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Inside Washington (08/08/2012)

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  • WASHINGTON (8/9/12)--Freddie Mac Tuesday reported net income of $3 billion for the second quarter of 2012, compared with $577 million in the first quarter. The company also reported income of $2.9 billion for the quarter ended June 30, compared with income of $1.8 billion for the quarter ended March 31. The increase in net income in the second quarter reflected a decline in the provision for credit losses due to positive trends in the housing market, the government-sponsored enterprise said. The second-quarter income primarily reflected higher net income, partially offset by higher fair value losses on non-agency available-for-sale (AFS) securities that resulted from spread widening. Freddie Mac does not require a draw from Treasury for the second quarter because the company had positive net worth as of June 30. The company's $1.1 billion net worth as of June 30, reflects second quarter comprehensive income of $2.9 billion, partially offset by the $1.8 billion quarterly dividend payment to Treasury on the company's 10% senior preferred stock …

State legislative group set to adopt dual system policy

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WASHINGTON (8/9/12)--A provision backed by the Credit Union National Association (CUNA) reinforcing support for a dual chartering system is a key provision of the Banking and Financial Services Policy Directive that the National Conference of State Legislatures (NCSL) is scheduled to adopt this week at its annual meeting in Chicago.

"NCSL believes that state credit union supervisors have the primary responsibility for assuring the safety and soundness of credit unions chartered by and operating under state law and regulation NCSL supports the authority of state governments to determine how state financial institutions must be insured and opposes any efforts by the federal government to preempt states' authority to govern state deposit insurance requirements,'' according to the policy statement, which is the result of a condensation and combination of existing policies.

The conference said it feels the need to take a strong stance because it is "concerned that Congress, the federal banking regulators, and the federal courts have sought to nationalize control of financial services in Washington, D.C."

The statement goes on to say that states must "provide a credible regulatory environment,'' so credit unions avoid practices that can threaten the National Credit Union Share Insurance Fund's  (NCUSIF) financial solvency.  It added that the National Credit Union Administration has a "legitimate role'' if state agencies don't do their job properly, but the federal agency's "regulations and policies should be crafted in a way that minimizes the preemption of state authority."

CUNA, which is sponsoring a booth at this week's NCSL convention, opposes any unnecessary restrictions on conversion from one system of credit union supervision to another. It favors having the NCUA and state supervisory authorities act cooperatively.

CUNA seeks CFPB clarity on card disclosure change

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WASHINGTON (8/9/12)--The Credit Union National Association (CUNA) has sought guidance with the Consumer Financial Protection Bureau (CFPB) to clarify whether a seemingly minor change in credit card account opening disclosure forms would trigger a whole new requirement for a 45-day advance notice of change in terms.

The question revolves around the transfer of Regulation Z authority to the CFPB from the Federal Reserve Board as required by the Dodd-Frank Act.

Certain changes to the bureau's version of the Open-End Model Forms require credit unions to modify their credit card applications and solicitations and their account-opening disclosures to refer to the CFPB and its website--rather than to the Fed and its website.

"Although that change may seem relatively minor," explains Mike McLain, CUNA senior compliance counsel, "such a change is defined in Reg Z as a 'significant change' and, if CFPB agreed, it would trigger a 45-day advance notice." Credit unions and other card issuers have until Jan. 1, 2013 to switch the website references in their card forms.

CUNA has clarified with the CFPB that the change should not trigger a need for a 45-day advance notice of change in terms.

"However, credit unions that want to reduce the risk of litigation may still want to send their credit card accounts a notice anyway," McLain says.

Komyathy named to NCUAs examinations office

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ALEXANDRIA, Va. (8/9/12)--JeanMarie Komyathy is the National Credit Union Administration's (NCUA) new director of risk management in its Office of Examination and Insurance (E&I), the agency announced Wednesday.

Komyathy assumes her new duties Sept. 3. She has been with the NCUA since 1995 starting her career as an examiner and most recently serving as director of special actions in NCUA's Region II, where she supervised a team of problem-case officers.

In 2007 and 2008, she served a detail at the U.S. Department of Justice to assist in the investigation and prosecution of Carol Aranjo, former chief executive of the D. Edward Wells FCU, who was convicted in 2008 of fraud.

NCUA Chairman Debbie Matz said Komyathy's experience make her "ideally suited" to her new post, adding that her expertise will complement "E&I's already strong management team."

CU-backed candidates fared well in primaries

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WASHINGTON (8/9/12)--Tuesday's primaries in Kansas, Michigan, Missouri and Washington provided more good news for credit union allies on Capitol Hill and state legislatures.

In Kansas' 33rd Senate district, state Rep. Mitch Holmes defeated state Sen. Ruth Teichman in the GOP primary. Teichman had been a vocal credit union opponent who led an effort several years ago to restrict the fields of membership of state-chartered credit unions in the Sunflower State.

The Kansas Credit Union League and local credit unions worked actively on behalf of Holmes, a credit union member and supporter, including providing volunteer support, fundraising, and sending endorsement letters to their membership.

In Missouri, Rep. Todd Akin, who had the backing of the Credit Union National Association's (CUNA) Credit Union Legislative Action Council (CULAC), was an upset victor in the Republican primary for U.S. Senate. Akin has co-sponsored legislation to raise the cap on credit union member business lending (MBL).

Akin won with 36% of the vote. In November, he will challenge incumbent Sen. Claire McCaskill, whom CULAC supported in her Democratic primary.

Because of redistricting, two credit union friends faced off in the Democratic primary in the 1st congressional district. Rep. Lacy Clay defeated Rep. Russ Carnahan (D) 62%-35%.

Clay is a member of the House Financial Services Committee and a co-sponsor of legislation to raise the cap on MBLs and supports allowing credit unions to access supplemental capital.

Carnahan is also a co-sponsor of the MBL legislation and supports access to supplemental capital.

CULAC contributed to both candidates this cycle, prior to their being redistricted together.

In Michigan's 14th congressional district, Rep. Gary Peters defeated Rep. Hansen Clarke 47%-35% in a Democratic primary caused by both of these credit union-supporting candidates being placed together in the same district because of redistricting.

Peters is a member of the Financial Services Committee and backed credit union- friendly legislation such as raising the caps on MBLs and delaying the implementation of interchange regulations. Clarke held similar positions.

As with the Clay-Carnahan race in Missouri, CULAC contributed to both candidates prior to their being redistricted together.

In Washington's 1st congressional district, the CULAC-backed favorite candidate Steve Hobbs (D) failed to make the cut in a crowded field in the primary.  The general election will feature a race between John Koster (R) and Suzan Del Bene (D). The vacancy was created by the resignation of Rep. Jay Inslee (D), the Democratic nominee for governor.

CUNA Vice President of Political Affairs Trey Hawkins commended the credit union efforts in in Kansas, Michigan, Missouri and Washington saying, "Credit unions win politically when they become actively involved like this."

He added that CULAC "will continue to be in the game on behalf of credit union-friendly candidates, and will aggressively support credit union friends in this year's elections."

SCRA disclosure form expiration date extended

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WASHINGTON (8/9/12)--Credit unions and other mortgage lenders should note that the U.S. Department of Housing and Urban Development (HUD) has updated the expiration date on its HUD-92070, the form that spells out the legal rights and protections under the Servicemembers Civil Relief Act (SCRA).

The expiration date was pushed back by more than two years--to Nov. 30, 2014 from July 31 of this year.

HUD requires mortgage lenders to notify delinquent homeowners of the availability of homeownership counseling offered through the lender, if applicable, and through HUD-approved counseling organizations.

In addition, lenders must notify homeowners in default of the mortgage and foreclosure rights of servicemembers and their dependents under the SCRA, in case those rights apply to the borrower. This additional notice requirement became effective in late 2006. 

"The only change to the HUD-92070 form appears to be the expiration date," notes Credit Union National Association Director of Compliance Information Valerie Moss.  She adds a warning to compliance officers: The last form update contained some typos, so beware, since they may not have been corrected.

Use the resource link to download the SCRA notice. Also, CUNA members can visit the CUNA CompBlog for up-to-the-minute compliance tips.