his Humvee exploded in Iraq. Use the resource link below to read the full story.