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CUs spread out across Denver for Democrats event

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DENVER (8/26/08)--The Credit Union National Association's (CUNA) Homes for Our Troops video played throughout convention hall and on national television last night after credit union representatives fanned out to engage lawmakers and political leaders during the Democratic National Convention in Denver. The video was shown on the convention floor shortly before U.S. Sen. Ted Kennedy (D-Mass) addressed the assembly. C-SPAN TV aired the video in its entirety. During the day, CUNA sponsored the National Journals’ Daily Briefing, VIP convention viewing reception, as well as a Homes for Our Troops reception. During the morning’s Daily Briefing, journalist Ron Brownstein hosted a discussion with panelists:
* Andy Stern, president, SEIU; * Will Marshall, president, Progressive Policy Institute; Founder, NDN; * Ellen Malcolm, President, EMILY’s List; and * Eli Pariser, executive director, MoveOn.org.
Click for slide show U.S. Rep. Debbie Wasserman Schultz (D-Fla.), left, and CUNA Director of Federal Legislative Affairs Michele Johnson during an event Sunday at the Democratic National Convention in Denver. Wasserman Schultz is a member of the House Judiciary Committee and earlier this summer aligned with credit unions to oppose a bill that would give merchants an antitrust exemption to negotiate interchange fees. (Photo provided by Patrick Collins)
Pollster Stan Greenberg also appeared on Monday’s Daily Briefing to unveil results of a new survey from the Democracy Corps called “Back to Macomb.” The study follows the 24-year voting preferences of people living in Macomb County, Mich. While it was the convention’s first day, CUNA Legislative Affairs Vice President Ryan Donovan, who attended the 2004 Democratic National Convention in Boston, said so far this year’s convention has a “much different feel to it.” Donovan attributed the difference to they cities’ varied geographic layouts. CUNA Political Director Trey Hawkins said both the Democratic and Republican National Conventions are “an excellent opportunity for credit union to be in front and center of a very concentrated collection of lawmakers and political leaders at the same time.” The four-day convention happens Monday through Thursday. CUNA, the state credit union leagues, and other credit union representatives also will participate in the Republican National Convention happening next week in Minneapolis and St. Paul, Minn. CUNA and credit unions have been involved in these national events since 1988.

Inside Washington (08/25/2008)

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* WASHINGTON (8/26/08)--California has denied a request from IndyMac to investigate Sen. Charles Schumer (D-N.Y.). IndyMac claims that letters Schumer sent in June to the Office of Thrift Supervision about his concerns with IndyMac triggered the bank’s failure (American Banker Aug. 25). IndyMac had asked California State Attorney General Jerry Brown to investigate the senator. Brown said there is no reason to believe Schumer’s statements were factually false ... * WASHINGTON (8/26/08)--The Federal Reserve Board should be granted explicit oversight authority for systemically important payment and settlement systems, Fed Chairman Ben Bernanke said in a speech Aug. 22. The Fed continues to monitor systemically important payment and settlement systems and compares their performance with international standards. But the Fed doesn’t have general statutory authority to oversee the systems. “Instead, we rely on a patchwork of authorities, largely derived from our role as a banking supervisor, as well as on moral persuasion to help ensure that the various payment and settlement systems have the necessary procedures and controls in place to manage the risks they face,” he said ... * WASHINGTON (8/26/08)--Nine former branches of Columbian Bank and Trust Co. in Kansas and Missouri reopened yesterday as Citizens Bank and Trust branches (TheStreet.com Aug. 25). Columbian was closed on Friday by regulators. The bank had $752 million in assets, and suffered a $5.2 million loss during the second quarter. The institution was added to the Federal Deposit Insurance Corp.’s “watch list” in May ... * WASHINGTON (8/26/08)--The U.S. Court of Appeals for the Sixth Circuit in Cincinnati ruled Friday in favor of the arguments the Office of Thrift Supervision made on behalf of State Farm Bank after a lower court ruled that the Home Owners Loan Act did not preempt state and local laws governing agents selling the bank’s products (American Banker Aug. 25) ...

Revamp of MBL approach urged by CUNA

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WASHINGTON (8/26/08)—The Credit Union National Association (CUNA) is recommending a major overhaul in the National Credit Union Administration’s (NCUA’s) regulatory approach to member business lending (MBL). Rather than setting parameters on MBLs that restrict the ability of credit unions to serve businesses, CUNA believes the NCUA has the authority to pare down its rule dramatically to include only those provisions that are directed by the Federal Credit Union Act, leaving those issues such as Loan to Value ratios, equity requirements and other issues to be addressed in credit unions' MBL policies and in guidance from NCUA. As part of its policy to review all existing regulations every three years, the NCUA in May sought comment on how its MBL rules should be revised or clarified. CUNA said in its Aug. 25 comment letter: “The FCU Act contains few provisions that address MBLs. In general, in addition to limits on one borrower, the provisions in the Act that cover MBLs are the total asset limitations and exceptions and the provisions under prompt corrective action that limit new MBLs for undercapitalized credit unions.” “In light of the limited provisions in the Act regarding MBLs, we think NCUA has latitude to develop an improved approach to MBL regulation,” wrote Mary Dunn, CUNA deputy general counsel. The CUNA letter noted that business lending is a generally safe activity for credit unions and an important source of credit for small businesses across the country, especially amid reports that small businesses are having trouble getting a loan from a bank. However, CUNA acknowledged that its proposed revamping of NCUA MBL rules may not be achievable given the agency’s reluctance over the years to encourage MBL growth. Therefore, CUNA agreed that the agency can and should make clarifications to the MBL rule in a number of areas. These include: loan to value ratios, loan participations, waivers, the two-year experience requirements and regulatory restrictions generally as they relate to MBLs in order to improve the rule and facilitate lending to small businesses. CUNA’s letter also takes the opportunity to address the misinformation about member business lending that is contained in comment letters from banking trade groups. Use the resource link below to access the complete CUNA comment letter.

Fryzel re-emphasizes proper third-party due diligence

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WASHINGTON (8/26/08)—The National Credit Union Administration (NCUA) continues to emphasize the importance of proper due diligence in setting up and maintaining third-party relationships in a recent Letter to Credit Union (08-CU-19). Chairman Michael Fryzel writes that third parties, including brokers and correspondents, “can and will continue to play an important and ever-increasing role in how credit unions operate.” “While a broker or correspondent can assist in facilitating transactions, credit union management is responsible for controlling the risk being added to the balance sheet,” Fryzel reminded credit unions. The NCUA letter said because credit union management retains fiduciary responsibility to members and the credit union in third party arrangements, it is imperative that credit unions keep in mind:
* Board-established lending policies and procedures should be established to fit the product—with risk tolerance levels based on management analysis, established regulatory thresholds, and sound business rationale; * Loan growth should be slow and controlled, activity should be within reasonable risk thresholds, and building a concentration in a particular loan type and/or in an unfamiliar geographic area should be avoided; and * Broker and correspondent relationships need to receive ongoing due diligence commensurate with the risk and complexity of those activities, regardless of whether the third party has a credit union affiliation, such as being part of a credit union service organization.
In his letter, Fryzel also calls attention to Letter to Credit Unions 07-CU-13, Evaluating Third Party Relationships, which provides significant detail on due diligence required prior to and during third-party arrangements. Use the resource link below to access the NCUA letters on due diligence, an agency-sponsored Webinar on the subject, and the NCUA’s AIRES questionnaire on due diligence.

CUNAs immediate online convention coverage

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WASHINGTON (8/26/08)--Credit unions are encouraged to check in on Twitter, a microblogging service, to get the latest credit union take on happenings at the Democratic National Convention this week in Denver and at the Republican National Convention next week in Minneapolis and St. Paul, Minn. Staff and volunteers from the Credit Union National Association (CUNA), state leagues and corporates are at the conventions and aim to raise the profile of credit unions during the national conventions. CUNA Editorial Communication Vice President David Klavitter will provide frequent convention updates using Twitter. The service allows instant, extremely short online postings--limited to no more than 140 characters each. Use the resource link below to stay up-to-date: Follow Klavitter on Twitter.