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Interchange: Next Steps Examined In CUNA 'Inside Exchange'

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WASHINGTON (8/9/13)--Interchange, and the next steps for credit unions to expect as the result of a federal court ruling, is the subject of the latest episode of the Credit Union National Association's "Inside Exchange."

In this episode, CUNA General Counsel Eric Richard discusses with Paul Gentile, CUNA executive vice president of strategic communications and engagement, the court ruling striking down the Federal Reserve's rules on debit interchange, what that ruling means for credit unions--and what CUNA is doing about it.



CUNA has warned that the district court ruling will have "a potentially devastating impact on the ability of small debit card issuers, particularly credit unions, to continue offering this vital payments service to their members and customers."

CUNA currently is meeting with a broad coalition of finance industry representatives to chart a response strategy and approach to the court's decision, and is contacting Fed staff to detail the negative impact of the ruling on credit unions and other small card issuers as that agency considers an appeal.

Cleveland Fed's Pianalto To Leave Early 2014

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CLEVELAND, Ohio (8/9/13)--The president/CEO of the Federal Reserve Bank of Cleveland, Sandra Pianalto, announced Thursday that she will retire early next year after heading the bank since 2003.  She joined the Clevelend Fed in 1983 as an economist in the Research Department.

"It has been an honor to serve as president of the Federal Reserve Bank of Cleveland and to participate on the Federal Open Market Committee during this extraordinary period in our country's economic history," Pianalto said announcing her 2014 departure.

She said she presently has no immediate plans "beyond continuing my involvement in civic and non-profit activities."  She added: "I will not consider any opportunities until my successor is in place.  I look forward to staying actively engaged in leading the Bank and serving on the Federal Open Market Committee until the selection process is complete."

NEW: Federal Student Loan Rate Bill Expected To Be Signed Today

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WASHINGTON (8/9/13, UPDATED 11:50 a.m. ET)--It is expected that President Obama will sign a bill this afternoon that will lower the federal student loan rate to 3.86%, for direct loans for undergraduate students, after it shot up to 6.8% in July.
 
The bill, known as the Bipartisan Student Loan Certainty Act, passed the U.S. House a little more than a week ago and was approved by the Senate a week before that.
 
The legislation ties federal student loan interest rates to the 10-year Treasury note. Individual rates will be locked in for the life of the loan. Students and their families will be protected from sharply increasing interest rates.
 
The bill does not affect private student loan rates.

Fannie Mae Reports $10.1B 2Q Profit, Amid GSE Debate

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WASHINGTON (8/9/13)--Fannie Mae's second quarter financial results filed with the Securities and Exchange Commission show net income of $10.1 billion, marking the sixth consecutive quarterly profit for the conserved government-sponsored enterprise (GSE).

Fannie Mae said it will pay $10.2 billion in dividends to the U.S. Treasury as it continues to settle debts incurred following the 2008 government conservatorship. The GSE will have paid $105 billion in dividends to the Treasury when this latest payment is made in September. That is against a cumulative draw from Treasury of $116.1 billion.

Fannie Mae's results are attributed to continued stable revenues, boosted by a significant increase in home prices in the quarter, Fannie Mae said. The company expects to remain profitable for the foreseeable future.

Fannie Mae in its quarterly financial statement said it has "devoted significant resources toward helping to build a new housing finance system for the future," including pursuing the strategic goals identified by its conservator, the Federal Housing Finance Agency.

A range of housing finance policy changes are being considered by the U.S. House, the Senate, and the Obama administration, and the winding down of Fannie Mae and fellow GSE Freddie Mac is a consistent theme in all three plans.

As these plans are discussed, the Credit Union National Association continues to emphasize that consumers are increasingly choosing credit unions as their mortgage lenders and that it is critical credit unions have fair and readily available access to a functioning, well-regulated secondary market that accommodates their members' demand for long-term, fixed-rate mortgages.

CUNA has also identified maintaining widespread access to safe, responsible financing like the 30-year fixed rate mortgage as a priority.

NCUA Letter Answers Corporate Assessment Questions

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ALEXANDRIA, Va. (8/9/13)--In its Letter to Federally Insured Credit Unions (13-CU-06) released Thursday, the National Credit Union Administration reminds all credit unions to expect an invoice in September for their assessment for the Temporary Corporate Credit Union Stabilization Fund (TCCUSF). The payment is due Oct. 16.
 
The NCUA, at its July open board meeting, declared an assessment for the TCCUSF of eight basis points (bp) of credit unions' insured shares as of June 30, 2013. The assessment is at the very low end of the NCUA's estimated range of 8-11 bp announced last November and is a significant improvement over last year's assessment of 9.5 bp.
 
The Credit Union National Association has noted that with the improvement of the performance of the NCUA's legacy assets, stabilization fund assessments should no longer be necessary after the 2013 payment. The range for any additional assessment for 2014, if any, will be set by the NCUA board in November.
 
The NCUA letter also provides answers to key questions about the assessment. The topics addressed include:
  • Why must all credit unions pay assessments?
  • Why is the assessment set at 8 basis points?
  • How should my credit union account for the assessment?
  • What is the impact of the 2013 assessment on credit unions' earnings and net worth?
  • Will examiners take the effect of the assessment into account when evaluating credit union earnings and net worth?
  • What are the net remaining projected costs of the corporate resolution program?
 Use the resource link to read the complete letter.

CUNA: FTC Should Limit Telemarketing Rule's Impact On Payments System

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WASHINGTON (8/9/13)--The Credit Union National Association appreciates the Federal Trade Commission's (FTC) ongoing efforts to limit the activities of unscrupulous telemarketers that defraud consumers, but in a recent comment letter CUNA outlined concerns regarding how proposed amendments to the FTC's Telemarketing Sales Rule could impact the broader payments system.

The FTC's proposed changes, among other things, would prohibit sellers and telemarketers when they are engaged in "telemarketing" activities on the phone, from accepting or requesting four types of "novel payment methods":
  • Remotely created checks (RCCs);
  • Remotely created payment orders;
  • Cash-to-cash money transfers; and
  • Cash reload mechanisms.
A complete ban on these four payment methods in telemarketing activities would likely shift some of these payments to other payment systems, and financial institutions and other entities will have to make appropriate risk management changes, CUNA Regulatory Counsel Dennis Tsang wrote.

"We are not aware that credit unions use these types of payment methods in telemarketing or engage in telemarketing practices that harm consumers," he added.

Noting that the proposed rule could impact check-related rules, including the regulation of RCCs, CUNA encouraged the FTC to provide information to payment processors and others to comply with the rule, while permitting legitimate payments to continue.

The CUNA letter also urged the FTC to coordinate closely with federal financial regulators to ensure legitimate payments, including emerging payment applications and financial institution collections activities, are not negatively impacted.

For the full CUNA comment letter, use the resource link.