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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.

Inside Washington (08/27/2008)

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* WASHINGTON (8/28/08)--Minutes of the July 24 Federal Open Market Committee meeting with the Federal Reserve Board of Governors have been released. The committee and board met to consider proposals to extend or enhance Federal Reserve System liquidity facilities. The proposals passed. Participants expressed general support for them, but there was sentiment for altering the Term Auction Facility proposal to allow both 28- and 48-day credits. The committee extended until Jan. 30, 2009, its authorizations for the Federal Reserve Bank of New York to transact with primary dealers through the Term Securities Lending Facility (TSLF). Charles Plosser, president of the Reserve Bank of Philadelphia, dissented, saying that he viewed the net benefit of the TSLF options as insufficient to justify adding them to the support already provided to market liquidity ... * WASHINGTON (8/28/08)--The Federal Deposit Insurance Corp. (FDIC) will host eight identical phone seminars for bankers between Sept. 17 and Nov. 4 on rules for deposit insurance coverage. Each seminar will run two to three hours ... * WASHINGTON (8/28/08)--The Office of Thrift Supervision (OTS) released home equity line of credit account management guidance. OTS expects thrifts to actively manage their home equity portfolios by maintaining effective risk management systems and complying with OTS real estate lending standards ... * WASHINGTON (8/28/08)--The Federal Deposit Insurance Corp. (FDIC) Tuesday issued guidance on brokered deposits. The agency suggested that banks perform pro forma cash flow analyses, create contingency plans for events and follow other guidance the FDIC has released on restrictions regarding brokered deposits (American Banker Aug. 27). A strong reliance on brokered deposits has been tied to several bank failures this year, including Columbian Bank and Trust Co., IndyMac Bank and ANB Financial ...

CUNA nominates Wis. CU exec for Fed advisory panel

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WASHINGTON (8/28/08)—The Credit Union National Association (CUNA) has nominated Michael Long, a Wisconsin credit union executive, for consideration to serve on the Consumer Advisory Council (CAC) of the Federal Reserve Board. Long is vice president of lending at UW Credit Union in Madison. He is an executive committee member of the CUNA Lending Council, where he chairs the Regulatory and Legislative Subcommittee. Also, he is an active member of the CUNA Consumer Protection Subcommittee and is a 2004 graduate of CUNA Management School. Each year, the Fed’s CAC appoints 10 new members to its 30-member panel. The council was established in 1976 and advises the Fed on its responsibilities under the Consumer Credit Protection Act and on other matters in the area of consumer financial services, according to the Fed's website. Members serve staggered three-year terms. Over the past year, CUNA noted in its nominating information, Long has traveled to Washington several times advocating nationally on credit union student lending and consumer lending issues. He has spoken to lawmakers and their aides on both the House and Senate Education Committees on the role credit unions serve in student lending and the many benefits credit unions provide to their members. In 2007, CUNA successfully nominated Alan Cameron, president/CEO, Idaho Credit Union League, Boise, to the CAC and his term continues to 2010. Also named to the council at that time was Michael Calhoun, president of the Center for Responsible Lending in Durham, N.C. The CRL is a nonprofit, non-partisan research and policy organization focusing on consumer lending issues.

CUs help hand home deed to wounded vet

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GOLDEN, Colo.(8/28/08)—Culminating six months of planning and hard work, America’s Credit Unions and its partners placed the keys and deed to a new specially outfitted home into the hands of wounded Iraq war veteran Staff Sergeant Travis Strong Wednesday.
Click for slide showAfter thanking all the individuals and organizations for helping provide his family’s new home, Sgt. Travis Strong gives a special nod to credit unions. CLICK TO VIEW SLIDESHOW (Photo provided by CUNA)
The new home was the result of the efforts of hundreds of volunteers who donated their time and resources to finishing Strong’s new home in time for this week’s Democratic National Convention. A similar project is being executed in Minneapolis and St. Paul, Minn., in conjunction with next week’s Republican National Convention. That home will be presented to Sgt. Marcus Kuboy, also an injured Iraq war veteran. Both homes are joint endeavors by Homes for Our Troops, which builds specially adapted homes for severely wounded war veterans, and its partners, America’s Credit Unions, and the National Journal Group. The Democratic National Convention Committee was involved in the Denver-area project, as the Republican National Committee is in the Minnesota effort. America’s Credit Unions and the state credit union leagues have played an integral part in the projects, both through volunteer labor and fundraising to defray costs of the house. The credit union effort in Denver was coordinated by the Credit Union National Association (CUNA) and by the Credit Union Associations of Colorado and Wyoming. A nationwide fundraising effort among state credit union leagues, individual credit unions and credit union system partners including Co-Op Financial Services and the Corporate Credit Union Network raised over $350,000 for the Strong and Kuboy homes. At the Wednesday Key Presentation Ceremony, CUNA President/CEO Dan Mica said, “Credit unions operate every day with a ‘People Helping People’ philosophy. That’s why our credit unions and their members have jumped at the opportunity to assist this very deserving soldier and his family, either through fundraising efforts across the country or by volunteering their time in person today and throughout the project.” John Dill, President/CEO of the state league, added, “Credit unions here in Colorado and Wyoming are proud to be a part of this project. When the last balloons have dropped and the Democratic Convention has left town, we will have left behind something very real for a real American hero.” U.S. Representative Ed Perlmutter, (D-Colo.), in whose congressional district Strong, his wife Misty, and their two children will live, said, “It is truly an honor to welcome Travis, Misty and their two beautiful children into our neighborhood. "It is equally heartwarming to see the outpouring of community involvement and support in building them a new home, from credit unions to organized labor to the many volunteers who have given so generously of their time and resources.” As a final touch to Wednesday's ceremony, attendess learned Strong had accepted an information technology specialist position with Lockheed Martin.

Twitter with Klavitterinstant online convention coverage

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

Interchange bill still CU focus at DNC

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DENVER (8/27/08)--Interchange was a hot topic for credit unions at this week’s Democratic National Convention (DNC) in Denver.
Click for slide show CUNA staffers prepare for Tuesday morning call with credit union trade press. Clockwise from left: Senior Legislative Representative Chris Gaginis, Political Director Trey Hawkins, Legislative Affairs Vice President Ryan Donovan, Federal Legislative Affairs Director Michele Johnson and Political Program Specialist Anne Foley. (Photo provided by CUNA)
In discussions with lawmakers, Credit Union National Association (CUNA) lobbyists continue to build opposition to a bill that would give merchants an antitrust exemption to negotiate interchange fees. During a DNC event yesterday, MasterCard International General Counsel Noah Hanft pointed out that CUNA was very effective with the interchange message and thanked the association and credit unions for the efforts. At another meeting, CUNA lobbyists Michele Johnson urged Senate Majority Whip Dick Durbin (D-Ill.) to include credit unions in any public hearings on the interchange bill.

Democratic convention delegate is CU volunteer

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DENVER (8/27/08)--Credit union volunteer Pamelya Herndon first became involved in politics after attending the 1993 Presidential Inauguration. The U.S. New Mexico FCU Board vice chair and delegate to the Democratic National Convention has been hooked ever since. “I began working on local and national campaigns as a volunteer and have continued to do so since then,” the first-time national party convention attendee told News Now. U.S. New Mexico FCU has $532 million in assets and is located in Albuquerque. Herndon became a delegate to the Democratic National Convention after being elected at her Congressional District Convention. The process was very much like running for a political office, she said. “I had to find people who would support me and then I had to get them to attend the Congressional District Convention to cast their votes for me,” said Herndon. “Ultimately, I was elected as a pledged delegate for Sen. Barack Obama.” Herndon decided to become a delegate because she was “truly excited and fired up about the 2008 Presidential election and about Obama becoming our next president.” “As a delegate, I could cast a vote that would help Senator Obama become the presidential nominee for the Democratic Party,” she said. During the convention this week in Denver, Herndon said she most looks forward to “casting her vote for the first African American Presidential nominee of a major political party, and then being present to watch him accept the nomination of the Democratic Party.” “I look forward to meeting many of the thousands of other delegates to the convention and participating in the various caucus meetings,” she explained. “I look forward to voting on the Party Platform and being a delegate at the convention that is destined to be remembered as the greatest political convention of all times.” She said she continues to support candidates who support the ideals and principles of credit unions. Herndon initially became involved with her credit union as a volunteer member of the Volunteer Development Committee, which developed educational training programs and strategies to recruit more volunteers. After the Volunteer Development Committee, she became a member of the supervisory committee. Two years later, a vacancy resulted in her seat on the credit union’s board of directors. Through its website and direct mail, U.S. New Mexico FCU keeps its membership informed about political matters that affect credit unions--a process that has not changed over the years, she said. She offered advice to her credit union peers. “I strongly encourage credit union volunteers and professionals to learn about the issues that affect credit unions and support candidates who believe in the principles, ideals and philosophy of credit unions,” said Herndon.

Inside Washington (08/26/2008)

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* WASHINGTON (8/27/08)--Banking industry observers say that regulators are taking action on bank failures too late after Columbian Bank and Trust Co. of Kansas failed on Friday (American Banker Aug. 26). The Federal Reserve Bank of Kansas City and Columbia Financial Corp., Overland Park, Kan., signed an agreement to restrict transactions and raise capital two weeks before the failure. The agreement gave the bank 60 days to raise capital, but the bank was closed by regulators just two weeks later. Enforcement orders should be issued right after an exam, said Nicholas Ketcha, former director at the Federal Deposit Insurance Corp. (FDIC). Ann Graham, Texas Tech University Law School professor, said some banks may not be able to raise enough capital. The FDIC has issued 31 cease-and-desist orders in the first half of this year, compared with a total of 48 for the total year in 2007 ... * WASHINGTON (8/27/08)--Brokered deposits have been linked to Columbian Bank and Trust Co.’s failure. Brokered deposits made up 43% of the bank’s $622 million deposit base (American Banker Aug. 26). Ralph F. McDonald III, a partner at Jones Day, said regulators should have restricted the brokered deposits. The bank also had troubled real estate loans. About $52 million of construction loans were in nonaccrual status, according to a call report. Data from the Federal Deposit Insurance Corp. showed that $7.5 million of Columbian’s portfolio had been in nonaccrual stats in 2007.... * WASHINGTON (8/27/08)--The number of struggling banks on probation has risen (The Wall Street Journal Aug. 26). The Federal Reserve and the Office of the Comptroller of the Currency issued more memorandums of understanding for the banks to fix their problems so far this year than they did for all of 2007. The Federal Deposit Insurance Corp. had 90 banks on its “problem list” since March 31. Five banks have failed since July 11 ... * ALEXANDRIA, Va. (8/27/08)--National Credit Union Administration (NCUA) Chairman Michael E. Fryzel (left) met with National Federation of Community Development President/CEO Clifford Rosenthal Tuesday at NCUA’s office in Alexandria, Va. “The National Federation of Community Development Credit Unions has a longstanding tradition of promoting and enhancing credit union outreach to low and moderate-income communities,” Fryzel said. “I am pleased to begin a dialogue with Mr. Rosenthal as both NCUA and the credit union industry continue to explore ways to assist credit unions on this essential effort, and look forward to ongoing discussions with a broad cross-section of the credit union industry.” (Photo provided by the National Credit Union Administration) ...

FASB business combo information released

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WASHINGTON (8/27/08)—The Financial Accounting Standards Board (FASB) has announced the completion of an important step in its ambitious project to codify the thousands of U.S. GAAP pronouncements into roughly 90 accounting topics. Earlier this month FASB released the Business Combinations Topic to the FASB Accounting Standards Codification (Codification). FASB constituents are encouraged to use the online Codification Research System during its verification period free of charge to research accounting issues. They are asked to provide comment on whether the codification content accurately reflects existing U.S. GAAP for nongovernmental entities. Scott Waite, chairman of the Credit Union National Association’s Accounting Task Force and an advisor to FASB, said of the recent announcement, "This is a great addition to the Codification Project which is close to completion. Credit unions will be using the new standard in 2009 for business combinations. I'm sure that they'll find the new tool very beneficial and less complex to use as an important source for GAAP related matters." Waite, who is also SVP-CFO of Patelco CU, San Francisco , added, "Today, the proper application of GAAP can require the reference to many different standards and pronouncements located throughout GAAP's many thousands of pages of literature. The Codification tool will provide a location for all related guidance which will be sorted by topic. "I highly encourage them to access and review the on-line tool which is free of charge to use. We are also seeking comments on its usefulness before it goes live." The Codification's one-year verification phase ends Jan. 15, 2009. Users are advised that the Codification content is not yet approved as authoritative and, therefore, they must verify research results using their existing resources for the currently effective literature. FASB intends the new structure and new system to have benefits for users, such as:
* Reduce the amount of time and effort required to solve an accounting research issue; * Improve usability of the literature thereby mitigating the risk of noncompliance with standards; * Provide real-time updates as new standards are released; and * Assist FASB with the research and convergence efforts required during the standard-setting process.
Use the resource link below to become a registered user to access and review the FASB Codification.

FDIC considers bolstering fund bank earnings drop

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WASHINGTON (8/27/08)—Insured bank and thrift earning fell to $5 billion in the second quarter of the year as the Federal Deposit Insurance Corp. (FDIC) considers a restoration plan to bolster the Deposit Insurance Fund. The second quarter earnings figure represented an 86.5%, or $31.8 billion, decline from the $36.8 billion that the industry earned in the same time period last year, according to an FDIC release announcing the figures. With the exception of the fourth quarter of last year, the latest earnings were the lowest for the industry since the fourth quarter of 1991. The FDIC also revealed that its "problem list" grew to 117 institutions from 90 at the end of the first quarter. Total assets of problem institutions increased from $26 billion to $78 billion, with $32 billion coming from IndyMac Bank, F.S.B., Pasadena, CA, which failed in July. FDIC Chairman Sheila Bair said more banks will come on the list as credit problems worsen and assets of problem institutions also will continue to rise. In releasing the latest results, the FDIC cited higher provisions for loan losses as the primary reason for the drop in industry profits. The agency said the size of the earnings decline was mainly attributable to a few large institutions, but more than half of all insured institutions, 56.4%, reported lower net income in the second quarter. Bair announced that in early October the FDIC will consider a plan to replenish the agency's Deposit Insurance Fund (DIF), which experienced a large drop due to added loss reserves for IndyMac and other bank failures. The DIF restoration plan "likely will include an increase in the premium rates that banks pay into the fund," she said. "And we'll be proposing changes to the current assessment system that will shift a greater share of any assessment increase onto institutions that engage in high-risk behavior to encourage and reward safer behavior." Use the resource link below for more on the FDIC earning figures.

CUNA asks newly sworn Fed gov to talk

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WASHINGTON (8/27/08)—After the Tuesday swearing-in ceremony of Elizabeth Duke, the Federal Reserve Board’s newest governor responded favorably to the Credit Union National Association (CUNA). CUNA Senior Vice President and Deputy General Counsel Mary Dunn, attending the ceremony on CUNA’s behalf, congratulated Duke on her appointment to the Fed board and expressed CUNA’s interest in meeting with her. “Ms. Duke seemed to be open to talking with us,” Dunn said. Duke is a former chairman of the American Bankers Association who began her banking career as a teller. Duke’s undergraduate degree was in theater, but, according to a Federal Reserve Board press release, she later received an MBA from Old Dominion University in Virginia, her native state. Prior to her appointment to the Fed board, Duke was senior executive vice president and chief operating officer of TowneBank, a Virginia-based community bank. Before that she was an executive vice president at Wachovia Bank, and an executive vice president at SouthTrust Bank. She also has been a director of the Federal Reserve Bank of Richmond.

Prohibited persons rule effective Sept. 18

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WASHINGTON (8/27/08)—September 18 is the effective date of new National Credit Union Administration (NCUA) guidance regarding provisions in the Federal Credit Union Act (Act) that prohibit persons convicted of certain criminal offenses from participating in the affairs of the credit union. Absent prior written consent from the NCUA Board, the Act prohibits persons convicted of a criminal offense involving dishonesty or breach of trust, or who have entered into a pretrial diversion or similar program, from participating in the affairs of the credit union. The agency’s new Interpretive Ruling and Policy Statement (IRPS) excludes certain minor offenses, juvenile offenses, and expunged convictions, while also prohibiting NCUA from providing consent to those individuals who have engaged in certain other criminal offenses. The IRPS establishes the procedures that credit unions must follow if they are seeking the required NCUA consent. Under these procedures, a credit union must explain circumstances surrounding a conviction or pretrial diversion program and demonstrate that the individual is fit to participate in the affairs of the credit union without posing a safety and soundness risk or impairing the public confidence in the credit union. The guidance also places the burden on the credit union to prove that the NCUA Board should grant the requested consent. It sets forth the factors that the NCUA Board will consider when reviewing these requests, which include the nature of the offense, evidence of rehabilitation, the position that the individual held at the credit union and the nature of those responsibilities, the ability of the credit union to supervise the individual, the credit union's fidelity bond coverage, the position of the state regulator if the credit union is state-chartered, and any other factors that may be relevant. For more details, use the resource link below to access the Federal Register document on the IRPS.

Immediate online convention coverage from CUNA

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WASHINGTON (8/27/08)--Credit unions are encouraged to check in on Twitter, a microblogging service, to get the latest credit union take on happenings at the Democratic National Convention this week in Denver and at the Republican National Convention next week in Minneapolis and St. Paul, Minn. Staff and volunteers from the Credit Union National Association (CUNA), state leagues and corporates are at the conventions and aim to raise the profile of credit unions during the national conventions. CUNA Editorial Communication Vice President David Klavitter will provide frequent convention updates using Twitter. The service allows instant, extremely short online postings--limited to no more than 140 characters each. Use the resource link below to stay up-to-date: Follow Klavitter on Twitter.

CUs spread out across Denver for Democrats event

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DENVER (8/26/08)--The Credit Union National Association's (CUNA) Homes for Our Troops video played throughout convention hall and on national television last night after credit union representatives fanned out to engage lawmakers and political leaders during the Democratic National Convention in Denver. The video was shown on the convention floor shortly before U.S. Sen. Ted Kennedy (D-Mass) addressed the assembly. C-SPAN TV aired the video in its entirety. During the day, CUNA sponsored the National Journals’ Daily Briefing, VIP convention viewing reception, as well as a Homes for Our Troops reception. During the morning’s Daily Briefing, journalist Ron Brownstein hosted a discussion with panelists:
* Andy Stern, president, SEIU; * Will Marshall, president, Progressive Policy Institute; Founder, NDN; * Ellen Malcolm, President, EMILY’s List; and * Eli Pariser, executive director,
Click for slide show U.S. Rep. Debbie Wasserman Schultz (D-Fla.), left, and CUNA Director of Federal Legislative Affairs Michele Johnson during an event Sunday at the Democratic National Convention in Denver. Wasserman Schultz is a member of the House Judiciary Committee and earlier this summer aligned with credit unions to oppose a bill that would give merchants an antitrust exemption to negotiate interchange fees. (Photo provided by Patrick Collins)
Pollster Stan Greenberg also appeared on Monday’s Daily Briefing to unveil results of a new survey from the Democracy Corps called “Back to Macomb.” The study follows the 24-year voting preferences of people living in Macomb County, Mich. While it was the convention’s first day, CUNA Legislative Affairs Vice President Ryan Donovan, who attended the 2004 Democratic National Convention in Boston, said so far this year’s convention has a “much different feel to it.” Donovan attributed the difference to they cities’ varied geographic layouts. CUNA Political Director Trey Hawkins said both the Democratic and Republican National Conventions are “an excellent opportunity for credit union to be in front and center of a very concentrated collection of lawmakers and political leaders at the same time.” The four-day convention happens Monday through Thursday. CUNA, the state credit union leagues, and other credit union representatives also will participate in the Republican National Convention happening next week in Minneapolis and St. Paul, Minn. CUNA and credit unions have been involved in these national events since 1988.

Inside Washington (08/25/2008)

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* WASHINGTON (8/26/08)--California has denied a request from IndyMac to investigate Sen. Charles Schumer (D-N.Y.). IndyMac claims that letters Schumer sent in June to the Office of Thrift Supervision about his concerns with IndyMac triggered the bank’s failure (American Banker Aug. 25). IndyMac had asked California State Attorney General Jerry Brown to investigate the senator. Brown said there is no reason to believe Schumer’s statements were factually false ... * WASHINGTON (8/26/08)--The Federal Reserve Board should be granted explicit oversight authority for systemically important payment and settlement systems, Fed Chairman Ben Bernanke said in a speech Aug. 22. The Fed continues to monitor systemically important payment and settlement systems and compares their performance with international standards. But the Fed doesn’t have general statutory authority to oversee the systems. “Instead, we rely on a patchwork of authorities, largely derived from our role as a banking supervisor, as well as on moral persuasion to help ensure that the various payment and settlement systems have the necessary procedures and controls in place to manage the risks they face,” he said ... * WASHINGTON (8/26/08)--Nine former branches of Columbian Bank and Trust Co. in Kansas and Missouri reopened yesterday as Citizens Bank and Trust branches ( Aug. 25). Columbian was closed on Friday by regulators. The bank had $752 million in assets, and suffered a $5.2 million loss during the second quarter. The institution was added to the Federal Deposit Insurance Corp.’s “watch list” in May ... * WASHINGTON (8/26/08)--The U.S. Court of Appeals for the Sixth Circuit in Cincinnati ruled Friday in favor of the arguments the Office of Thrift Supervision made on behalf of State Farm Bank after a lower court ruled that the Home Owners Loan Act did not preempt state and local laws governing agents selling the bank’s products (American Banker Aug. 25) ...

Revamp of MBL approach urged by CUNA

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WASHINGTON (8/26/08)—The Credit Union National Association (CUNA) is recommending a major overhaul in the National Credit Union Administration’s (NCUA’s) regulatory approach to member business lending (MBL). Rather than setting parameters on MBLs that restrict the ability of credit unions to serve businesses, CUNA believes the NCUA has the authority to pare down its rule dramatically to include only those provisions that are directed by the Federal Credit Union Act, leaving those issues such as Loan to Value ratios, equity requirements and other issues to be addressed in credit unions' MBL policies and in guidance from NCUA. As part of its policy to review all existing regulations every three years, the NCUA in May sought comment on how its MBL rules should be revised or clarified. CUNA said in its Aug. 25 comment letter: “The FCU Act contains few provisions that address MBLs. In general, in addition to limits on one borrower, the provisions in the Act that cover MBLs are the total asset limitations and exceptions and the provisions under prompt corrective action that limit new MBLs for undercapitalized credit unions.” “In light of the limited provisions in the Act regarding MBLs, we think NCUA has latitude to develop an improved approach to MBL regulation,” wrote Mary Dunn, CUNA deputy general counsel. The CUNA letter noted that business lending is a generally safe activity for credit unions and an important source of credit for small businesses across the country, especially amid reports that small businesses are having trouble getting a loan from a bank. However, CUNA acknowledged that its proposed revamping of NCUA MBL rules may not be achievable given the agency’s reluctance over the years to encourage MBL growth. Therefore, CUNA agreed that the agency can and should make clarifications to the MBL rule in a number of areas. These include: loan to value ratios, loan participations, waivers, the two-year experience requirements and regulatory restrictions generally as they relate to MBLs in order to improve the rule and facilitate lending to small businesses. CUNA’s letter also takes the opportunity to address the misinformation about member business lending that is contained in comment letters from banking trade groups. Use the resource link below to access the complete CUNA comment letter.

Fryzel re-emphasizes proper third-party due diligence

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WASHINGTON (8/26/08)—The National Credit Union Administration (NCUA) continues to emphasize the importance of proper due diligence in setting up and maintaining third-party relationships in a recent Letter to Credit Union (08-CU-19). Chairman Michael Fryzel writes that third parties, including brokers and correspondents, “can and will continue to play an important and ever-increasing role in how credit unions operate.” “While a broker or correspondent can assist in facilitating transactions, credit union management is responsible for controlling the risk being added to the balance sheet,” Fryzel reminded credit unions. The NCUA letter said because credit union management retains fiduciary responsibility to members and the credit union in third party arrangements, it is imperative that credit unions keep in mind:
* Board-established lending policies and procedures should be established to fit the product—with risk tolerance levels based on management analysis, established regulatory thresholds, and sound business rationale; * Loan growth should be slow and controlled, activity should be within reasonable risk thresholds, and building a concentration in a particular loan type and/or in an unfamiliar geographic area should be avoided; and * Broker and correspondent relationships need to receive ongoing due diligence commensurate with the risk and complexity of those activities, regardless of whether the third party has a credit union affiliation, such as being part of a credit union service organization.
In his letter, Fryzel also calls attention to Letter to Credit Unions 07-CU-13, Evaluating Third Party Relationships, which provides significant detail on due diligence required prior to and during third-party arrangements. Use the resource link below to access the NCUA letters on due diligence, an agency-sponsored Webinar on the subject, and the NCUA’s AIRES questionnaire on due diligence.

CUNAs immediate online convention coverage

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WASHINGTON (8/26/08)--Credit unions are encouraged to check in on Twitter, a microblogging service, to get the latest credit union take on happenings at the Democratic National Convention this week in Denver and at the Republican National Convention next week in Minneapolis and St. Paul, Minn. Staff and volunteers from the Credit Union National Association (CUNA), state leagues and corporates are at the conventions and aim to raise the profile of credit unions during the national conventions. CUNA Editorial Communication Vice President David Klavitter will provide frequent convention updates using Twitter. The service allows instant, extremely short online postings--limited to no more than 140 characters each. Use the resource link below to stay up-to-date: Follow Klavitter on Twitter.

Homes for Our Troops contributions surpass goal

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DENVER (8/25/08)--America’s credit unions exceeded the $300,000 goal to help present two disabled veterans with new homes during the upcoming national presidential conventions. The Credit Union National Association (CUNA), the Credit Union Association of Colorado and Wyoming, and Minnesota Credit Union Network, along with the National Journal Group and the Republican and Democratic National Conventions, are jointly sponsoring homes for two disabled U.S. servicemen wounded in the line of duty. Credit unions are building the homes for Army Sgt. Marcus Kuboy in St. Paul, Minn., site of the Republican convention, and Staff Sgt. Travis Strong in Golden, Colo., near the Denver site of the Democratic convention. At each national convention, America's Credit Unions look for opportunities to give back to the host cities, noted CUNA Political Affairs Senior Vice President Richard Gose. Co-Op Financial Services, the Corporate Credit Union Network, and state credit union leagues across the country were instrumental in the fundraising effort, which so far totals more than $350,000, he added. Homes for Our Troops is a nonprofit organization that builds specially adapted homes for severely injured service members. Use the link for more information.

Fifth Third wants court to reverse CU standing

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WASHINGTON (8/25/08)—Fifth Third Bank of Cincinnati is seeking a rehearing of a July court decision granting Pennsylvania State Employees CU (PSECU) and Sovereign Bank standing to sue BJ's Wholesale Club for the cost of replacing member credit cards after customer data was stolen from the retailer. The $3.13 billion Harrisburg, Penn.-based credit union had tried to recover the $98,000 from both the retailer and its merchant bank, which is Fifth Third Bank, through negotiations. More than 235,000 credit and debit cards total were reissued, and nearly 1,000 accounts were affected by illegal purchases made by thieves. Ultimately, PSECU filed suit against the retailer and bank in the U.S. District Court for the Middle District of Pennsylvania in 2004. In July, a U.S. court of appeals reversed the district court ' s ruling that the suing parties did not have standing, thereby clearing the way for the credit union plans to return to the District Court for a jury trial--which PSECU originally requested. The appellate court's reversal was based on a finding that PSECU was a third party beneficiary to the contract between Visa and Fifth Third Bank, and thus has standing to bring suit against Fifth Third. To block that occurrence, Fifth Third is asking for a rehearing on the standing issue, based on the following arguments:
* Classes of third party beneficiaries must be specific and narrow, and according to the appellate court's rationale, any issuing bank or Visa cardholder could be considered a third party beneficiary; and * That the Circuit Court used the wrong standard in overturning the District Court's ruling.
Fifth Third Bank asked for the rehearing because the appeal "involves a question of whether thousands of issuing banks--or even millions of retailers or consumers who are participating in the Visa system--should be able to sue for breach of contract as purported third-party beneficiaries of the contract between Visa and its acquiring banks.” The request further states that the previous discussion actually is contrary to the intent of Fifth Third Bank and Visa by allowing issuers to pursue breach of contract claims in court. Also, "by allowing issuing banks to pursue breach of contract claims in courts to be resolved outside the Visa regulatory system, the panel decision undercuts that central purpose of the contract, allows potentially differing and inconsistent results and eliminates Visa's control, contrary to the contract's stated intent," the request stated.

CUs converge on national convention

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DENVER (8/25/08)--Staff and volunteers from the Credit Union National Association (CUNA), state leagues and corporates aim to raise the profile of credit unions during this week's Democratic National Convention (DNC) in Denver. The four-day convention happens Monday through Thursday. Credit unions also will participate in the Republican National Convention happening next week in Minneapolis and St. Paul, Minn. CUNA and credit unions have been involved in these national events since 1988, according to CUNA Senior Vice President of Political Affairs Richard Gose. Among each day’s plethora of events, CUNA is sponsoring the National Journal’s Convention Daily Briefings, which feature party newsmakers. A convention version of the CUNA-sponsored Power Breakfast, the on-site events are moderated by Atlantic Media political director Ron Brownstein, The Hotline's Amy Walter, Charlie Cook and Chris Matthews. On Wednesday, U.S. Rep. Ed Perlmutter (D-Colo.) and other elected officials will join CUNA and the leagues, the Democratic National Convention Committee, National Journal Group and Homes for Our Troops in a ceremony to turn over a new home to wounded Iraq war veteran Staff Sergeant Travis Strong and his family. Meanwhile, CUNA Editorial Communication Vice President David Klavitter will provide frequent convention updates using Twitter. The service allows instant, extremely short online postings--limited to no more than 140 characters each. CUNA News Now will provide complete coverage of credit union participation in the convention. Use the resource link below for more information about Homes for Our Troops.

Inside Washington (08/21/2008)

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* WASHINGTON (8/22/08)--The Office of the Comptroller of the Currency (OCC) has outlined its concerns regarding a proposal to reform credit card practices in a letter to the Federal Reserve Board. The proposal would limit credit for consumers and could weaken thrifts and banks, OCC said. (American Banker Aug. 21). It also could pose litigation risks to the credit card industry, wrote Comptroller John Dugan. In May, the Fed, Office of Thrift Supervision and the National Credit Union Administration released the proposal, which would ban double-cycle billing and define deceptive credit card practices. Dugan suggested that the Fed prevent deceptive practices, rather than define them, by placing the proposal under the Truth-in-Lending Act. That way, more entities would be covered by the rule ... * WASHINGTON (8/22/08)--Treasury Secretary Henry Paulson’s move to reassure investors on Wall Street could backfire, analysts say. Last month, Paulson asked Congress for a government rescue of Fannie Mae and Freddie Mac he didn’t intend to use. However, his request is creating uncertainty among investors and could trigger a bailout, according to investors ( Aug. 21). Stock in Fannie Mae has dropped since the law was passed. This week, the enterprise’s shares dropped 28% while Freddie’s fell 38%. Had Paulson not made a request for the rescue, Freddie Mac’s bond sale Monday may have been a total failure, said William Poole, former Reserve Bank of St. Louis president ...

Mortgage lending registration required next year

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WASHINGTON (8/22/08)—Title V of the Housing and Economic Recovery Act brings new licensing and registration requirements for mortgage originators and the Credit Union National Association (CUNA) is advising credit unions on just what that means. The housing recovery measure was signed into law in July and is the result of problems with mortgage lending in recent years, especially with subprime mortgage loans. Under the new law, any individual who originates residential mortgage loans as an employee of any state or federal credit union will have to annually register with the “Nationwide Mortgage Licensing System and Registry” as a “registered loan originator.” The law calls for the federal banking agencies and the National Credit Union Administration to develop and maintain a system for registering the appropriate employees of banks and credit unions in conjunction with the Conference of State Banking Supervisors (CSBS) system, and this agency program has to be in place by August 2009. Credit union mortgage lending staff will have to provide fingerprints for a criminal background check, provide a personal employment history and authorization for the CSBS system to obtain information about any administrative, civil or criminal rulings, and be assigned a "unique identified" number that will facilitate electronic tracking and public access to this information. CSBS has had its licensing system and registry up and running since Jan. 2, and with some minor tweaks they will soon meet the Title V requirements, according to Valerie Moss, CUNA’s director of compliance information. Generally under the CSBS plan, if a state does not take necessary action to participate in the system by August 2009, then HUD is required to develop a system of licensing and registration for state-licensed loan originators in those states not participating. The law does give the Department of Housing and Urban Development(HUD) the authority to wait up to an additional two years if it feels the state is making a good faith effort to take state action. HUD is also authorized to step in at some future time if it feels the system is not working in one or more states. And who must be registered? Moss says any individual who originates residential mortgage loans as an employee of any state or federal credit union will have to annually enroll as a “registered loan originator.” “Other people who originate residential mortgage loans will have to be licensed and registered as ‘state-licensed loan originators.’ “And employees working for a ‘subsidiary that is owned and controlled by’ a credit union and that is regulated by NCUA doing residential mortgage loan originations will also be subject to registration, but it’s unclear if any CUSOs will fit into this definition,” according to CUNA’s Moss. Use the resource link below to access more information on credit union employee registration, licensed loan originators, and other provisions of the new law, which affect credit unions.

Fryzel intends partnership approach with state regulators

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ALEXANDRIA, Va. (8/22/08)—Michael Fryzel, the newly installed chairman of the National Credit Union Administration (NCUA), said he is committed to a partnership of shared ideas and opinions with state credit union regulators. Addressing the National Association of State Credit Union Supervisors 2008 Summit in Seattle, Wash., Fryzel emphasized his belief in strong regulatory oversight. He said he hopes to share with NASCUS a partnership of open dialogue on problems and solutions, and of working together to achieve “our common goal of a strong, vibrant credit union industry.” The NCUA chairman identified a rigorous safety and soundness standard as the central focus of both state and federal regulators when describing the primary principles that will guide his approach as head of the federal agency. His other essential elements, he said include:
* Maintaining strong regulatory control that aggressively protects the rights of consumers; * Providing common-sense rules that benefit both credit unions and the members they serve; and * Monitoring credit union to ensure consumers get a fair deal.
“These principles are central to the continued durability of the dual chartering concept,” Fryzel said. “The existence of strong, vital federal and state systems benefits all facets of the credit union industry. We have a commitment to those who placed us in these regulatory positions and to the consumers who depend on us, to be diligent stewards keeping their financial institutions safe, sound and well-functioning.”

CUNA conference has new BSA highlights

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WASHINGTON (8/22/08)—Registration is open of the Credit Union National Association’s (CUNA’s) next four-day Bank Secrecy Act (BSA) conference, to be held Oct. 19-22 in Atlanta. New topics include who is responsible for what under BSA in shared branching arrangements, and the latest on automated clearinghouse and wire issues. Also, conference attendees will get an in-depth, hands-on look at developing an institution-wide BSA risk assessment for their credit union, as well as help to understand how BSA due diligence before a merger can save a credit union from other pitfalls. This conference will feature informative discussions on practical, operational compliance issues; open forums for question and answer; big picture compliance trends; overviews of common mistakes; and networking opportunities. As in its prior BSA conferences, CUNA will offer Bank Secrecy Act Compliance Specialist Certification as an optional feature. The conference, presented in partnership with the National Association of State Bank Supervisors, will be held at the The Westin Buckhead Atlanta. For conference and registration information, use the resource link below.

NCUA CU member saving growth consistent

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ALEXANDRIA, Va. (8/21/08)—Federal credit union assets, loans, shares and membership showed consistent growth through the first sixth months of 2008, the National Credit Union Administration (NCUA) reported Wednesday. The NCUA, which based its assessment on call report data submitted by the nation’s 7,972 federally insured credit unions, said membership grew to nearly 88 million during that period. Also, bucking the recent trend, savings growth outpaced lending in the first six months of the year: Savings grew a significant 7%, lending grew 3.7 %, and assets increased 6.5 % from January through June. “Although current mortgage and credit markets continue to cause fluctuations in the financial sector, the overall fiscal condition of federally insured credit unions remains stable,” said NCUA Chairman Michael E. Fryzel in a release. He added that first mortgage real estate loans grew by 10.1%, “illustrating that credit unions continue to meet their members’ mortgage loan needs.” Details of major balance sheet categories included:
* Assets increased 6.5% to $802.5 billion from $753.4 billion; * Loans increased 3.7% to $546.4 billion from $526.9 billion; * Investments increased 17.3% to $167.0 billion from $142.5 billion; * The 7% increase brought shares to $676.9 billion from $632.4 billion; * Net worth increased 5.62% to $88.6 billion from $86.1 billion; and * Membership increased 1.3% to 87.9 million members.
The NCUA also reported that the loan-to-share ratio was 80.72%. With the exception of declines in new automobile and other unsecured loans and lines of credit, all major loan categories grew. In addition to a 10.1% increase in first mortgage real estate loans, which represent $198.1 billion, other types of real estate loans reported 1.7% growth to $92.8 billion, used automobile loans grew 3.3% to $92.0 billion, unsecured credit card loans grew 1.5% to $30.6 billion, and all other loans/lines of credit grew to $25.6 billion. Major share accounts grew across the board in the first six months of 2008. Money market shares showed the greatest expansion with a 13.9% increase to $126.6 billion, share certificates grew 2.9% to $222.3 billion, while IRA/KEOGH accounts grew 7% to $60.9 billion. Share drafts grew 6.2% to $75.3 billion and regular shares grew 8% to $182.7 billion. The loan delinquency ratio increased 4 basis points, up from .93% to .97%, and the net charge-off ratio increased from 0.51% to 0.71% during the first six months of 2008. The return-on-average assets ratio declined from 0.64 percent to 0.52 percent primarily due to increased funds set aside for loan and lease losses. With savings growth outpacing loan growth in 2008, the loan-to-share ratio declined to 80.72% from the year-end level of 83.32%. Use the resource link below for more details of the mid-year 2008 data.

IRS issues instructions for new Form 990

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WASHINGTON (8/21/08)--The Internal Revenue Service (IRS) Tuesday released revised instructions that will be needed by tax-exempt organizations to fill out the tax agency’s redesigned Form 990. The new IRS form, Return of Organization Exempt from Income Tax, is effective for the 2008 tax year, for returns filed in 2009. State-chartered credit unions are required to file Form 990 with the IRS annually, although a few states still permit group 990 filings. Federal credit unions are not required to file, since they are not subject to unrelated business income taxes. The new instructions are more comprehensive than earlier ones and have been modified to reflect the new format of Form 990. The Credit Union National Association is currently executing an in-depth review of the instructions to see how they will affect credit unions. CUNA had expressed concern about that the changes to the instructions for filing the IRS form when they were proposed. CUNA warned the new form, when used to report the pay of executives at state-chartered credit unions, could result in filers reporting "inflated figures" that do not reflect true compensation. Use the resource link below to access the IRS instructions.

Changes may be needed in CU availability schedules

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WASHINGTON (8/21/08)—Credit unions affected by changes in the Federal Reserve’s check processing operations in the fourth district may need to amend their availability schedules and related disclosures and provide their members with notice of these changes. In a final rule analysis, the Credit Union National Association (CUNA) reminds credit unions that the Fed’s Cincinnati branch office of the Federal Reserve Bank of Cleveland no longer will process checks as of Oct. 18. Financial institutions currently served by the Cincinnati branch will be reassigned to the head office of the Federal Reserve Bank of Cleveland. The consolidation, affected by amending Appendix A of the Fed’s Regulation CC, is one step in the Fed’s overall plan to reduce the number of locations at which they process checks. CUNA asks credit unions to be aware that:
* When the changes are implemented, some checks deposited in the Fourth District that are currently nonlocal checks will become local checks and subject to shorter permissible hold periods. * Regulation CC requires that financial institutions notify accountholders within 30 days after implementing a change that improves the availability of funds. * Credit unions that are affected may need to amend their availability schedules and related disclosures and provide their members with notice of these changes.
Read the CUNA analysis using the link below.

CU-supporter Tubbs Jones dies after brain hemorrhage

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WASHINGTON (8/21/08)—Rep. Stephanie Tubbs Jones, a co-sponsor of the Credit
Click to view larger image U.S. Rep. Stephanie Tubbs Jones (D-Ohio) defends credit unions during a Nov. 3, 2005 House Ways and Means Committee hearing on the credit union tax exemption. (Photo provided by CUNA)
Union Regulatory Improvements Act (CURIA, H.R. 1537) and longtime credit union supporter, died yesterday evening after suffering a brain hemorrhage. CBS News reported early in the day that Tubbs Jones was brought to Huron Hospital in Cleveland Tuesday evening after police discovered her in her car. At that time news stories were relating that the congresswoman’s condition was grave and some mistakenly reported her death. However, at 6:40 p.m. ET, Tubbs Jones’ family released a statement from the hospital saying their loved one had died at 6:12 p.m. ET. The Ohio Democrat, 58, and in her fifth term, was first elected to the U.S. House of Representatives in 1998. She was scheduled to be a superdelegate at next week's Democratic National Convention in Denver, and was one of Sen. Hillary Clinton's (D-N.Y.) biggest boosters during the primaries, prior to throwing her support to Sen. Barack Obama (D-Ill.) in June. Credit Union National Association (CUNA) President/CEO Dan Mica said CUNA and the nation's credit unions were deeply saddened to learn of Congresswoman Stephanie Tubbs Jones's untimely death. "We worked most closely with her as a cosponsor of CURIA and during her service on the House Ways and Means Committee, where she always had an open-door policy and expressed appreciation for all credit unions to do improve their members' financial well being," said Mica. "This was only fitting in that improving the well being of her constituents was a motivating force for Rep. Tubbs Jones throughout her tenure in Congress." Mica said Tubbs Jones was a skilled legislator, a good friend, and the credit union community will miss her. The Ohio CU League (OCUL) issued a statement remembering her life-long connection with credit unions. John Florian, OCUL vice president of government affairs, said the congresswoman had become one of credit unions’ strongest allies on Capitol Hill during her time in office. Florian added: “Tubbs Jones first showed her support of credit unions while serving on the House Financial Services Committee and, more recently, as a member of the Ways and Means Committee, where she actively worked to maintain the federal tax exempt status for credit unions. During her time in Congress, she consistently voted to support credit unions, and was an early sponsor of CURIA each time the bill was introduced. “Her strong credit union support was rooted in her life-long connections with credit unions located in inner-city Cleveland, and she counted credit union leaders, such as Rita Haynes, CEO of Faith Community United CU, as personal friends. “Ultimately, Congresswoman Tubbs Jones’ passing has monumental significance. Her support of credit unions was unwavering, but that support was simply one manifestation of a compassionate and generous heart that touched her colleagues in Congress, her hometown community of Cleveland, and everyone that was fortunate enough to be graced by her presence.”

Inside Washington (08/20/2008)

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* WASHINGTON (8/21/08)--The Federal Deposit Insurance Corp. (FDIC) Wednesdsay announced a plan to help homeowners with mortgages from IndyMac avoid foreclosure. The failed bank has about 740,000 loans that it owns or services for others (Reuters Aug. 20). Eligible borrowers must be seriously delinquent or in default. The modifications, which will be capped at a permanent 6.5%, apply to primary residences only. The cost of the loan modification program is not known, but the FDIC is required by law to take the lowest-cost approach. If modification costs are higher than foreclosure costs, the agency will have to foreclose on the home, she said ... * WASHINGTON (8/21/08)--Next week, the Securities and Exchange Commission (SEC) will propose rules to curb short-sale stock manipulation, SEC Chairman Christopher Cox said (American Banker Aug. 20). The commission already has implemented a temporary measure to stop traders from driving down stocks from Fannie Mae, Freddie Mac and 17 other companies. The measure expired Aug. 12. The SEC also could consider rules to end short-selling in all companies, Cox noted ...

Inside Washington (08/19/2008)

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* WASHINGTON (8/20/08)--Fannie Mae and Freddie Mac shares have been negatively affected by recent speculation that the Treasury Department would have to nationalize the government-sponsored enterprises (American Banker Aug. 19). Treasury Secretary Henry Paulson asked Congress last month to approve the department to purchase Fannie and Freddie shares and give the enterprises a higher line of credit. Though the Treasury wasn’t planning to purchase any shares, the move would reassure Wall Street, he said. Congress approved his request. Fannie’s shares fell 25% to $4.39 a share, while Freddie’s fell 22%, at $6.15 per share. The enterprises’ troubles continued Monday when a planned debt sale was not well-received ...

CUNA seeks clarifications on risk-based pricing notices

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WASHINGTON (8/20/08)—The Credit Union National Association (CUNA) agrees that the standard annual percentage rate should generally be designated as the credit term for purposes of determining what borrowers should received a risk-based pricing notice, as proposed by the Federal Reserve Board and the Federal Trade Commission (FTC). The joint Fed.-FTC proposal, in its entirety, would implement section 311 of the Fair and Accurate Credit Transactions (FACT) Act of 2003, which amended the Fair Credit Reporting Act. However, in an Aug. 18 comment letter CUNA argued that the risk-based pricing notices should be simplified so creditors will be more likely to use those as opposed to using an exception that allows them to provide credit score information to all consumers, as opposed to the risk-based pricing notice. CUNA also said several clarifications are necessary to the agencies’ joint plan to require disclosures when a consumer is receiving credit on less favorable terms than other consumers with better borrowing histories. For instance, CUNA cited the following examples:
* The proposed rule will require that these notices go to consumers who are receiving “materially less favorable” credit terms. This needs clarification as it may lead to situations in which one creditor would send more risk-based pricing notices than another, even if both offer similar APRs to consumers with similar credit histories. * The terms “most favorable terms” and “substantial portion of consumers” also need further clarification. * The risk-based pricing rule needs further clarification with regard to indirect automobile lending as it is unclear in certain situations as to which party should provide the risk-based pricing notice. CUNA believes the dealer is in the best position to provide the notice. * The proposed rule should also clarify who receives these notices when there is a joint application for credit.
CUNA warns that, as proposed, the requirement to provide risk-based pricing notices will result in delay and inconvenience for members who participate in multi-featured, open-end lending. CUNA believes there should be an exception to the timing requirements in these situations. For CUNA’s compete comments on the Fed/FTC plan, use the resource link below.

Better rate cap eligibility identifier wanted by DoD

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WASHINGTON (8/20/08)—The U.S. Department of Defense (DoD) has asked Congress to more clearly define who may benefit form a 2007 law that caps interest rates on payday, vehicle title, and refund-anticipation loans for military servicemembers. In a report to the Senate Armed Services Committee, DoD said that the lending cap has generally worked well to protect military servicemembers and their dependents from abusive payday loans. (American Banker August 19) However, the department urged Congress to better define who is eligible for the lending cap and recommended that lenders have access to the Defense Manpower Data Center, the database that tracks those eligible for military benefits. That recommendation was first set forth in a comment letter from HSBC North America Inc. to the Defense Department. The department report noted that anyone found in the database would be covered under the law and the approach could allow lenders an efficient method to assure compliance with the law and regulators a more consistent way to evaluate compliance.

Newspaper spotlights CUNA league outreach effort

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WASHINGTON (8/20/08)—“Lobbyists rethink convention strategy,"
Click to view larger image Politico highlights the efforts of CUNA and the leagues to build relationships through benevolent works. (CUNA Photo)
proclaimed an Aug. 19 headline in Politico, indicating the days of using big-dollar donations to national party conventions to gain notice are over. But there are ways to grab the attention of both the Democratic and Republican parties during their convention weeks, the article said, and the Credit Union National Association’s (CUNA’s) Homes for Our Troops is highlighted as a successful effort to stand out in the crowd. CUNA is noted as a group trying a successful new approach to “capturing the notice of a few wavering lawmakers or impressionable senior aides as they race from banquet spread to open bar during the Democratic convention next week in Denver and the Republican gathering in St. Paul, Minn., the following week.” As 173 organizations have spent $1.5 billion on federal political contributions and lobbying expenditures since the 2004 presidential election, CUNA has broken through the morass with an approach Politico labeled “Hit Them in the Heart.” Politico, a Washington-based daily political journal, culled the spending figures from a new Campaign Finance Institute and Center for Responsive Politics report expected to be released today. “The quickest way to capture the attention of people accustomed to a life of free food, easy booze and fawning admirers is to shove some compassion for others in their face,” the article said. It then described CUNA President/CEO Dan Mica’s decision to link credit unions with Homes for Our Troops, an organization that helps veterans, and set out to build a new home for the family of a disabled veteran in each city hosting a convention. "Throughout the process, Mica and his team enjoyed other dividends when they had multiple conversations with party officials, local leaders and the offices of House or Senate members who would be invited to the key-passing event,” reporter Jeannne Cummings noted. Quoted in the article, Mica explained the motivation of the credit union effort: “One of our credos is ‘people helping people. I think we were able to blend our motto and credo with the work we need to do to build relationships and inform legislators.” The beneficiaries of the effort are, in Denver, Army Staff Sgt. Travis Strong, who lost his legs when a roadside bomb hit his patrol vehicle in Iraq and, in the St. Paul area, Army Sgt. Marcus Kuboy, whose legs were severely injured when his Humvee exploded in Iraq. Use the resource link below to read the full story.

No support for NCUA underserved plan says CUNA

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WASHINGTON (8/19/08)—The Credit Union National Association (CUNA) does not support a National Credit Union Administration (NCUA) proposal that would dramatically alter the current federal regulatory process for approving multiple group credit unions' applications to serve underserved areas. In fact, in an Aug. 18 comment letter CUNA questioned the very basis of the NCUA plan. “Before addressing concerns with various aspects of the proposal, CUNA has a fundamental disagreement with the basic rationale for the proposal and the analysis of the Federal Credit Union Act’s provisions regarding underserved areas that underlie the proposal,” wrote CUNA Deputy General Counsel Mary Dunn. “While we appreciate efforts to clarify and update rules, we are not aware of problems with the current process that indicate that the (field of membership) FOM Manual provisions on underserved applications are not clear and which would justify a broad new regulation on underserved areas and the application process,” the CUNA letter said. CUNA noted that under FCU Act, a federal credit union must have a field of membership that is a single common bond, multiple common bond, or which encompasses a community FOM. The Act provides an exception for underserved areas. “As these provisions indicate, and as NCUA’s current FOM provisions recognize, Congress envisioned a process for approving undeserved areas that first starts with a determination that a recognizable geographic area--a local community, neighborhood or rural district (i.e., community)--exists,” CUNA pointed out. The letter added that the legislative history to the Credit Union Membership Access Act reinforces that vision but added that the proposal would erroneously rely on geographical, rather than economic, criteria from the Community Development Financial Institutions Fund's regulations. "In our view, Congress intended that NCUA would implement the provisions of the Act carefully but in a manner that would facilitate service to undeserved eras. The proposal undermines both these objectives," Dunn said. CUNA urged the NCUA to retain the current process , not to proceed with the proposal and said the agency should “be mindful” that the Credit Union, Bank, and Thrift Regulatory Relief Act, HR 6312, remains pending in Congress, That legislation would change the definition of “undeserved area.” Meanwhile, the American Bankers Association has written to NCUA supporting limitations on undeserved areas, such as limiting underserved designations to census tracts. The ABA also recommends that if a branch of any financial institution is located in a proposed area, "this would indicate with high probability that the area is not undeserved." To read CUNA’s complete comment letter, use the resource link below.

Education bill with CUNA-sought changes signed into law

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WASHINGTON (8/19/08)—President George W. Bush last week signed the Higher Education Opportunity Act into law. The new law includes two changes sought by the Credit Union National Association (CUNA) during the legislative process. The act reauthorizes the Higher Education Act of 1965 for the first time since 1998. The 2008 package made significant amendments to the original law, which governs federal higher education programs, including financial assistance for students. As different versions of the bill made their way through the House and Senate in July and early August, CUNA worked with Capitol Hill legislative staffers to ensure two changes were included before final passage by both houses of Congress. The new act requires lenders and colleges to adopt strict codes of conduct for their student lending programs. A concern was expressed that the bill, as originally passed by the House, may have prevented university-sponsored credit unions from using the name of their educational institution in marketing the lender’s private educational loans. CUNA sought and received language that should provide credit unions that are named for a university sufficient latitude to market their student loans-- provided that they do not imply that the loan is made by the university and not the financial institution. Also, CUNA won for credit unions an exemption to a 50% rule that the act granted national and state-chartered banks. Specifically, the bill imposes a 50% limitation stating that an eligible lender cannot have as its primary credit function the making or holding of federal student loans. Under the House-approved version of the bill, Federal Family Education Loan Program (FFELP) loans may not represent more than 50% of a lender's consumer credit loan portfolio, including home mortgages. The bill provided an exemption for national banks with assets under $1 billion and CUNA secured that exemption for credit unions.

Inside Washington (08/18/2008)

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* WASHINGTON (8/19/08)--Phil Gramm and Thomas Bliley of the Gramm-Leach-Bliley Act, or the Financial Modernization Act of 1999, will back Sen. John McCain (R-Ariz.) for president. Jim Leach said he will support Barack Obama (D-Ill.). The three former legislators are Republicans (American Banker Aug. 18). Leach, a former chair of the House Banking Committee, helped launch the Republicans for Obama group. Gramm worked as a top adviser for McCain’s campaign until he stepped down, saying the nation’s economic problems were overblown. Gramm was seen in Aspen, Colo., at a McCain event last week, according to ABC News. The Gramm-Leach-Bliley Act protects consumers’ personal financial information held by financial institutions ...

Compliance Know your share insurance rules

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WASHINGTON (8/18/08)—With the country’s financial markets in turmoil, more and more Americans are asking questions about federal share insurance coverage to determine if their money is safe. The Credit Union National Association’s (CUNA’s) August Compliance Challenge poses several questions that deepen credit unions’ understanding of how insurance works. For instance, the Challenge notes in one question that there is no “qualified beneficiary” distinction for irrevocable trust account beneficiaries. Such beneficiaries do not have to be a spouse, child, grandchild, parent or sibling. Another question clarifies that the National Credit Union Administration (NCUA) has adopted the definition of “marriage” and “spouse” found in the Defense of Marriage Act (HR 3396). Under the Act, “marriage” is defined as a legal union between one man and one woman and “spouse” refers only to individuals of the opposite gender. Therefore, the Challenge notes, same-sex partners united in states permitting same-gender unions may not be named as a ”qualified account beneficiary” who would thereby be entitled to separate share insurance coverage up to $100,000. And in a third related question, the CUNA compliance experts ask (and answer): How should account cards be titled to ensure proper share insurance coverage for “Payable on Death” (POD) and Living Trust Accounts? The answer: In the case of POD accounts, if the POD line or lines are filled in on the account card, the account is insured separately as a “revocable trust” with each qualified beneficiary, as defined above, being entitled to share insurance coverage up to $100,000. The account doesn’t have to be specifically titled as a “POD” and no trustees would be listed. In the case of a living trust account, the NCUA’s ‘How Your Accounts Are Insured” booklet states: “Credit unions can establish a common revocable trust payable-on-death (POD) account without additional documentation; however, some trusts require additional, valid documentation to qualify for coverage.” For more information on this issue, the above questions, and many other challenges in the compliance world, use the resource link below to visit CUNA’s Compliance Challenge.

CUNA GAO interchange study should look at small FI issues

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WASHINGTON (8/18/08)--The Credit Union National Association (CUNA) has suggested a series of questions with specific relevance to credit unions that should be explored as part of a Government Accountability Office (GAO) study on interchange fees that was requested recently by three U.S. Senators. “These questions focus on the challenges small card-issuing financial institutions face in working with the card networks to ensure interchange is balanced to support their continued administration of card programs,” explained CUNA President/ CEO Dan Mica in a letter to Sens. Tom Harkin (D-Iowa), Benjamin Cardin (D-Md.) and Olympia Snowe (R-Maine). Last month the three senators asked the GAO to study the interchange issue to help them better assess pending legislation that would regulate interchange rates. Questions that CUNA suggested the GAO consider include:
* How small institutions, such as credit unions, would offset costs if interchange were capped by regulation or legislation; * How new restrictions would affect small institutions’ ability to offer credit and debit cards; * What options do small financial institutions have to increase the interchange fee associated with merchant card acceptance; and * How the ability of merchants to negotiate interchange affect card acceptance and competitive balance in the marketplace?
The Credit Card Fair Fee Act (H.R. 5546) has passed the House Judiciary Committee and a companion bill, S. 3086, has been introduced in the Senate. CUNA opposes the legislation, saying it would adversely affect consumer options, competition and technology innovation. Use the resource link below for the full text of CUNA’s Aug. 14 letter.

Inside Washington (08/15/2008)

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* WASHINGTON (8/18/08)--The Community Development Financial Institutions (CDFI) Fund is offering application tutorials through webcasts for individuals unable to attend in-person application workshops ... * WASHINGTON (8/18/08)--The “too big to fail” problem has gotten worse, Gary Stern, president of the Minneapolis Federal Reserve Bank and voting member of the Federal Open Market Committee, said in a speech Thursday. “Too big to fail” refers to large banks with fewer incentives to practice business soundly because they expect to be bailed out in the event of a failure (MarketWatch Aug. 14). Regulators need to limit spillovers from the failure of a systematically important institution through stress tests, Stern said. They also should rely on indicators such as subordinated credit spreads, or credit default spreads, instead of a bank’s asset value ... * WASHINGTON (8/18/08)--The Federal Deposit Insurance Corp. (FDIC) is set to release its Quarterly Banking Profile with second-quarter earnings for banks and thrifts Aug. 26 (American Banker Aug. 15). The FDIC reported in May first-quarter net income for banks and thrifts at $19.3 billion, down 46% from a year earlier. The profile will also include a list of “problem banks.” In the first quarter, 90 banks and thrifts were on the list ... * WASHINGTON (8/18/08)--Newly originated loans to borrowers in “high cost” areas as defined in the Housing and Economic Recovery Act of 2008 will qualify for incorporation into To-Be-Announced (TBA) eligible mortgage-backed securities, the Securities Industry and Financial Markets Association (SIFMA) announced Thursday. Higher balance loans may comprise 10% of the total balance of a pool eligible for TBA delivery to minimize liquidity disruption in the market, SIFMA said. The association also recommends that higher-balance mortgages be pooled separately ...

Corporates Market not affecting ability to support CUs

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WASHINGTON (8/15/08)--Although market disruptions have affected corporate credit unions, along with virtually all other types of financial institutions, those disruptions have not affected corporate credit unions' ability to support the industry, officials said this week. Tuesday's edition of the The Kansas City Star reported that although U.S. Central FCU has seen a sharp drop in the value of its mortgage-backed securities, those losses are unrealized and securities continue to generate cash flow for U.S. Central, according to Kathy Brick, chief financial officer. U.S. Central expects to recover the securities' full value. "These are high-quality performing assets. We are still receiving principal and interest payments each and every month on these securities," Brick told the newspaper. "They're still doing what we bought them to do." Some of the 26 corporate credit unions that are members of U.S. Central have reported similar declines in mortgage securities' values. If U.S. Central sold its mortgage securities now, said the paper, it would receive $2 billion less than it paid for them. However, U.S. Central has $2.6 billion in regulatory capital and abundant and deep sources of liquidity, making it unnecessary to sell any of the securities, Brick said. Because of the turbulent market, U.S. Central considers the drop in prices for securities to be temporary. The Star noted comments by the National Credit Union Administration, which said the corporate credit unions' liquidity position is strong. In the past, U.S. Central routinely sold securities to meet its short-term funding needs, but three years ago, it began developing alternative sources of immediate funding. Now, it can borrow from the Federal Home Loan Bank; use lines of credit at commercial banks; and issue its own commercial paper. Brick noted that U.S. Central is, "highly liquid. This just hasn't been an issue for us." Brad Miller, executive director of the Association of Corporate Credit Unions, told News Now yesterday that the corporates are diligently monitoring market conditions. "The corporates will continue their ongoing surveillance of the securities they own to ensure that their portfolios continue to perform throughout changing market conditions," he said. Miller added that NCUA continues to provide prudent oversight, and the agency has stated it is confident that corporates are taking the appropriate measures to weather the current market environment. He also pointed out that independent, third-party analysis confirms that mortgage-related securities held by corporates continue to "perform within original expectations and that full cash flow--principal and interest payments--will be received." Corporates have the willingness and ability to hold these securities until the markets recover or mature," Miller said. "For that reason the accumulated unrealized losses may never be realized in any material amounts." Miller also noted that all corporates within the Corporate Network continue to "maintain ample sources of liquidity to support the needs of their members." “This includes both advised and committed lines of credit from a vast array of financial institutions, member deposits, and cash flows being received as expected from their investment portfolios," Miller said.

NCUA webinar to highlight insurance protection

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ALEXANDRIA, Va.(8/15/08)—“Share Insurance 101”: The National Credit Union Administration (NCUA) Thursday announced its plans to offer a webinar of that name this Fall to provide credit unions with more information regarding share insurance protection. Date, time and other details of the informational session as they become available, the agency said in a release. The NCUA issued a letter to credit unions noting the webinar and highlighting resources available to educate members about the benefits of share insurance coverage offered by federally insured credit unions. In July, the federal regulator issued a media release confirming the secure position of the National Credit Union Share Insurance Fund (NCUSIF), and at its July open board meeting the NCUA’s chief financial officer announced that the NCUSIF has a record reserve level. The NCUSIF, which protects members against loss should a federally insured credit union fail, has an equity level of 1.24% and is expected by the agency to end the year at 1.28%. The NCUA points out that no member has ever lost a penny of federally insured funds held in a credit union. In its letter, the NCUA encourages credit unions to help educate their members about insurance protection and how members can structure their accounts to maximize share insurance coverage. The agency offers resources online to help, such as:
* Share Insurance Estimator, which allows members to estimate their amount of insurance coverage; * “How Your Accounts Are Federally Insured” brochure, which provides general information regarding share insurance coverage; * “Your Insured Funds” brochure, which provides detailed explanation of share insurance coverage and offers coverage examples; and * The “NCUA Increases Retirement Insurance Coverage” bulletin, explaining the separate coverage provided for certain retirement accounts.
The Credit Union National Association (CUNA) and the leagues also are working on behalf of credit unions to reassure their members about the safety of their deposits in the credit unions system and about the soundness of that system despite today's upheavals. For instance, CUNA recently distributed to each member credit union a special edition of Credit Union NewsWatch that encapsulates the many CUNA resources newly designed to help credit unions and their staffs address the public's questions and concerns about the safety of their money in trying economic times. The issue features a two-page "Primer on Share Insurance Coverage for Individual Credit Union Members," as well as a two-page spread on operational questions affecting share insurance coverage, geared toward credit union compliance staff. Also included in the special edition are:
* CUNA, Leagues Help CUs Spread Good News of Safety, Soundness; * NCUSIF Strong at Mid-Year, Says NCUA; and * CUNA, Leagues Get Word Out About CU Soundness.
CUNA members may use the resource link below to access the special CUNA resource. Also, see below for resource link to NCUA information.

CUNA urges party platform recognition for CUs

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WASHINGTON (8/15/08)—The Credit Union National Association (CUNA) is urging both Democratic and Republican parties to include credit union priorities in their party platform documents. CUNA also called attention to credit unions’ close work with Homes for Our Troops to build a home for a disabled veteran in each of the two major party convention cities. “We are proud to make a lasting contribution to the host cities and these American heroes in this historic election year. “It is representative of the effort credit unions make to serve their members every day,” wrote CUNA President/CEO Dan Mica in separate letters to the Republican Party Platform Committee and the Democratic Party Platform Committee, as those bodies worked to hammer out their final party platforms. The CUNA letter underscored the safety and soundness of the credit union movement and underscored that credit unions are well capitalized with an overall capital-to-asset ratio of 11.1%. About 70% of credit union home mortgage loans are held on credit union books, not sold off to the secondary mortgage market. “Credit unions have emerged largely unscathed from the subprime mortgage lending crisis because, unlike many banks, credit unions practice sound lending practices and were not tempted into making risky loans with the promise of big profits in return…Therefore, the plague of nonperforming home loans is a bank problem, not a credit union problem,” Mica pointed out to the platform builders. The CUNA letters also urged the parties’ to support the credit union tax status, an independent federal regulator for credit unions, and statutory changes needed to improve credit union service to members. “Credit unions remain trusted institutions, owned and controlled by their members.” Mica wrote, adding, “As you complete your work on the party’s platform, we ask that you consider including a statement recognizing the positive and vital role of credit unions in the lives of their members and financial services industry as a whole.”

Inside Washington (08/14/2008)

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* WASHINGTON (8/15/08)--The Federal Deposit Insurance Corp. (FDIC) has the opportunity to test its loan modifications strategy with IndyMac, according to industry observers. At the time of its failure, IndyMac serviced 740,000 mortgages worth $184 billion (American Banker Aug. 14). About 60,000 borrowers are behind on their payments by two months or more, said John Bovenzi, senior FDIC official and IndyMac chief executive. The agency placed a foreclosure ban on the loans IndyMac still owns to attract maximum value for the $15 billion portfolio, said Michael Krimminger, adviser for FDIC Chairman Sheila Bair. The FDIC plans to classify the loans based on their modification potential and then systematically restructure them, he said ... * WASHINGTON (8/15/08)--Larry Giesing, former president of Neighbors CU, St. Louis, is now treasurer for Rep. Russ Carnahan’s congressional campaign after retiring from the credit union (CourierNet Aug. 13). Carnahan (left) is a co-sponsor of the Credit Union Regulatory Improvements Act. Working on Carnahan’s campaign reinforces the importance of supporting credit union friends in elected office, Giesing told the Missouri Credit Union Association. (Photo provided by the Missouri Credit Union Association) ...

Inside Washington (08/13/2008)

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* WASHINGTON (8/14/08)--The Federal Reserve Board Wednesday requested public comment on a proposed change to Regulation S, its Right to Financial Privacy rule. That rule sets the rates and conditions under which a government agency must reimburse a financial institution for costs incurred in producing customer financial records under the Right to Financial Privacy Act. The revision proposes two updates. First, the personnel fees that may be charged for searching and processing document requests are increased substantially. Second, the proposed amendments encourage electronic document productions by not allowing a 25 cents per page fee to be charged for printing electronically stored information. The proposal also includes an automated mechanism for periodically updating the labor rates found in the regulation… * WASHINGTON (8/14/08)--Industry representatives are charging that new regulations to reform the mortgage brokerage industry are incomplete. A registry that would be established to license brokers under the new rules is flawed, according to the banking industry (American Banker Aug. 13). Each state will police its own licensing, which will likely lead to inconsistent enforcement, according to Doug Landy, a New York banking lawyer. All brokers must be licensed and entered into the registry by October 2010. To receive a license, brokers must undergo 24 hours of training and pass an exam. Observers also cited yield-spread premiums and said the reform won’t work until brokers maintain a monetary responsibility to borrowers. Currently, brokers earn fees on the premiums. If borrowers pay broker fees right away, it can lower closing costs in exchange for a higher interest rate ... * WASHINGTON (8/14/08)--Representatives from New York credit unions and the Credit Union Association of New York visited Capitol Hill to meet with 21 Congressional representatives, and their staff. The delegates thanked lawmakers for supporting the Credit Union, Bank, and Thrift Regulatory Relief Act (CUBTRRA) and promoted sponsorship of the Credit Union Regulatory Improvements Act (CURIA). Credit unions met with the staff of Sen. Charles Schumer (D-N.Y.) and Sen. Hillary Clinton (D-N.Y.). From left are: Rob Nemeroff, marketing director, Melrose CU, Briarwood; James McKeon, board member, Municipal CU, New York City; Rep. Carolyn Maloney (D-Metropolitan); and William J. Mellin, league president. Evan Gotlob, strategic business analyst, Bethpage (N.Y.) FCU, and Fred Schaefer, Teachers FCU, Farmingville, also met with Maloney. (Photo provided by the Credit Union Association of New York) ...

CUNA CTR exemption bill promising for CUs

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WASHINGTON (8/14/08)—A bill that would exempt certain customers from currency transaction report (CTR) rules, as well as streamline that exemption process, was introduced in the House just before Congress recessed for its August District Work Session. Rep. Barney Frank (D-Mass.), who heads the House Financial Services Committee, and Reps. Bill Foster (D-Ill.) and Dennis Moore (D-Kan.), both committee members, introduced H.R. 6688, the Seasoned Customer CTR Exemption Act of 2008, on July 31. It shares the name and some provisions with legislation introduced by Rep. Spencer Bachus (R-Ala.), currently the ranking member of the committee, in 2006 and 2007. Nichole Seabron, federal compliance counsel for the Credit Union National Association (CUNA), said the bill combines the earlier seasoned customer legislation and the Financial Crimes Enforcement Network’s (FinCEN's) recent CTR revision proposal issued earlier this summer. "It is definitely something that would impact credit unions in a favorable manner," Seabron said. She highlighted the provisions she believes will be of most importance to credit unions. The bill impacts CTR exemption requirements. For instance, it would do away with the Phase I filing requirement for transactions between credit unions and other depository institutions, such as other credit unions, banks or corporate credit unions. The provisions also call for the removal of the biennial renewal requirement for Phase II exemptions--those pertaining to non-listed businesses and payroll customers. The bill gives credit unions more flexibility in determining when to grant exemptions and would allow them to grant exemptions within 2 months versus the 12-month requirement that is currently in place. Also, the bill provides for a "seasoned customer" exemption to CTR filing requirements, although it is not yet clear to what extent the exemption will benefit credit unions. The "seasoned customer" exemption would be applied to business account customers, such as incorporated/registered businesses, including sole proprietorships. Use the resource link below to access the text of the bill.

Frank sets Sept. foreclosure forbearance hearing

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WASHINGTON (8/14/08)—Chairman Barney Frank (D-Mass.) of the House Financial Services Committees has announced his panel will conduct a Sept. 17 hearing to see if lenders are complying with lawmakers’ requests to hold off on mortgage foreclosures for a while. Frank and his committee members, Reps. Maxine Waters (D-Calif.), Mel Watt (D-N.C.) and Brad Miller (D-N.C.), have called for forbearance by mortgage lenders for the next several months as a new mortgage rescue program is set up under the authority of the Housing and Economic Recovery Act. The act, signed into law by the president late last month, states the rescue program will be operational by Oct. 1. Frank said in a release that mortgage servicers have reported progress in addressing the foreclosure crisis through such things as a greater willingness to engage in meaningful loan modifications that materially alter a borrower’s ability to repay the loan; and new hiring of servicing professionals to more quickly address the backlog. However, Frank said that some individuals facing foreclosure, consumer advocates and others “have painted a very different picture: one that involves long waits and few, if any, meaningful loan modifications.” In a letter sent to 19 representing the mortgage servicing industry, the committee members asked for more information on current and anticipated practices to help troubled mortgage borrowers. To read the letter and the list of recipients, use the resource link below.

Fee cap bill harms consumers says CUNA

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WASHINGTON (8/14/08)—The Credit Union National Association (CUNA) urged federal lawmakers Wednesday to reject a bill that could exacerbate the pain of higher auto fuel prices for consumers by setting arbitrary limits on interchange fees. In a letter to all U.S. House members, CUNA President/CEO Dan Mica urged them to oppose H.R. 6620, the “Gas Pump Fair Payment Act of 2008.” The bill, introduced in July by Rep. Stephen Lynch (D-Mass.), would amend the Truth in Lending Act to limit the amount of the interchange fee imposed on the sale of motor vehicle fuel. In addition to its impact on consumers, Mica also stated that the bill would “upset a delicate balance in the electronic payment system that reduces risk for both merchants and consumers.” Mica noted that capping interchange by statute would result in convenient debit and credit becoming less available and more expensive for consumers, causing credit unions to assess whether they can continue to offer debit cards and credit cards to their members. “To the extent that H.R. 6620 is intended to reduce the effect of higher gas prices on consumers, it is well-intentioned; however, the reality is that the bill will only benefit the gas station franchisees and the oil company conglomerates, which will be spared the responsibility to pay their fair share to use the electronic payments system,” Mica wrote. To read the full CUNA letter, use the resource link below.

Inside Washington (08/12/2008)

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* ALEXANDRIA, Va. (8/13/08)-- National Credit Union Administration (NCUA) Chairman Michael Fryzel (left) welcomed Credit Union National Association (CUNA) President Dan Mica for an initial meeting Monday at agency headquarters here. “As the regulator charged with ensuring the safety and soundness of the nation’s federal credit unions, I appreciate the important role that CUNA and all trade organizations play within the credit union industry,” Fryzel said. “The services offered and training CUNA provides have been an integral part of the federal credit union system since the 1934 inception of both NCUA and CUNA. I look forward to an eventful 2009, as we celebrate 75 years of regulating and serving federally chartered credit unions.” (Photo provided by the National Credit Union Administration) ... * WASHINGTON (8/13/08)--About 44% of senior loan officers who responded to a recent Federal Reserve Board survey said they expect to securitize or sell conforming-jumbo mortgage loans to Fannie Mae and Freddie Mac. The other 44% said they did not expect to securitize or sell such loans, while 12% said they did not expect to originate any of those loans. Senior loan officers at 52 domestic banks and 21 U.S. branches and agencies of foreign banks were surveyed. Fifty officers responded to the question regarding conforming-jumbo mortgage loans. Of the banks who said they would sell or securitize such loans, 16 were large banks. Fannie and Freddie reported second-quarter losses of $2.3 billion and $821 million, respectively (News Now Aug. 12) ... * WASHINGTON (8/13/08)--Senate Banking Committee leaders are pushing the Farm Credit Administration (FCA) to drop a proposed rule that would allow lenders in the Farm Credit System to invest 150% of their capital in projects for rural communities with 50,000 people or fewer (American Banker Aug. 12). The rule also would allow lenders to invest in rural-area venture capital firms. Senate Banking Committee Chairman Christopher Dodd (D-Conn.) and Sen. Richard Shelby (R-Ala.) wrote a letter to the FCA saying the proposed rule is too broad. Congress also should determine if the system should be expanded, given the credit crisis, they added ... * WASHINGTON (8/13/08)--Raymond T. Crosier, president/CEO, Online Resources Corp., will serve as chairman of the Electronic Funds Transfer Association (EFTA) for a two-year term. Richard G. Lyons Jr., executive vice president of global debit and prepaid at MasterCard, was elected vice chairman. Sandra Hartfield, president/CEO, electronic banking division, Palm Desert National Bank, and Lynn Barr, partner, Goodwin Procter LLP, were re-elected treasurer and secretary, respectively. EFTA is a trade association dedicated to advancing electronic payment systems and commerce ...

FY 2009 round of CDFI program opens early

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WASHINGTON (8/13/08)—The U.S. Treasury Department’s Community Development Financial Institutions (CDFI) Fund Tuesday released its notice of funds availability for FY2009. “I am happy to announce the opening of the 2009 award round of this critically important program. In these turbulent times, building the capacity of CDFIs serving the nation’s distressed communities is more important than ever," said CDFI Fund Director Donna Gambrell in a release. "We are opening this award round almost three weeks earlier than last year in order to provide applicants more time to prepare. In the coming months I look forward to sharing with our stakeholders additional steps the CDFI Fund will be taking to ensure that our programs operate as efficiently and effectively as possible in order to get these resources into the nation's distressed communities as quickly as possible." The annual funding notice provides up to $54 million, subject to final appropriations, in the form of awards to the community-based organizations known as CDFIs. The CDFIs provide affordable financing and related services to low-income communities and populations that lack access to credit, capital and financial services. Since it was created in 1994, the CDFI Fund has awarded $864 million to CDFIs, community development organizations and financial institutions through CDFI Program, the Bank Enterprise Award Program, and the Native Initiatives. In addition, the CDFI Fund has allocated $16 billion in tax credit authority to community development entities (CDEs) through the NMTC Program. The CDFI Program application deadline is 12 a.m. EDT on Oct. 29. An applicant not currently certified as a CDFI must first submit a CDFI certification application by 12 a.m. EDT on Oct. 1. Those interested in learning more about the FY 2009 funding round of the CDFI Program can do so though a CDFI Fund webcast on Aug. 18 or through the flowing workshops:
* Monday, Aug. 18, Chicago, Ill., at The Palmer House Hilton; * Wednesday, Sept. 10, 2008, Washington, D.C., at the Hyatt Regency Crystal City (Arlington, Va.); or * Friday, Sept. 19, 2008, Denver, Colo., at the Sheraton Denver Hotel.
Use the resource link below for more CDFI information.

Mica tells iPosti 2009 a busy busy year

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WASHINGTON (8/13/08)—In an Aug. 12 article in The Washington Post, Credit Union National Association (CUNA) President/CEO Dan Mica says 2009 is going to be a “very, very busy year” for lobbyists. The article, called “In a Harsh Climate for Lobbyists, the Forecast Calls for...More Lobbyists,” notes that both the Republican and the Democratic presidential candidates have had harsh words about lobbyist during their campaigning. “But K Street's response is not to flee in fear. Instead, it's getting ready for one of its busiest periods ever,” wrote reporter Jeffrey H. Birnbaum. CUNA’s Mica concurred: “It's going to be a very, very busy year; we might as well brace ourselves for it." The article noted that Mica, a former congressman from Florida, is asking CUNA’s state affiliates to boost their budgets so they can bring more people to Washington to press for their causes. "It doesn't matter which one is president--there is going to be a tremendous need for lobbying," Mica said. The Post article explained that increased need as a result both of the attacks from the “presidential wannabes” and the likelihood that Congress will become even more Democratic. A more Democratic Congress, the article posited, means that many corporate interests will face “increased danger next year and will have to employ more of the people whose job is to protect them--lobbyists.” CUNA merited a second, separate mention in the piece on lobbying. CUNA shined in a section that was otherwise about the receptions and late-night parties and hospitality suites that will be sponsored by some organizations during the presidential nominating conventions. “But not every lobbying event will be frivolous. Seeking positive publicity, the Credit Union National Association will give away a house at each convention to the family of a disabled military veteran,” the Post piece reports.

Treasury announces next Fin Lit meeting

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WASHINGTON (8/13/08)—The U.S. Treasury Department announced this week that it will conduct its fifteenth open meeting of its Financial Literacy and Education Commission (FLEC) on Sept. 16. FLEC is a 20-agency commission lead by Treasury Secretary Henry Paulson. It was created by Congress in 2003 to create a national strategy for financial education and the National Credit Union Administration (NCUA) is represented among its members. Former NCUA Chairman JoAnn Johnson served as the head of the FLEC website subcommittee. New NCUA Chairman Michael Fryzel automatically becomes a FLEC member, but not necessarily head of the subcommittee. An agenda for the Sept. 16 meeting has not yet been made public, but Treausry did supply details in its Federal Register document published Monday of how to register to attend the meeting. It is to be held in the Cash Room at the Treasury Building. Use the resource link below to access the Federal Register announcement.

Mica Corporates are feeling strain but remain strong

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WASHINGTON (8/12/08)--Credit Union National Association (CUNA) President/CEO Dan Mica pointed out that yesterday's Wall Street Journal story about corporate credit union balance sheets reports what corporates have been telling their member credit unions for some time--that they do have some investments that are feeling the strain of the mortgage crisis, but the unrealized losses are expected to recover over time as the housing market improves. Mica's comments were in response to Monday's front page Wall Street Journal story entitled "Mortgage-Market Trouble Reaches Big Credit Unions." (Use the link below to access the complete story online.) Mica said the National Credit Union Administration (NCUA) also has been on the case, as evidenced by its June Letter to Credit Unions, which addressed the impact of the current mortgage market on corporate credit unions. It pointed out steps corporate credit unions have been taking to address their continued safety and soundness in the downturn in the housing market. Mica also reiterated, as NCUA's Kent Buckham and the corporate representatives did in the story, that CUNA is confident the likelihood of significant realized losses is very remote. Also, the investments at issue continue to pay interest and principle on schedule. In addition to NCUA, the national rating agencies and the corporates' financial auditors have attested to the fact that corporates remain safe and sound, he added. "Nevertheless, we are keenly aware of the public impact that front-page headlines in the Wall Street Journal can and do have" said Mica. "I am in contact with leaders of the corporate credit union system today, and will be talking to them about continued and clear communication about the issues raised in the article."

Inside Washington (08/11/2008)

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* WASHINGTON (8/12/-08)—The Federal Reserve Board Monday announced a restructuring of its check processing operation in its fourth district. As of Oct. 18, the Cincinnati branch office of the Federal Reserve Bank (FRB) of Cleveland no longer will process checks. Financial institutions currently served by that office will be reassigned to the head office of the FRB of Cleveland. Routing numbers associated with the Cincinnati branch office are reassigned to the Cleveland head office. As a result of these changes, some checks deposited in the affected regions that currently are nonlocal checks will become local checks that are subject to shorter permissible hold periods... * WASHINGTON (8/12/08)--Bankers are working to kill a proposal by the National Credit Union Administration (NCUA), Federal Reserve Board and the Office of Thrift Supervision that would crack down on deceptive credit card practices by limiting or prohibiting seven credit card practices and two practices relating to overdraft protection plans. Bankers and trade groups argue the plan would increase costs and limit access to credit (American Banker Aug. 11). The Credit Union National Association supports the proposal and wrote in a recent comment letter that regulatory action on the issue is appropriate because consumers have been subject to predatory practices in the financial marketplace ... * WASHINGTON (8/12/08)--Joseph Stilwell, an activist shareholder, is trying to block a rule change by the Office of Thrift Supervision that would let recently converted thrifts limit the stocks a shareholder can own (American Banker Aug. 11). The rule is scheduled to become effective Oct. 1. An investor currently can own up to 10% of shares. Stilwell says the rule is unlawful and has filed a petition against it ... * WASHINGTON (8/12/08)--The Treasury Department isn’t planning to put more money into Fannie Mae or Freddie Mac, Treasury Secretary Henry Paulson said Sunday (Bloomberg Aug. 11). The government-sponsored enterprises reported losses three times larger than estimated. Paulson said their losses were not a surprise, and that the housing crisis is the economy’s biggest threat. Paulson also said a second economic stimulus package, called for by House Speaker Nancy Pelosi (D-Calif.), is not needed yet ... * WASHINGTON (8/12/08)--J. Richard (Dick) Harvey Jr. will serve as senior advisor to the Internal Revenue Service (IRS) Commissioner Doug Schulman, effective Sept. 2, the IRS said Monday. Harvey is a partner at PricewaterhouseCoopers, where he serves as the U.S. banking and capital markets team leader. He will provide guidance on policy and tax administration. He also will maintain a partnership between the commissioner’s office and business units such as the Large and Mid-Size Business Division ...

Reg burden for CUs focus of attorneys

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WASHINGTON (8/12/08)—The Credit Union Committee of the American Bar Association (ABA) has agreed to take on a new assignment this year—a review of the regulatory burden of credit unions. The ABA credit union unit is comprised of several subcommittees which focus on specific issues, such as supervision, operations, electronic services, and corporate governance. Those subcommittees will start this Fall to take a comprehensive look at the regulatory responsibilities of credit unions and develop recommendations to ease the burden. "We all know that credit unions are operating under tremendous regulatory responsibilities and that are ever-increasing,” said committee chair Mary Dunn, who is deputy general counsel for the Credit Union National Association (CUNA). “Credit union attorneys want to do our part to take a look at this burden and develop important recommendations on how to lighten the load," Dunn said. Faith Anderson, vice president and general counsel of American Airlines FCU and vice chair of the ABA credit union committee, added, "The committee's members discussed a wide range of issues but the dominant theme was that there are too many new rules we all have to contend with. “The credit union bar wants to be part of an effort to help contain regulatory growth." Other topics the committee addressed included a review by National Credit Union Administration (NCUA) Associate General Counsel John Ianno on current and upcoming NCUA issues, a discussion of examination issues by NCUA's John Kutchey, compliance for remote deposit capture items by attorney Brian Witt, and Fair Credit Act reporting issues from attorneys Andrew Keeney and Lysa Simon. Dunn said the fair credit reporting presentation focused on credit unions' responsibilities under the Fair Credit Reporting Act to report accurate information to consumer reporting agencies, conduct prompt investigations when there have been a dispute and correct information reported erroneously. It was noted that a number of lawsuits have been brought against financial institutions regarding alleged mistakes in reporting debts charged off in bankruptcy and that credit unions should make sure they are in compliance with credit reporting requirements. The Credit Union Committee met this weekend in New York concurrent with the ABA's annual meeting there. The next meeting of the committee will be in conjunction with CUNA's Attorneys Conference in Charleston September 22.

New mortgage foreclosure protections for servicemembers (08/11/2008)

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WASHINGTON (8/12/08)--Credit unions should be aware that a recently enacted housing law provides some immediate protection to servicemembers having trouble making mortgage payments, the Credit Union National Association (CUNA) has advised. The Housing and Economic Recovery Act was signed into law late last month. It is meant, in part, to mitigate burgeoning mortgage foreclosures in a stressed housing market. That new law amends the Servicemembers Civil Relief Act (SCRA) by:
* Offering nine months of protection (formerly 90 days) from mortgage foreclosures for returning servicemembers after they separate from active duty. This provision remains in effect until December 31, 2010; and * Extending the SCRA’s six percent interest rate cap for one year (formerly 90 days) beyond the period of military service if the debt is a mortgage, trust deed, or other security in the nature of a mortgage.
The new recovery law also requires the Department of Defense to implement a foreclosure-prevention counseling program for servicemembers returning from active duty abroad. Refer to the resource link below for more guidance on SCRA requirements.

New mortgage foreclosure protections for servicemembers

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WASHINGTON (8/12/08)--Credit unions should be aware that a recently enacted housing law provides some immediate protection to servicemembers having trouble making mortgage payments, the Credit Union National Association (CUNA) has advised. The Housing and Economic Recovery Act was signed into law late last month. It is meant, in part, to mitigate burgeoning mortgage foreclosures in a stressed housing market. That new law amends the Servicemembers Civil Relief Act (SCRA) by:
* Offering nine months of protection (formerly 90 days) from mortgage foreclosures for returning servicemembers after they separate from active duty. This provision remains in effect until December 31, 2010; and * Extending the SCRA’s six percent interest rate cap for one year (formerly 90 days) beyond the period of military service if the debt is a mortgage, trust deed, or other security in the nature of a mortgage.
The new recovery law also requires the Department of Defense to implement a foreclosure-prevention counseling program for servicemembers returning from active duty abroad. Refer to the resource link below for more guidance on SCRA requirements.

NCUA reiterates corporates strength after iWSJi story

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ALEXANDRIA, Va. (8/12/08)--Following a story in yesterday’s Wall Street Journal, the National Credit Union Administration (NCUA) said it would continue prudent regulatory oversight and close supervision of the corporate credit union system, which the agency said maintains a “strong” liquidity position. NCUA’s statement was in response to Monday’s front page Wall Street Journal story entitled “Mortgage-Market Trouble Reaches Big Credit Unions.” (Use the link below to access the complete story online.) That story primarily addressed the impact of current market conditions on fair values of mortgage-related securities held by five corporate credit unions. The article notes as of May 31, five corporate credit unions have reported $5.7 billion in accumulated unrealized losses on available-for-sale securities. Additionally, the article discusses the reclassification of some securities from available-for-sale to held-to-maturity on the balance sheets of U.S. Central FCU (U.S. Central) and Western Corporate FCU (WesCorp). In a statement, NCUA said its Office of Corporate Credit Unions (OCCU) “continues to dedicate its resources to ensuring corporate credit unions are managing their balance sheets appropriately during this stressed market affecting mortgage-related securities. OCCU will not change its regulatory strategy as a result of this article.” NCUA said corporate credit unions, by regulation, are limited to the most highly credit rated investments, and that the vast majority of mortgage-related securities held by corporate credit unions “continue to be highly rated and continue to perform as expected.” “However, the lack of liquidity in the mortgage-related securities market has resulted in many financial institutions, including corporates, having to record accumulated unrealized losses on available-for-sale securities,” said NCUA. “These adjustments have been made in accordance with generally accepted accounting principles (GAAP) as set forth in Financial Accounting Standards Board (FASB) Statement of Financial Accounting (SFAS) No. 157 Fair Value Measures.” The agency also reiterated that corporate credit unions’ liquidity position is “strong.” “Corporate credit unions have ample liquidity to meet foreseeable liquidity demands,” said NCUA. “Furthermore, they have established additional liquidity sources in the event of increased liquidity demands from their members.” As part of its ongoing supervision, NCUA said OCCU monitors the liquidity position of the largest corporate credit unions “daily.” NCUA said U.S. Central and WesCorp have demonstrated they have “the ability and intent to hold securities transferred to maturity.” “As such, this reclassification of securities complies with GAAP. In addition, the securities reclassification was reviewed by their auditors and OCCU,” said NCUA.

CPM FCU serves members of liquidated CU

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ALEXANDRIA, Va. (8/11/08)--The National Credit Union Administration (NCUA) said Friday that CPM FCU of North Charleston, S.C., agreed to purchase and assume the member accounts of recently-liquidated Port Trust FCU of Charleston, providing Port Trust FCU members with local credit union service. NCUA liquidated Port Trust FCU Aug. 5 to “protect member assets after the credit union was determined to be insolvent,” said the agency. With assets purchased and assumed by CPM FCU, the Port Trust FCU members’ loan and share accounts are being transferred directly to CPM FCU. The new CPM members are guaranteed full member-owner rights and can access their funds at any CPM office location. Headquartered in North Charleston, CPM Federal Credit Union is a full service, $178 million federally chartered credit union serving 48,488 members. Chartered in 2006, liquidated Port Trust FCU had assets of approximately $460,900. The community-based credit union served 260 members.

Comments taken on NCUA merger net worth proposal

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WASHINGTON (8/11/08)--Credit unions can comment on a National Credit Union Administration’s (NCUA) proposed rule that would amend the definition of post-merger net worth. In regard to an acquiring credit union's net worth, NCUA's proposed rule would result in a net worth similar to that arrived at under the "pooling method.” More specifically, the proposed rule would allow an acquiring credit union to combine with its retained earnings, those of its acquiree. Comments are due to NCUA by Sept. 29. Use the resource link below for more details on the proposal.

NCUAs Hood summit stresses proactivity flexibility

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CHICAGO (8/11/08)--During his second annual Risk Mitigation Summit, National Credit Union Administration (NCUA) Vice Chairman Rodney E. Hood encouraged attendees not to simply avoid risks, but to “manage them effectively in order to stimulate economic growth.” “This morning, I ask that you all join me on this journey of seeking clarity in the balance of risks and rewards, amid economic indicators we often wish were clearer and more predictable,” said Hood. “As financial service providers, today’s credit unions are able to create member value and stimulate economic growth by taking risks. The seeds you plant today will shape America’s families and communities tomorrow." The summit was held last week at the Federal Reserve Bank of Chicago. Leaders from government and industry attended the event, which addressed “the latest and most effective techniques for risk mitigation,” according to an agency statement released Friday. Hood noted the importance and timeliness of the summit, and stressed the necessity for NCUA and the industry to proactively address risk mitigation issues. “Safety and soundness and consumer empowerment are closely related concepts,” noted Hood. "My interest in hosting today’s Risk Mitigation Summit stems from my core belief that credit unions must have regulatory flexibility and empowerment to dynamically manage their balance sheet to respond to the challenges of the current economic stresses.” Donna Gambrell, Director of Treasury's Community Development Financial Institutions (CDFI) Fund, delivered the keynote address.

NCUA hosts new state regulators

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ALEXANDRIA, Va. (8/8/08)—National Credit Union Administration (NCUA) Chairman Michael Fryzel and Board Member Gigi Hyland welcomed newly appointed state credit union commissioners and representatives of the National Association of State Credit Union Supervisors (NASCUS) for meetings at NCUA’s headquarters in Alexandria, Va. Among those attending the meeting with Fryzel and Hyland:
* Lorie Hovanec, director, Division of Banking and Securities for the Department of Commerce, Community and Economic Development, Alaska; * Martin Cofsky, deputy Superintendent of banks, New York State Banking Department; * Ken Ross, commissioner, Michigan Office of Financial and Insurance Regulation); * Joseph Garcia, chief of staff to Commissioner Ross; * Jenita Moore, deputy commissioner of policy, Michigan; and * NASCUS President and CEO Mary Martha Fortney.
Hyland is the NCUA board representative to NASCUS. “It is both important and beneficial that federal and state regulators foster open dialogue,” said Fryzel in a press statement released yesterday. “Particularly in these times of heightened attention to the safe and sound operations of financial institutions of all kinds, NCUA and the state regulatory system need to work closer than ever to ensure that we fulfill our responsibilities.”

House members urge vote on interchange bill

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WASHINGTON (8/8/08)--Four members of the U.S. House of Representatives this week urged leadership to commence a full House vote on a bill that would give merchants an antitrust exemption to negotiate interchange fees. The Credit Card Fair Fee Act (H.R. 5546) narrowly squeaked by the House Judiciary Committee last month with a 19-16 vote. U.S. Reps. Peter Welch (D-Vt.), Chris Carney (D-Pa.), Keith Ellison (D-Minn.) and John Yarmuth (D-Ky.) urged House Speaker Nancy Pelosi (D-Calif.) and Majority Whip Steny Hoyer (D-Md.) to bring the bill to full House vote before the Congressional session concludes. The Credit Union National Association (CUNA) opposes government intervention in setting interchange fees. CUNA believes that the tight committee vote and a short remaining legislative calendar will combine to preclude a final vote on an interchange bill this year. However, CUNA President/CEO Dan Mica added that CUNA does not assume H.R. 5546 is dead, and will remain active on the Hill in "beating the legislative drums against floor consideration and passage." "HR 5546 is not necessary for credit unions and will work against consumers in the long run. We will continue to oppose it," Mica added.

H.R. 1151 became law 10 years ago

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WASHINGTON (8/8/08)--"With the memories of that time still so vivid, it hardly seems that a decade has gone by since H.R. 1151 was signed into law,” said Credit Union National Association (CUNA) President/CEO Dan Mica. The credit union leader was reflecting on the 10th anniversary of the signing of the bill, officially titled The Credit Union Membership Access Act. It granted credit unions power to serve multiple groups. “We learned so much during that historic struggle to pass the bill-- the value of grassroots, the importance of a permanent presence on Capitol Hill, the urgency of political action,” said Mica. “We learned that the Movement wasn't nearly as ready as any of us thought to deal with a significant federal legislative issue,” he added. “Since then, we have built on those lessons--with Credit Union House, our Hike the Hill programs, and the growth of our political programs, and much more.” Mica witnessed President Bill Clinton sign H.R. 1151 into law on Aug. 7, 1998. Also present in the Oval Office were the bill’s chief sponsors, Pennsylvania Democrat Congressman Paul Kanjorski and Ohio Republican Steve LaTourette. Bankers claimed that NCUA’s multiple groups field of membership policy violated the common bond of the Federal Credit Union Act. After the U.S. Supreme Court ruled against credit unions in February 1998, credit unions worked hard to gain sponsors for H.R. 1151. “The task 10 years ago was to enact a bill to ensure credit unions survive,” said Mica. “Now, our challenge is to apply what we have developed since then to ensure credit unions thrive and grow."

Fed adjusts TILA triggers for mortgages

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WASHINGTON (8/7/08)--The Federal Reserve Board yesterday published its annual adjustment of the dollar amount that triggers additional disclosure requirements under the Truth in Lending Act (TILA) for home mortgage loans that bear rates or fees above a certain amount. The dollar amount of the fee-based trigger has been adjusted to $583 for 2009 based on the annual percentage change reflected in the Consumer Price Index that was in effect on June 1, 2008. The adjustment is effective Jan. 1, 2009. This adjustment does not affect the new rules adopted by the Board in July 2008 for "higher-priced mortgage loans." Coverage of mortgage loans under the July 2008 rules is determined using a different rate-based trigger. The Home Ownership and Equity Protection Act of 1994 restricts credit terms such as balloon payments and requires additional disclosures when total points and fees payable by the consumer exceed the fee-based trigger--initially set at $400 and adjusted annually--or 8% of the total loan amount, whichever is larger. Use the resource link below to review the board's complete notice.

CO-OP Financial joins interchange bill opposition

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WASHINGTON (8/7/08)--CO-OP Financial Services has joined the Credit Union National Association (CUNA) and others’ efforts to oppose and educate legislators about H.R. 5546, the “Credit Card Fair Fee Act,” which could substantially reduce credit and debit card interchange income, negatively affecting credit unions and their members. Despite a narrow 19-16 vote victory in the House Judiciary Committee last month, H.R. 5546 is not expected to go to the full House for a vote this year, though the Senate Judiciary Committee could hold a hearing on the issue in September. CO-OP President/CEO Stan Hollen said CO-OP would maintain an active role in any public education campaign and other grassroots efforts, should the bill be reintroduced next year. “At a time when economic conditions are straining earnings at virtually all credit unions, a material decline in interchange income would likely result in reduction or elimination of rewards programs and increased fees to members,” said CO-OP President/CEO Stan Hollen. “Past experience with similar legislation in Australia suggests the merchants did not pass any interchange reduction on to consumers.” Hollen said CO-OP will work with credit unions to further their understanding of interchange revenue, expense and fee structure.

CUs surveyed on regulatory exam process

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WASHINGTON (8/7/08)--The Credit Union National Association (CUNA) is circulating a survey to 2,000 credit unions to determine the areas of concern they have with the routine examination process. The two-page, 16-item questionnaire asks participants about their recent examination histories and experiences. However, it also queries specifically to what extent the credit union has pursued such actions as informally questioning examiner findings, refusing to agree to an item in a record of action, submitting a written response to an examination report, or requesting a different examiner, among other things. The purpose of the CUNA poll is to elicit credit union concerns regarding the regulatory examination process, according to CUNA Regulatory Affairs Senior Vice President Mary Dunn. In a letter accompanying the survey, CUNA President/CEO Dan Mica and CUNA's Examination and Supervision Subcommittee Chairman Tom Gaines write: “The annual examination by a state agency or the National Credit Union Administration can be one of the highest impact events on a credit union's calendar.” “As part of our ongoing effort to improve the examination process, CUNA's Examination and Supervision Subcommittee is collecting information about examination practices and credit union perceptions of examiners and examinations.” Gaines is president and CEO of the Tennessee Credit Union League. Separate, but similar, polls are being sent to federal and state-chartered credit unions. Replies will be held in confidence. Once poll results are in, CUNA will execute computer analysis and the questionnaires will be destroyed at the study's completion, said CUNA’s Dunn. Summary results will be published.

Inside Washington (08/06/2008)

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* WASHINGTON (8/7/08)--The Office of the Comptroller of the Currency Tuesday issued an interim final rule that provides guidance to national banks investing in public welfare projects (American Banker Aug. 6). Banks can invest in the projects regardless of community income levels under a provision in a recently approved housing rescue law. Banks have been able to participate in the projects since 1963, but in 1992, Congress capped the investments at 10% of a bank’s capital. John Dugan, comptroller of the currency, headed lobbying efforts for the change ... * WASHINGTON (8/7/08)--Rep. Barney Frank (D-Mass.) and members of the House Financial Services Committee sent letters to banking trade groups, the government-sponsored enterprises and mortgage servicers asking them to use a refinancing program that becomes effective Oct. 1. The program would allow the Federal Housing Administration to insure more mortgages (American Banker Aug. 6). Recipients of the letters include JP Morgan Chase and Co., Citigroup, Bank of America, Wells Fargo, Washington Mutual, Option One Mortgage Corp., HSBC Holdings PLC and Litton Loan Servicing LP. The lawmakers requested a response by Aug. 31. Frank’s committee scheduled a hearing on the matter Sept. 17 ...

NCUA shuts tiny South Carolina CU chartered in 2006

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ALEXANDRIA, Va. (8/6/08)--The National Credit Union Administration (NCUA) said yesterday it placed the Port Trust FCU of Charleston, S.C. into liquidation. NCUA in a release said it made the decision to liquidate the credit union and discontinue its independent operations after determining that “the credit union is insolvent” and had “no prospects for restoring viable operations.” At the time of liquidation, the credit union served 260 members and had assets of approximately $460,915. NCUA chartered Port Trust FCU in 2006 to serve persons who live, work, worship, attend school in, and businesses and other legal entities located in a community within Charleston and North Charleston, S.C. NCUA will issue checks to individuals holding verified share accounts in the credit union within one week.

Inside Washington (08/05/2008)

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* WASHINGTON (8/6/08)--Disaster victims can go online to file an application for recovery assistance from the U.S. Small Business Administration through its new electronic loan application. The application aims to simplify filing and deliver aid more quickly. Homeowners and renters who suffered damages to their homes and personal property following a declared disaster can apply for help. The disaster must be declared by President Bush or the SBA administrator. Businesses and non-profits can apply for assistance to cover losses to real estate and property, and economic injury ...

Compliance Shared branchings BSAAML issues

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WASHINGTON (8/6/08)—Shared branching is great, bringing the ability to serve members from thousands of locations nationwide. But increased opportunity comes with increased responsibility, especially with Bank Secrecy Act (BSA) and anti-money laundering (AML) compliance issues, says Mary-Lou Heighes, president of Compliance Plus, Lakewood, Calif. Heighes, in the August issue of Credit Union Magazine, writes that while shared branching provides opportunities for money laundering activities that otherwise would be limited, following specific rules for shared branching will alleviate most confusion. Heighes notes that there are special BSA/AML rules for shared branching being familiar with them is the key to avoid compliance headaches. The rules address these separate areas:
* Currency transaction; * Transfers between credit unions; * Office of Foreign Asset Control (OFAC) verifications’ *Monetary instruments; and * Suspicious activities.
Heighes also advises that credit unions participating in shared-branch systems must include this activity in their BSA/AML and OFAC risk assessments to ensure they have proper procedures in place and staff have adequate training. “By following the operating guidelines and regular due diligence in handling shared-branching transactions, credit unions can fulfill their regulatory responsibilities while providing members with access to their accounts wherever they may be,” assures Heighes. Use the resource link below to read Heighes’ complete advice.

CUNA supports a careful crack down on unfair practices

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WASHINGTON (8/6/08)—The Credit Union National Association (CUNA) supports a federal regulatory proposal to crack down on unfair and deceptive credit card practices, but warned in a recent comment letter that there are operational and practical concerns associated with the current plan. CUNA's comments followed a letter CUNA President/CEO Dan Mica sent last week to Rep. Carolyn Maloney (D-N.Y.), chairwoman of the House Financial Services subcommittee on financial institutions and consumer credit regarding legislation that contains provisions similar to those in the regulatory proposal. If adopted, the regulatory proposal would prohibit or limit seven practices relating to credit card practices and two practices regarding overdraft protection plans. It was issued jointly by the National Credit Union Administration (NCUA), Federal Reserve Board, and Office of Thrift Supervisions under the Federal Trade Commission Act which authorizes these agencies to regulate unfair and deceptive practices. CUNA will send it comments to all three regulators. CUNA wrote, “As the only consumer owned cooperatives in the financial marketplace, credit unions have a strong tradition of protecting consumer interests.” The letter added that regulatory action on these issues is necessary and appropriate because some in the financial marketplace have been subjecting consumers to predatory practices. “We commend the regulators for developing the proposal,” wrote CUNA Deputy Counsel Mary Dunn. However, Dunn warned that CUNA has operational and practical concerns about how some of the provisions will be implemented and whether they will result in unintended, negative consequences for credit unions and their members. “We feel it is reasonable for Congress and the regulators to consider how best to shield consumers but without continually adding new requirements that fail to recognize the existing level of regulatory burden,” the letter said. CUNA took the opportunity in its comment letter to recommend a “modified pay-go” approach for all new regulations, meaning that whenever an additional burden is imposed, it must be paired with an existing requirement that the regulators may eliminate or that Congress will review for removal. CUNA noted that its comments on the credit card and overdraft proposals reflect broad participation from the credit union system. The top issue of concern, measured by the number of comments, addressed the provisions on overdraft protection plans. Specifically, the plan’s opt-out rights, disclosures and overdrafts due to debit holds, received the most comments from CUNA members. CUNA recommended that two consumer-oriented practices in which a number of credit unions engage in should not be covered by all of the provisions of the proposal. These are overdraft accommodations and opt-in protection plans. If these practices are covered by the proposal’s full notice and disclosure requirements, “which were designed to prevent consumer abuses that do not exist with these accommodations,” they will likely be discontinued, in which case credit union members will be disadvantaged, CUNA wrote. CUNA also raised concerns about the prohibition on changing the interest rate on outstanding balances. While CUNA noted that, "(c)redit unions do not want to raise interest rates to gouge their members," Dunn noted that the prohibition does raise concerns about its impact on asset liability management, "particularly at a time when examiners are focusing increased attention on ALM." CUNA urged the regulators to take these considerations into account when developing the final rule. Use the resource link below to read CUNA’s complete comments.

Inside Washington (08/04/2008)

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* WASHINGTON (8/5/08)—First Priority Bank, Bradenton, Fla., offices opened Monday as part of the Atlanta-based SunTrust Bank network after the Florida bank was closed Friday by state regulators and the Federal Deposit Insurance Corp. (FDIC) was named receiver. The FDIC announced that SunTrust Bank assumed the failed bank’s insured deposits for no premium. In addition, SunTrust has agreed to purchase approximately $42 million of First Priority’s assets, comprised mainly of cash, cash equivalents and securities. The FDIC, however, said it entered into a separate agreement with LNV Corp., Plano, Tex., to purchase $14 million in First Priority's assets. LNV Corp. is a subsidiary of Beal Bank Nevada, Las Vegas. The FDIC will retain the remaining assets for later disposition. Over the weekend, First Priority customers were able to access their money via check, ATM or debit card. The FDIC reported that as of June 30, First Priority had total assets of $259 million and total deposits of $227 million. The bank closing was the third in two weeks and the eighth this year … * WASHINGTON (8/5/08)--Lenders and mortgage servicers are being encouraged by Congress and lawmakers to halt foreclosing on borrowers in an effort to help them refinance (American Banker Aug. 4). On Friday, San Diego City Attorney Michael Aguirre asked Bank of America Corp. to place a voluntary moratorium on mortgages from Countrywide Financial Corp. Rep. Barney Frank (D-Mass.) also has requested that lenders slow foreclosures for borrowers that are eligible for a refinancing program expected to begin in October. Consumer groups have suggested a blanket moratorium should be issued, while others say the loan modifications need to be performed individually. Scott Talbot, senior vice president for government affairs at the Financial Services Roundtable, said modifications are done on a case-by-case analysis ...

Risk mitigation for CUs summit Aug. 7 in Chicago

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ALEXANDRIA, Va. (8/5/08)—This Thursday’s Risk Mitigation Summit in Chicago is set to offer six sessions on tools, strategies and trends for reducing hazards that can be associated with some credit union products or services. National Credit Union Administration Vice Chairman Rodney Hood, who is host of the one-day interactive program, announced the following agenda, in addition to his own opening remarks:
* Enterprise Risk Management: Trends, Tools, and Turbulence – A Practitioner’s Perspective, Nate Wuerffel, vice president of Operational Risk Management and Business Continuity, Federal Reserve Bank of New York; * Value Creation Through Dynamic Strategic Management, Leo Tilman, president, L.M.Tilman & Co., and adjunct faculty, Columbia University; * Reputation Risk, John Bryant, founder and chairman/CEO, Operation Hope Inc.; * Capital for Credit Unions Serving Distressed Community, luncheon speaker Donna Gambrell, director of the Treasury Department’s Community Development Financial Institutions Fund; * ERM – A Challenging and Rewarding Journey, Christopher Copeland, director of Corporate Risk Management, CUNA Mutual Group; and * Credit Union National Risk Trends, John Kutchey, director of the Division of Risk Management, NCUA Office of Examination and Insurance.
This is Hood’s second risk mitigation summit, following a January 2007 session in Washington, D.C. where nearly 100 participants attended. Hood said of this week’s session, “The 2008 Summit is well-timed, given the dislocations in the financial markets and the attendant interest in the credit union community in the identification and management of risk.” “As with our previous summit in January 2007, I intend to continue to proactively work to provide whatever regulatory and supervisory tools necessary to assist credit unions in this crucial area.”

Push for reg relief for CUs stays strong says Magill

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WASHINGTON (8/5/08)—The Credit Union National Association’s (CUNA) lobbying efforts while Congress is in recess will focus on meetings with Senate staffers to promote passage of the Credit Union, Bank and Thrift Regulatory Relief Act (CUBTRRA). And while CUNA keeps the heat on in Washington to try to get CUBTTRA on the Senate suspension calendar before yearend, credit unions and the leagues are encouraged by CUNA to use the lawmakers’ time in their home districts to keep up the drive for the more comprehensive Credit Union Regulatory Improvements Act (CURIA). That bill has 151 official backers in the House, including Rep. Doug Lambourn (R-Colo.), the most recent supporter to sign on to the bill. The Senate bill has four co-sponsors in addition to Sen. Joseph Lieberman (I-Conn.), who introduced the bill in that chamber in May. CUNA’s John Magill, senior vice president of legislative affairs, said Monday of CUNA’s CUBTTRA push that he believes there is a shot for final passage this year. “We will be working to keep CUBTRRA on the minds of lawmakers and I believe we have a shot of at passage by unanimous consent in the Senate despite a very tight legislative calendar,” Magill said. “The thing to remember is that with unanimous consent, just one Senator can stop the progress of a bill, and that always can make a precarious situation for a bill,” he warned. Both houses of Congress are back in session on Sept. 8, but then recess for the year on Sept. 26. As its name suggests, CUBTRRA contains measures that would benefit credit unions, as well as banks and thrifts. Among provisions for credit unions, the bill proposes to:
* Allow all federal credit unions to apply to serve underserved areas, reversing the effect of a banker lawsuit that has prevented community and single-sponsor credit unions from reaching out to underserved areas; * Provide increased MBL ability by exempting MBLs made in underserved areas from a statutory 12.25%-of-assets cap; CUNA estimates more than 40% of the nation's census tracts are located in underserved areas; * Grandfather previously approved underserved fields of membership for credit unions; and * Allow short-term payday loan alternatives within a credit union's field of membership.
The more comprehensive CURIA also proposes a risk-based capital system for credit unions and an increased cap on member business lending, among other things.

CUNA urges action on pending NCUA proposals

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WASHINGTON (8/5/08)—The Credit Union National Association (CUNA) identified Bank Secrecy Act (BSA) compliance as remaining significant among all the regulatory challenges faced by credit unions. CUNA, commenting on a National Credit Union Administration routine review of its regulations, urged the federal regulator to encourage the U.S. Congress to conduct hearings on the struggles credit unions and other financial institutions face in their efforts to comply with BSA requirements. Those hearing, CUNA said, should address the scope of the regulations and the costs and problems associated with compliance. They should also look at the magnitude of financial institutions' attempts to satisfy examiners. “This will bring more congressional attention to these issues and encourage lawmakers to develop meaningful legislation to help streamline requirements,” CUNA said in its letter. Each year the NCUA and other federal financial regulators review one-third of their regulations to identify areas that could be simplified and made less burdensome. In addition to BSA rules, NCUA requested comment on its rules implementing the national flood insurance program, the Freedom of Information Act, and records preservation. (CUNA’s complete comments on these issues are available below.) In addition to the subjects listed by the agency for its review, CUNA urged the NCUA to consider action on some important proposals that are pending board action. For instance, CUNA urged the federal regulator to take up its field of membership proposal, which has been pending for more than a year, as a means to provide more flexibility for community federal credit unions. The proposal would streamline the charter application process for areas that meet a new “presumption” definition, giving community credit unions more latitude to plan their growth. CUNA also asked the NCUA to move forward on a plan to allow federal credit unions to make investments in foreign currency. The group also asked the agency to use its legal opinion letters to form a commentary to its regulations similar to that provided by other federal financial regulators. By way of comparison CUNA wrote, “As you know, commentaries issued by the Federal Reserve Board to Regulation Z, Truth-in-Lending, are proposed as a regulation with comments from stakeholders considered when the final commentary is developed.” For CUNA’s complete comments, use the resource link below.

CUNA welcomes bill to help unbanked

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WASHINGTON (8/4/08)—The Credit Union National Association (CUNA) Friday welcomed new legislation introduced by Sen. Daniel Akaka (D-Hawaii) intended to help more Americans gain access to mainstream financial services. Akaka gave credit unions the nod when introducing his bill. In a release, he noted that several credit unions have developed low-cost payday loan alternatives similar to what he proposes in the Improving Access to Mainstream Financial Institutions Act of 2008. The bill would create two grant programs within the Department of the Treasury. One is intended to provide consumers with a lower-cost, short-term alternative to payday loans by encouraging the development of affordable payday loan alternatives at mainstream financial institutions. Consumers who apply for the loans would be provided with financial education opportunities. Loans extended under the grant would be subject to the annual percentage rate promulgated by the National Credit Union Administration's (NCUA) Loan Interest Rates, currently capped at an annual percentage rate of 18%. The other program would authorize grants to help unbanked low- and moderate- income individuals establish credit union or bank accounts specifically to provide consumers with alternatives to rapid refund loans, check cashing services, and lower cost remittances. A side benefit noted by Akaka is that credit union and bank accounts provide access to savings as well as affordable borrowing opportunities. Akaka said: "About 45 million Americans do not have a bank or credit union account, denying them access to basic financial services. With these federal resources, mainstream institutions will be better able to bank the unbanked.” Last month, Akaka signaled his interest action to protect consumers from predatory lending practices during a Senate Banking Committee hearing on monetary policy. Akaka queried Federal Reserve Chairman Ben Bernanke about what must be done to encourage the development of affordable payday loan alternatives. The Fed chairman responded that he believes competition is the best solution, but then gave the nod to credit unions: "And I think banks and credit unions--I give particular credit to credit unions. They have done some particularly good work in terms of providing remittance services to allow people to get money back to their families without exorbitant costs."

Cardholder rights bill sends signal

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WASHINGTON (8/4/08)--The Credit Cardholders’ Bill of Rights Act of 2008 (H.R. 5244) passed the House Financial Services Committee 39-27 last week, just before both Houses of Congress adjourned for a month-long August recess. Although there is similar legislation pending in the Senate, S. 3252 introduced by Senate Banking Committee Chairman Christopher Dodd (D-Conn.), it appears unlikely that a final bill will pass Congress this year. The House committee vote in favor of the bill to ban unfair and deceptive credit card practices may serve to send a message to federal regulators to adopt strong measures to protect consumers. In fact, the Aug. 1 issue of American Banker said the lawmakers intended just that with their vote. The Federal Reserve Board, the Office of Thrift Supervision and the National Credit Union Administration have issued a joint proposal that addresses several of the concerns raised in the legislation. The joint proposed rule is open for public comment until Aug. 4 and CUNA will submit its comments in the near future. It is expected that the agencies will finalize their plan by the end of the year. CUNA has recommended in a letter to Rep. Carolyn Maloney (D-N.Y.), the chief sponsor of the House bill, that it may be “more prudent to let the regulatory process run its course prior to legislating a remedy." CUNA backs much of Maloney’s bill, but has urged balance in rules to end discriminatory, predatory, deceptive and abusive lending practices to avoid unintended consequences.

Work from home Recess means lobbying time for CUs

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WASHINGTON (8/4/08)--August is an opportune time for credit unions to visit their members of Congress in the home districts during the month-long recess away from Washington, D.C. Bridging the periods between the 15 successful Hike the Hill campaigns executed through July and the 17 lined up for September, the summer District Work Session can give credit union representatives more time with lawmakers. CUNA Legislative Affairs Senior Vice President John Magill said CUNA and the state leagues are emphasizing the importance of such meeting to credit unions. "During a congressional visit in Washington, D.C., visitors may only get 10 minutes of face-to-face time with your member of Congress," said Magill. "But at home in the district, you're likely to 30 or 45 minutes." "We think it will help pull in more cosponsors for the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537)," added CUNA Political Affairs Senior Vice President Richard Gose. Both CUNA officials reminded that such visits are an important time to underscore for lawmakers the safety and soundness of the credit union system. “It’s a good time to reiterate that, while credit unions did not create the problems in the subprime mortgage market, we are here to be part of the solution,” Gose said. He added that a number of leagues have made August in-district visits with lawmakers a priority. Many have scheduled meetings and invited lawmakers to tour credit unions.

Hyland touts NCUA tools to explain share insurance

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WASHINGTON (8/4/08)—Gigi Hyland used her address this week at the Louisiana CU League (LCUL) annual meeting to tout the National Credit Union Administration’s available resources to enable credit unions to help members better understand that their deposits in federally insured credit unions are safe and sound. The NCUA board member noted credit unions members’ increased interest in federal share insurance, which has been peaked amid the country’s economic upheavals and three recently reported bank closings. The resources include publications such as:
* How Your Accounts Are Federally Insured; * Your Insured Funds; * NCUA Increases Retirement Insurance Coverage (Special Bulletin); and * Media Release - Federal Insurance Protection Strong At Mid-Year.
Also during her speech, Hyland reviewed that the key NCUA examination issue this year will is third party due diligence. She stressed the importance of credit unions understanding the vendors that they enter in to relationships with, and doing the proper research when selecting vendors that are critical to credit union operations. She noted the variety of resources available from NCUA on the topic, including an archived webinar, a document listing frequently asked questions, and the AIRES questionnaire that examiners will use when looking at third party due diligence. The Credit Union National Association (CUNA) is also exploring every avenue to broadcast the safety, soundness and strength of credit unions and to underscore they are backed by federal insurance. Use the resource links below to access NCUA and CUNA information.

Inside Washington (08/01/2008)

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* WASHINGTON (8/4/08)--The Federal Deposit Insurance Corp. (FDIC) transferred the deposits of First Heritage Bank in Newport Beach, Calif., and First National Bank of Nevada to Mutual of Omaha Bank before they failed two weeks ago, a move the agency likely made to avoid another IndyMac-like failure, observers said (American Banker Aug. 1). The FDIC is required to follow a “least-cost” resolution test, which requires it to act on events in a way that is cost-effective for the insurance fund. About 27% of the two banks’ $3.2 billion deposits were not insured, which results in a higher cost to the insurance fund. Despite the least-cost resolution law, the FDIC may have moved in the way that was most practical to avoid another IndyMac, said Bert Ely, an independent banking consultant from Alexandria, Va. ... * WASHINGTON (8/4/08)--The House Financial Services Committee approved Rep. Carolyn Maloney’s (D-N.Y.) measure to crack down on credit card practices. The bill would ban double cycle billing, restrict certain card fees, prevent companies from raising interest rates on existing debt if a consumer is late paying a bill and block minors from owning cards. Lawmakers said the measure passed so that the Federal Reserve Board wouldn’t ease its proposal to bar deceptive credit card practices (American Banker Aug. 1) ... * ARLINGTON, Va. (8/4/08)--Michael Fryzel, National Credit Union Administration (NCUA) chairman, is scheduled to give a speech at the National Association for State Credit Union Supervisors (NASCUS) State System Summit Aug. 21 in Seattle, NASCUS announced Friday. Fryzel led the Illinois Department of Financial Institutions for seven years in the 1980s. He was sworn in as NCUA chairman Tuesday ...

Indiana league article CUs a bright spot in economy

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INDIANAPOLIS (8/4/08)--Building Indiana magazine will feature in its September/October issue a column written by Indiana Credit Union League President John McKenzie promoting credit union mortgage and business lending successes. The column discusses how credit unions are expanding lending while other institutions pull back. It will be read by business owners, executives, management staff and board chairmen, and elected officials in a seven-county area of Northern Indiana. "During 2007 and into 2008, credit unions have represented a bright spot in the midst of a generally cloudy picture for the financial services industry," McKenzie wrote. He provided state statistics on the state's 208 credit unions and noted their asset growth continued at a strong pace. The article cited strong mortgage growth, with first mortgages growing 12% in 2007, as other mortgage lenders scaled back. Business lending "grew at a 17% pace last year" and surpassed $1 billion in loans outstanding" at time when credit availability for businesses has tightened, especially for small business owners, McKenzie said. As Congress considers how to stimulate the economy and create jobs, he wrote, "credit unions could do even more to make additional credit available to help businesses in their communities if Congress would pass H.R. 1537 (the Credit Union Regulatory Improvements Act)." Credit unions' services are based on the needs of their memberships, with an increasing number of credit unions offering business loans. "As locally owned financial institutions rooted in their communities, many credit unions are finding increased interest in being a source of borrowing for businesses for a number of reasons," McKenzie wrote. He also explained that credit unions have "steered clear of the subprime mortgage mess" by operating more conservatively and holding most mortgage loans in their portfolios, instead of selling them on the secondary market. He added that "credit unions focus on serving the consumers and business owners who are the members/owners of their credit unions. There is no separate group of stockholders with lofty profit expectations, which contributed to problems" at other types of financial institutions. The economy and financial environment had consumers considering whom they can trust, and this has "resulted in more people and business owners looking to credit unions as an attractive, safe option for financial services, especially during challenging economic times," he concluded.

CUs on the Tube North Carolina CUs Hike Capitol Hill

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WASHINGTON (8/4/08)—North Carolina credit union representatives brought a positive message to Capitol Hill during a recent Hike the Hill event in Washington, D.C. Noting that lawmakers have been buffeted by bad economic news from “Wall Street and Main Street” in recent weeks, the North Carolina credit union delegation said the good news about credit unions seemed well received. "The people helping people ethic that credit unions talk about is really on display, and our elected leaders seemed to really appreciate the difference," said North Carolina CU League Senior Vice President of Association Services Dan Schline. The credit union representatives updated lawmakers on the state of credit union mortgage performance, reporting that the default and delinquency rates on credit union mortgages in the state--and the rest of the country-- are below 1%. Click on the embedded video in this story to view the league’s report on its Hike the Hill experience, as well a video interview with Ryan Donovan, the Credit Union National Association’s vice president of legislative affairs.

Eddie Haskell nods to CUs at state legislative confab

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NEW ORLEANS (8/4/08)--Ken Osmond, who played the character Eddie Haskell on television’s “Leave it to Beaver,” told assembled state legislators that his credit union helped his family save and plan for retirement. Osmond was the special guest during two events hosted by the Credit Union National Association (CUNA) in conjunction with the annual Legislative Summit of the National Conference of State Legislatures (NCSL) in New Orleans on July 25. The events--a reception for legislators, preceded by a special photo opportunity--featured Osmond and his role as Haskell. Osmond, who became a police officer following the years in which he appeared on “Leave it to Beaver,” is a member of the Los Angeles Police CU. He spoke to the legislators following the screening of a video retrospective of his portrayal of Eddie Haskell. He also told the legislators, as well as representatives of eighteen state credit union leagues and CUNA staff who attended the reception, that he receives more fan mail now than when the show originally ran on network television. Osmond paid tribute to the benefits that credit unions provide to their members. He expressed appreciation to the Los Angeles Police CU for counseling him and his wife when they were first married to save and plan for their retirement, advice which he said had served him well. Legislators had a great time meeting and talking with Osmond and having their photos taken with him, according to CUNA State Governmental Affairs Vice President Chris Johnson.
Click to view larger image Pennsylvania State Representatives Chris Sainato (right) and Mark Longietti (left) met Ken Osmond during CUNA's reception for legislators. (Photo provided by CUNA)
State Reps. Chris Sainato and Mark Longietti, both of Pennsylvania, described meeting Osmond as a “fantastic” experience, and collaborated to film a video with the actor in the style of a news report on his appearance. State Rep. Richard Morrisette, of Oklahoma, said that meeting Osmond was a thrill for him because “he was my hero on ‘Leave It To Beaver.’” Morrisette added: “Some might even say that I am the Eddie Haskell of the Oklahoma Legislature.” CUNA’s Johnson said the events were part of the trade association’s ongoing effort to use creative means to remind state legislators who attend the Legislative Summit of how credit unions benefit their constituents. No credit union issues were on this year’s NCSL legislative policy agenda. However, Johnson pointed out that the policy will be considered at next year’s Legislative Summit in Philadelphia. Johnson said CUNA will be working with the state credit union leagues and key state legislators in the coming year to ensure that the current favorable policy is reaffirmed.