WASHINGTON (9/12/08)—Changing one’s status from a Capitol Hill player to a “former” Hill hot shot may hold some surprises for the thousand or so who will face that transition—voluntarily or otherwise—after the November elections, wrote Dan Mica, president/CEO of the Credit Union National Association (CUNA), this week in The Hill. In his most recent monthly K Street Insider column, Mica wrote that “current wisdom” indicates that approximately 40-45 congressmen and six to nine senators will be leaving Congress after the elections. That, he added, translates to more than 1,000 staffers also. Sharing his perspective as one who has made the transition, Mica said the change can be an eye-opener for some. “When you’re in, you’re in; When you’re out, you’re out,” he warned. And a change to a professional life of Washington K-Street style lobbying occasionally can be a particularly rude awakening. Mica served in the U.S. Congress from 1979 to 1989 as a representative from Florida. “To be clear, a life outside Congress and on K Street can be rewarding and fulfilling, and it has been so for me. But there are adjustments, and one needs to be prepared for the certain change,” Mica wrote. “I learned quickly the phone system works quite differently from downtown to Capitol Hill, rather than vice versa,” Mica mused, “You will find that it takes longer to have calls returned, if they are returned at all.” Be prepared for rejection, to resign your position as center of attention, even to pay for past misdeeds if you were abusive on the way up, Mica advised his Capitol Hill readers. He joked, “Even your golf game is likely to change. The ‘gimmes’ on the golf course go away. You may find yourself asking: ‘Hey, what happened to my game?’” For more Mica pearls, use the resource link below to read the complete column.
WASHINGTON (9/12/08)—Data on mortgage lending transactions by credit unions, banks and thrifts throughout the United States in 2007 is now available through the Federal Financial Institutions Examination Council (FFIEC). The report covers the mortgage activity of 8,610 financial institutions covered by the Home Mortgage Disclosure Act (HMDA). Those covered institutions include, but are not limited to credit unions, banks, savings associations, and independent mortgage companies. The Credit Union National Association (CUNA) is currently analyzing the just-released mortgage lending data, particularly credit union information, and will report any significant trends. Mike Schenk, CUNA vice president of economics and statistics, noted it will take time to cull the enormous HMDA database. However, he said CUNA expects the numbers to show that credit unions, compared to other lenders, continue to be more likely to approve mortgage loan applications, and that their relatively high approval rates will continue to stand out across the income spectrum and in all key ethnic groupings. Schenk said the FFEIC numbers also historically have shown credit unions to be much less likely to saddle consumers with high-cost loans and that credit unions remain true to their mission: compared to other lenders, credit unions reported a larger share of the total mortgage lending to low/moderate income consumers. “My expectation is that, at a minimum, the new numbers will show a continuation of these impressive credit union results. I won't be surprised if, compared to other lenders, credit unions look even better than they have in the past,” Schenk said Thursday. He anticipated the FFEIC data will reflect that credit unions have remained active, responsible lenders during the ongoing housing downturn, which has caused many other lenders to significantly tighten underwriting standards and substantially curtail or completely abandon the mortgage market. “Credit unions were not contributors to the subprime mess, and have remained active, responsible lenders - the FFIEC data should reflect this fact,” the CUNA economist said. In more general terms, an FFIEC release noted that the 2007 HMDA data shows reductions in activity both in the overall mortgage market and in higher-priced lending. Factors contributing to the slowing were identified as slower or declining house price appreciation and tighter underwriting standards. In addition, part of the reduction in lending activity appears to be due to the nonreporting of loans by institutions that reported data for 2006 but discontinued operations during 2007. HMDA was enacted by Congress in 1975 and is intended, in part, to determine whether mortgage lenders are meeting the needs of their communities and to identify possible discriminatory lending patterns. The HMDA data show disposition of loan applications and include information on loan type, purpose, and amount; property type (1- to 4-family, multifamily, or manufactured housing); property location (MSA, state, county, and census tract); applicant characteristics (race, ethnicity, sex, and income); and census tract characteristics (minority composition and income). The FFIEC release said differences in the incidence of higher-priced lending between racial and ethnic groups continued in 2007, as did differences in denial rates on loan applications. “These differences continue to raise concerns about the terms, cost and availability of credit to minority applicants and borrowers, and lending practices in minority neighborhoods,” the FFIEC noted. The FFIEC is comprised of the National Credit Union Administration, Federal Reserve Board, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and Office of Thrift Supervision. Use the resource links below to read more from the FFIEC or to order the HMDA report.
WASHINGTON (9/12/08)--House Committee on Financial Services Thursday announced a Sept. 17 hearing to check in on the implementation progress of the newly established Hope for Homeowners program, intended to many thousands avoid mortgage foreclosures. In July, the U.S, Congress passed and President George W. Bush signed legislation designed to help at least 400,000 borrowers who are lagging in their payments because of a combination of unaffordable mortgages and falling home prices. The law sets an Oct. 1 effective date for the rescue provisions, which would let the FHA insure foundering mortgage loan for qualified individuals. Just before the bill was signed into law, a spokesperson for the Department of Housing and Urban Development (HUD) indicated he believed there was little chance that implementing regulations for the program would be ready by October. However, by the time Bush penned his name to the legislation HUD Secretary Steven Preston expressed confidence that the rules would be ready on time. The committee also intends to review foreclosure mitigation efforts by loan servicers at next Wednesday’s hearing. A witness list has not been released.
WASHINGTON (9/12/08)--Ryan Donovan, a chief lobbyist at the Credit Union National Association (CUNA), said that one affect on credit unions of the government’s move to seize control of Fannie Mae and Freddie Mac may in the loss of a sometimes political ally. He added that the situation has distracted lawmakers from the House-passed regulatory relief bill CUNA is working to push through the Senate before Congress adjourns this month; the Credit Union, Bank and Thrift Regulatory Relief Act (CUBTTRA). In an article in Politico entitled, “Picking up the Fannie-Freddie pieces, Donovan said he believed the loss of Fannie and Freddie’s firepower probably won’t hurt credit unions in the short term, but there are ramifications. “They may be out of the advocacy game, but Fannie and Freddie are still sucking a lot of the oxygen out of the room,” he said. In assessing what the article referred to as the “gaping hole left by the sudden departure of Fannie Mae and Freddie Mac from the lobbying game,” Donovan made the following observations: “Whenever you have an ally that ceases to exist so abruptly, there’s something missing. There’s a vacuum.” However, he added, while CUNA has worked alongside Fannie and Freddie on issues that address big banks, the two government-sponsored enterprises were not the kind of allies with whom credit union strategized. To read the entire article, use the resource link below.
ALEXANDRIA, Va. (9/12/08)—Credit unions and credit union members in the potential path of Hurricane Ike should prepare for all contingencies, including the possible interruption of some credit union operations, the National Credit Union Administration (NCUA) advised Thursday. The advisory, released as Ike was strengthening and moving toward the Gulf Coast states, noted that the NCUA will activate, as needed, a toll-free hotline for credit union members seeking information on such things as the operating status of their credit unions. That information will also be available on the NCUA website. The agency said it will also distribute a public service announcement to news outlets in potentially affected states in an effort to provide essential information to consumers about federal deposit insurance coverage for credit unions and how to access their credit union funds. Credit unions in Texas and Louisiana that could be affected by Ike are advised to review their contingency of operations plans and business continuity procedures, ensuring their ability to provide financial services to their members. NCUA encourages credit unions to ensure that in the event of an evacuation, they have taken the following important actions:
* Alternate sites are identified and prepared for potential activation; * Systems are backed up and the backup data is stored in a secure location that will be accessible (i.e., outside the impact area); * The NCUA regional office is notified with the location(s) of the alternate site(s), telephone numbers, and management emergency contact telephone numbers; * Any deploying employees should be identified and prepared to take necessary data and/or equipment to the alternate site location; and *Credit unions should test their backup systems to ensure proper operation.
In addition, the NCUA advised credit union staff and members may wish to document important personal family and financial information. It noted that the U.S. Department of Homeland Security’s “Ready Campaign” (www.ready.gov, or 1-800-BE-READY) provides information about disaster preparedness, including a link to the Emergency Financial First Aid Kit, a checklist of documents and steps consumers can take to maximize their preparedness. (See related story: Texas CUs, league brace for Hurricane Ike)
* WASHINGTON (9/12/08)--House Financial Services Chairman Barney Frank (D-Mass.) is looking to bring back two programs--one that would allow sellers to help borrowers in the Federal Housing Administration’s (FHA) mortgage insurance program with downpayment assistance, and another to allow FHA premiums to be priced based on borrowers’ risk (CongressDailyPM
Sept. 10). The programs were killed earlier during housing bill talks. Rep. Al Green (D-Texas) has sponsored a bill to allow the FHA program to apply to those with credit scores of 680 or higher. Those with scores of 620 would pay a premium to participate. Green said the bill is needed to help with the housing crisis. Reps. Christopher Shays (R-Conn.) and Gary Miller (R-Calif.) have co-sponsored Green’s bill ... * WASHINGTON (9/12/08)--Sen. John Cornyn (R-Texas) has called for an investigation of mortgage giants Fannie Mae and Freddie Mac, citing a 2006 report indicating that Fannie had overstated earnings. He sent a letter to the Justice Department asking it to determine if any illegal activities have taken place. Fannie and Freddie were placed into conservatorship Sept. 7 (CongressDailyPM
Sept. 10) ... * WASHINGTON (9/12/08)--Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Charles Grassley (R-Iowa), House Ways and Means Chairman Charles Rangel (D-N.Y.), and House Financial Services Committee Members Paul Kanjorski (D-Pa.) and Mike Capuano (D-Mass.) have called for oversight of pension investments in hedge funds and private equity. The legislators supported the recommendations of a recent Government Accountability Office report
, which suggests that the secretary of labor should provide more guidance for investments in hedge and equity funds by pension plans. “This new investment strategy has not been tested in an unstable market,” Baucus said. “If the pension investments sour, the retirement savings of millions of Americans could suffer” ... * WASHINGTON (9/12/08)--A Senate subcommittee report released Wednesday indicates that several Wall Street investment banks are using marketing schemes such as “dividend uplift” or “dividend enhancement” that help foreign investors avoid dividend taxes. The report, by the Senate Permanent Subcommittee on Investigations, cites Morgan Stanley, Lehman Brothers, Merrill Lynch, Deutsche Bank, Citigroup and UBS (The New York Times
Sept. 11). Hedge funds, such as Maverick Capital, Moore Capital and Highbridge also were noted as using the dividend avoidance products. The schemes have been used for at least the last 10 years, according to the report. Foreign investors generally owe 30% tax on dividends ...