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Inside Washington (08/28/2008)

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* WASHINGTON (8/29/08)--Democrats are optimistic that if elected president, Sen. Barack Obama (D-Ill.) would create smart financial services policies to help the troubled market (American Banker Aug. 28). Obama would create “market friendly” regulation, according to House Financial Services Committee Chairman Barney Frank (D-Mass).. Obama also would push for more oversight, said Rep. Charlie Wilson (D-Ohio). Rep. Gregory Meeks (D-N.Y.) said Obama is pro-business, but is not interested in over-regulating. Rep. Paul Kanjorski (D-Pa.) said Obama would be more pragmatic than opposing presidential candidate Sen. John McCain (R-Ariz). The Republican side is hurting for new ideas regarding financial services, and may not attract much support in Congress, he said ... * WASHINGTON (8/29/08)--American companies are on their way to using international accounting standards after the Securities and Exchange Commission took action Wednesday that would allow some American companies to implement the rules starting next year. By 2016, all American companies will be required to use the standards. Adopting the international standards would help investors compare companies in different regions (The New York Times Aug. 28). About 110 firms will be following the rules in their financial statements after Dec. 15, 2009. In order to qualify, the companies must be one of the largest 20 in their industry worldwide ... * ALEXANDRIA, Va. (8/29/08)--National Credit Union Administration (NCUA) Chairman Michael E. Fryzel toured and became a member of State Department FCU during his visit of the credit union’s headquarters here. The NCUA, like the credit union, is located in Alexandria. The NCUA said the chairman’s tour of the credit union was part of his outreach to the credit union industry during his first months in office. Pictured are Lavae Lindley (left) as she helps Fryzel open an account at the credit union (Photo provided by the National Credit Union Administration)… * ALEXANDRIA, Va. (8/29/08)--New London (Conn.) Security First FCU’s full payout is over 97%, the National Credit Union Administration (NCUA) announced Thursday. One month ago, the agency placed the credit union into liquidation after the credit union was considered insolvent. As of July 28, roughly 80% of the account balances were paid by the National Credit Union Share Insurance Fund, and 99.5% were paid by Aug. 28. The remaining accounts are being reviewed or have deposits in excess of the $100,000 federal insurance limit for individual accounts. NCUA is working to maximize recoveries for the benefit of uninsured depositors ...

Eight CUs among newest CDFI awardees

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WASHINGTON (8/29/08)--Donna Gambrell, director of the U.S. Department of the Treasury's Community Development Financial Institutions (CDFI) Fund, announced Thursday more than $54 million in awards for 89 organizations serving economically distressed communities across the nation. The awards are being made through the fiscal year 2008 round of the CDFI Program. The award recipient organizations are headquartered in 38 states and the District of Columbia. In her announcement Gambrell said, "By embracing new traditions of sustainability and economic diversification, CDFIs are helping to map the future of rural revitalization and growth." Among the awardees were eight credit unions who received a total of $4.2 million in assistance. In total, 26 credit unions applied for a total of $23.4 million under the CDFI program. The CDFI Program consists of two types of monetary awards: Financial Assistance and Technical Assistance. The program is funded through an annual appropriation from the United States Congress. The CDFI Fund receives applications on an annual basis and awards funds through a competitive process. Since inception, the CDFI Fund has awarded over $625 million through the CDFI Program. For more information and to read names of all recipients, use the resource link below.

Live from Denver Mica touts CUs on Fox

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DENVER, Colo. (8/29/08)—Speak to middle America in addressing the credit and housing crisis, was the advice that Credit Union National Association President/CEO Dan Mica had for the presidential nominees when asked by Fox Business Network Thursday.
Click for slide showSpeak to middle America in addressing the credit and housing crisis, was the advice that CUNA President/CEO Dan Mica had for the presidential nominees when asked by FOX Business Network Thursday. CLICK TO VIEW SLIDESHOW (Photo provided by CUNA) CLICK TO WATCH VIDEO
Mica said whether the new president is Democrat Barak Obama or Republican John McCain, their first order of business would be “do no harm.” A new president must assure Americans that their government is there as a back stop but won’t do anything to create any more jitters in the markets. Appearing live from INVESCO Field here just hours before Barack Obama is expected to accept the nomination to become the Democratic Party’s presidential candidate, Mica also touted the strength of the credit union system to a national audience during his Fox interview at the Democratic National Convention. Coolly espousing credit union virtues above the sound of a loud practice session of Michael MacDonald singing “America” in the background, Mica reiterated that credit unions have not been part of the subprime lending mess; rather they are helping to address the country’s credit crunch by continuing to lend.
“Credit unions are part of the solution, not part of the problem,” Mica told his Fox interviewers. “We weren’t part of the 125% loan, the liar loans.” For credit unions, Mica said, “liquidity is there” and he assured that deposits in credit unions are “absolutely” safe. “We have solid asset ratios. In fact, we are still lending and we’ve always had good, solid lending practices,” Mica said, adding, “Amid all this (market) chaos, there is a calm, a reasonable place to go—credit unions.” Use the resource link below to see full interview.

Compliance Can a CU change existing loan terms

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WASHINGTON (8/29/08)—When a federal credit union has been offering home equity line of credit (HELOC) loans to members for years, can it modify the terms of existing loans to reflect a newly adopted policy, asks the Credit Union National Association’s (CUNA’s) Compliance Challenge (CCC). Say, for instance, the credit union wants to set an interest-rate floor for all its adjustable-rate HELOCs. Simple enough, of course, for new loans: The credit union just has to change the language in its HELOC loan agreement. But can it effectively make this change for existing loans while maintaining compliance with the Truth in Lending Act and Regulation Z? Well, it might be tough, says the CCC. The credit union must obtain the member’s agreement in writing to add a floor interest rate to his or her existing HELOC loan. Regulation Z states that a creditor may only change the terms of a home equity plan when the change is insignificant or when the change benefits the consumer throughout the remainder of the plan. This just isn’t the case in the credit unions’ plan to set a rate floor. CUNA warns that it would be very unlikely that the credit union would receive written approval from all members to change terms on existing HELOC loans. And this would bring with it its own challenge: Since terms would remain unchanged on loans without written approval, the credit union's data processing system would have to be capable of tracking multiple HELOC plans—those with no change in terms and those with a change in terms. For more CUNA compliance tips, and more Reg Z information, use the resource links below.

CUNA mini blog keeps readers current on convention

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WASHINGTON (8/28/08)--Credit Union National Association (CUNA) Editorial Communication Vice President David Klavitter posts comments and observations almost minute by minute at the Democratic National Convention (DNC) in Denver. Credit unions are encouraged to check in on Twitter, a microblogging service, to get the latest credit union take on happenings at the DNC this week and at the Republican National Convention next week in Minneapolis and St. Paul, Minn. Twitter allows instant, extremely short online postings--limited to no more than 140 characters each. CUNA Staff and volunteers, state leagues and corporates are at the conventions and aim to raise the profile of credit unions during the national conventions. Use the resource link below to stay up-to-date: Follow Klavitter on Twitter.