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CUNA confirms NCUSIF saying premium only around 0.15

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WASHINGTON (8/31/2009)--CUNA has confirmed with NCUA that it is still saying credit unions will only be charged a premium of about .15 percent this fall. CUNA made the confirmation after other incorrect reports began circulating on the Internet today (Friday) that an extra NCUSIF premium or special assessment is under consideration by the agency. In June, NCUA indicated that federally insured credit unions should expect a premium assessment of around .15 percent (or higher, depending on NCUSIF costs) that would likely be approved by the NCUA Board in September. The agency is planning no separate insurance assessment in addition to the one it has already indicated credit unions will be charged. "In light of this, our reading of the situation is that credit unions can still expect just the roughly 15 basis point premium to be levied by NCUA next month," said CUNA Chief Economist Bill Hampel. CUNA continues to monitor the situation and will keep credit unions updated on all agency actions involving the NCUSIF.

Some guidance on examiner flexibility for CARD Act issued by NCUA

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WASHINGTON (8/31/09)--Noting that some credit unions may have technical difficulties in complying with the CARD Act, NCUA Board Chairman Debbie Matz today (Friday) issued a statement citing the "need for examiners to work with credit unions on a case-by-case basis." "The amount of time necessary to come into full compliance will likely vary, depending on the type of credit arrangements a credit union offers its members and, in many cases, the cooperation of third party vendors in revising billing procedures and statements," Matz stated. "All credit unions are expected to come into full compliance as early as reasonably possible, and to demonstrate their efforts to do so. "In the interim, credit unions should follow the alternative allowed by the Federal Reserve. Like any regulatory compliance matter, examiners will review credit union efforts to achieve compliance." The NCUA Board chairman added that "In no event can credit unions impose a late fee or change terms except as permitted by the Credit CARD Act and the Federal Reserve's regulation." Under the Credit Card Accountability, Responsibility and Disclosure Act (CARD Act) and the Federal Reserve Board's interim final rule, financial institutions must mail or deliver periodic statements for open-end consumer credit plans at least 21 days before the payment due date or lose the ability to treat the payment as late if it is made after the 21-day period. Congress established an Aug. 20, 2009, effective date for the requirement. However, the Federal Reserve has stated that for a "short period of time" a creditor may technically comply by prominently disclosing elsewhere on or with the periodic statement that the consumer's payment will not be treated as late for any purpose if received within 21 days after the statement was mailed or delivered. Matz' statement acknowledged that the Fed's failure to define "short period of time" has "caused credit unions and their representatives to ask for guidance as to the duration of the short period of time for which credit unions may use this alternative." Matz' statement today (Friday) was intended to provide some additional guidance. CUNA Senior Vice President of Regulatory Advocacy and Deputy General Counsel Mary Dunn described the NCUA Board Chairman's statement as "a useful step in the right direction" which "provides more indication of the agency's awareness of credit unions' compliance hurdles." She said CUNA will continue its efforts with NCUA to ensure examiners provide needed flexibility to credit unions that are making good faith efforts to comply. Earlier this month, CUNA sent a letter to the agency leadership urging it to instruct examination staff to be flexible as credit unions struggle to comply with aspects of the CARD Act. "There is no question that the CARD Act is inflicting a significant toll on the credit union system," CUNA President and CEO Dan Mica wrote. "In recognition of this and the range of other issues credit unions are facing, including the sagging economy and funding for NCUA's corporate stabilization program, we urge you to direct NCUA examiners to work with credit unions as they reasonably determine what is their best approach for compliance."

Matz NCUA future framed by big issues

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WASHINGTON (8/31//09)—The agenda for the September National Credit Union Administration (NCUA) open board meeting, the first at which Deborah Matz will be chair, may not have been set yet—but some glimpses of the new chairman’s future are clear. One of the biggest and most pressing issues facing the agency right now is its effort to stabilize and restructure the corporate credit union system—a plan that recently generated around 500 public comment letters. The NCUA board members have been careful not to indicate any preconceived notions about how the restructuring should look and they have repeatedly encouraged credit unions to send their ideas for a revamping plan. Matz seemed to mirror this approach at her confirmation hearing in July when the subject of corporate credit unions was raised. Matz noted simply that during her previous tenure on the NCUA board, she voted against a 2002 corporate credit union rule because she believed it did not adequately address her concern regarding an undue concentration of risk. Risk concentration is an area of interest to other board members as well, and to a back drop of the nation’s hard-hit economy, which is just sending up shoots of recovery, it is likely to see much debate in public and in private as Matz moves the corporate plan forward. Matz assumes chairmanship of the NCUA just as the U.S. Congress returns to Washington after its month-long summer district work session. While she will be navigating her agency through such regulatory considerations as compliance with new Credit CARD Act rules (see related story: Some guidance on examiner flexibility for CARD Act issued by NCUA), the Obama administration’s efforts for overall financial institution regulatory reform will certainly also be on the board members’ minds. Specifically, Matz assuredly will be closely monitoring the possible development of a Consumer Financial Protection Agency and considering whether the NCUA will pursue Michael Fryzel’s plan to establish its own consumer panel within the auspices of the agency. Other legislative issues that will help compose the framework within which the federal regulator operates in the near term are expanded member business lending, as proposed in a bill introduced by Rep. Paul Kanjorski (D-Pa.), and, of pivotal interest to credit unions, any actions to allow supplemental capital. After the agency’s customary August break for open board meetings, Matz will be joining board members Fryzel and Gigi Hyland for a public meeting on Sept. 24.

Compliance Due diligence a must when working with NCUA

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WASHINGTON (8/31/09)--Credit unions should take care to use the same due diligence when dealing with the National Credit Union Administration or other regulators that they take when dealing with everyday vendors, attorney Christopher Pippett advised in the August issue of Credit Union Magazine. To ward off potential letters of understanding and agreement (LUA) from regulators, Pippett advised that credit union officials should push back against regulators if they do not agree with a course of action or believe that they can meet a deadline imposed by a certain timetable. In the event that a LUA is issued, credit unions should seek legal advice before signing it, and should never simply sign a LUA when it is first presented by a regulatory examiner. Further, the attorney that is representing the credit union in the event of a LUA should be familiar with credit union law, Pippett said. While reviewing the LUA, credit unions should discuss reasonable alternatives that could address the examiners concerns and evaluate the prospective timeline for any recommended actions. Credit unions should also ensure that the document reflects steps that the credit union has taken to address the regulator’s concerns. The LUA should not be made public, and should contain a definite end date. Credit unions should also make sure to communicate with the regulator as the agreement is produced and should continue that sense of communication as the LUA is executed, Pippett added. For the full story, use the resource link.

Inside Washington (08/30/2009)

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* WASHINGTON (8/31/09)--One part of the Obama administration’s regulatory reform plan--the elimination of national bank preemption--has gone largely unnoticed by lawmakers. But many financial institutions say the elimination would have a significant impact. The provision would allow states to act independently and separately, “balkanizing” the industry, according to Howard Cayne, Arnold & Porter partner. Comptroller of the Currency John Dugan has rallied against preemption, but it’s not clear if his congressional counterparts agree (American Banker Aug. 21). However, Rep. Barney Frank (D-Mass.) wants the provision to stay, arguing that the Comptroller of the Currency overstepped its bounds in 2004 when it adopted rules codifying its preemption authority. Community banks have fought against the proposed consumer protection agency because it could set rules so strict states won’t go beyond them, while larger banks have opposed the preemption. The Senate may be the best place for the banking industry to fight the provision. Mark Calabria, former Republican committee aide and Cato Institute director of financial regulations, suggested Democrats could make a trade-off with the industry by allowing the preemption and detailing stronger consumer protection rules ...