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NCUA opines on abandoned real estate sales requirements

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ALEXANDRIA, Va. (8/6/09)--Federal credit unions that list abandoned properties that are under their possession as “for sale” through a real estate broker and/or a real estate listing service will meet portions of the National Credit Union Administration’s (NCUA) fixed asset rule that require FCUs to publicly advertise their abandoned properties for four years after they are acquired, according to a recent NCUA legal opinion letter. Under the NCUA rules, abandoned property refers to “real property an FCU is no longer using” and can include property that was purchased by the FCU with the intention of expanding the financial institution, NCUA Associate General Counsel Sheila Albin wrote. The rule, which generally limits FCUs investment practices in fixed assets, specifically requires FCUs to publicly advertise any property that has been abandoned for four years and requires that property to be sold within five years. However, Albin wrote, the NCUA can grant extensions to FCUs. The rule also requires FCUs to “make diligent efforts to dispose of and seek fair market value for abandoned property,” some of which could be beyond the scope of simply listing the property with public signage or with an agent. To read the complete letter, use the resource link.

Comment on flood insurance guidance changes sought CUNA

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WASHINGTON (8/6/09)--The Credit Union National Association (CUNA) has issued a regulatory comment call on recently proposed additions to a series of flood insurance-related questions and answers that are provided by the National Credit Union Administration (NCUA) and other financial regulators. The new content, which addresses, among other items, second lien mortgages, civil money penalties, loan participation, construction loans, insurable value calculations, are a response to public comments to the agencies, and will both address new areas and clarify some existing guidance. The U.S. House also recently agreed to extend the National Flood Insurance Program, which was set to expire on Sept. 30 of this year, through March 31, 2010. The Senate has not yet voted on the proposed extension. CUNA is asking credit unions to list their concerns regarding proposed changes to the guidance on replacement cost valuations and provisions for implementing force placement insurance when a previous insurance policy has lapsed. The Q&A revisions will become effective on Sept. 21. The NCUA will also accept comments regarding the new Q&A additions until this date. Comments are due to CUNA by September 10. For more information, use the link.

Inside Washington (08/05/2009)

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* NAPERVILLE, Ill. (8/6/09)--Speaking before the Illinois Credit Union Leagues Small Asset Size Conference, in Naperville, Ill., National Credit Union Administration Chairman Michael E. Fryzel noted the historical importance of small credit unions to the industry overall. While commending the Illinois League for its educational work and its assistance to small credit unions, Fryzel commented that while smaller CUs can be challenged by the “competitive pressures, financial market turmoil and constant technological changes” of the financial system. However, Fryzel said that in spite of those challenges, small credit unions are “closer” to their members, have a “more immediate relationship” than many of their larger counterparts, “and have the ability to adapt and manage change as well as any other group in the credit union movement…” * WASHINGTON (8/6/09)--A Senate panel Tuesday discussed the feasibility of a single banking regulator. The Obama administration has proposed spreading the oversight of banks over several agencies. Federal Deposit Insurance Corp. (FDIC) Chair Sheila Bair said consolidating regulators may not solve the problems that caused the financial crisis. John Bowman, acting director of the Office of Thrift Supervision, also said he opposed a single regulator. Comptroller of the Currency John Dugan and Federal Reserve Board Gov. Dan Tarullo said they were open to consolidation, but Tarullo warned that a single regulator could mean that some agencies--like the Fed--would lose insight into how banks are functioning. On June 17, the Treasury issued a report on the financial regulatory system indicating that it would allow the National Credit Union Administration (NCUA) to maintain its safety and soundness authority over credit unions ... * WASHINGTON (8/6/09)--The Securities and Exchange Commission (SEC) is working to curb flash trading, which occurs when buy and sell orders are shown to high-frequency traders before the orders are passed onto others (The New York Times Aug. 5). The orders are shown for 30 milliseconds, but are perceived to give some investors an unfair edge over other investors. Sen. Charles Schumer (D-N.Y.) said he wants to know if investors are using the technology for gaming markets. He has threatened to introduce legislation that would eliminate flash orders. The SEC also could introduce rules to prevent dark pools--which are only open to select investors ... * WASHINGTON (8/6/09)--The Treasury said Wednesday it will issue more inflation-protected securities--TIPS--to encourage investors to buy the debt the Treasury needs to sell to help the economy. Treasury also said it could replace 20-year TIPS with 30-year TIPS, which would create more liquidity (Reuters Aug. 5). China holds most of the U.S. government’s debt and has indicated that it would buy more securities. Issuing more TIPS is one way the Treasury is reviewing help to the budget deficit (The Wall Street Journal Aug. 5) ...