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Inside Washington (09/18/2008)

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* ALEXANDRIA, Va. (9/19/08)—After two years of operating under the conditions of a National Credit Union Administration (NCUA) Letter of Understanding (LUA), Toledo Metro FCU has resolved the issues of concern to the agency and the LUA has been terminated. The NCUA announced Thursday that the Toledo, Ohio, credit union has improved its underwriting and compliance with NCUA rules and regulations. Toledo Metro is “open, operating and serving its members,” the agency said in a release. The credit union board members signed the LUA in February and March of 2006 and its details were made public in September of that year. By signing the NCUA document, the credit union officials recognized the credit union's condition and committed to make a "sustained, conscientious effort to correct noted adverse conditions." According to the NCUA, those conditions included: poor loan quality; field of membership violations; delinquency issues; and weak management … * WASHINGTON (9/19/08)--House Financial Services Committee Chairman Barney Frank (D-Mass.) said he wants to quicken the loan modification process and will consider changing the mortgage servicing system to give servicers more authority. Frank commended Federal Deposit Insurance Corp. (FDIC) Chairman Sheila Bair for systemic loan modifications after IndyMac bank failed, and urged servicers to do the same. FDIC took on 742,000 mortgages after the bank failure, and iy has sent out 7,400 modification proposals. Borrowers with modifications are saving $430 a month, Bair said (American Banker Sept. 18). Modifying loans that servers do not own is a challenge, acknowledged Wells Fargo, Citigroup and Bank of America Corp. Michael Gross, Bank of America managing director for loss mitigation, said lawmakers’ expectations for Hope for Homeowners, a modification program scheduled to start Oct. 1, may be too high. Lenders may want to use traditional loan modification methods rather than taking a “haircut” to participate in the Hope program ... * WASHINGTON (9/19/08)--To bolster financial markets, regulators have proposed a number of rule changes. The Securities and Exchange Commission (SEC) has placed new limits on short-selling to help financial institutions build up money market accounts (The New York Times Sept. 18). SEC Chairman Christopher Cox also proposed a rule that would require investors and hedge funds to disclose short positions. The Federal Reserve announced Sunday that it had eased rules that would prevent companies from transferring funds to less regulated affiliates. The Office of the Comptroller of the Currency, Office of Thrift Supervision and Federal Deposit Insurance Corp., have proposed changes to accounting rules that would allow goodwill to be counted as capital. The agencies’ changes are subject to a 30-day comment period ...

Frank wants short-term Flood Insurance extender

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WASHINGTON (9/19/08)--House Financial Services Committee Chairman Barney Frank (D-Mass.) introduced legislation Thursday for a seven-month extension of the National Flood Insurance Program (NFIP). The NFIP is set to expire on Sept. 30 and the proposed extension would give House and Senate negotiators time to complete work on a permanent extension and to assess the implications of the 2008 hurricane season, Frank said in an announcement. “I am disappointed that a permanent solution is not before us, but we can and should extend the program while we work on that final bill,” Frank said. The House passed a bill in 2007, the Flood Insurance Reform and Modernization Act, which would reauthorize the NFIP, which was established after Hurrican Katrina, for five years.

Two finals one proposal at Fryzels first meeting

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Click to view larger image NCUA Board nominee Michael Fryzel before his June 3 Senate Banking Committee hearing on Capitol Hill. (Photo provided by CUNA)
WASHINGTON (9/19/08)—The National Credit Union Administration (NCUA) is scheduled to take up two final rules at its open board meeting next Thursday, one addressing requirements for use of the official insurance sign in advertising and the other intended to streamline the agency’s system for complying with freedom of information and privacy laws. The meeting will be the first of its kind since Michael Fryzel became chairman of the agency. He was sworn in on July 30 and historically the NCUA suspends open board meetings for the month of August. The Freedom of Information Act and Privacy Act proposal slated for final consideration combines both housekeeping and substantive changes. It incorporates recent amendments to the Freedom of Information Act, adds definitions, and revises and clarifies provisions implementing the Privacy Act. The other item up for a vote--the NCUA proposed revisions to requirements for use of the official insurance sign and official advertising statement--would permit insured credit unions to use the basic form of the official advertising statement, a shortened form, or the official sign in advertisements. The rule, if adopted, is expected to give credit unions added flexibility in advertisements. A third and final item on the Sept 25 agenda is a proposal to address Part 742 of NCUA’s Rules and Regulations, involving its Regulatory Flexibility Program. Use the resource link below to access the agenda.

Eight receive NCUA prohibition orders

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ALEXANDRIA, Va. (9/19/08)—Eight individuals have been the subject of recent prohibition orders issued by the National Credit Union Administration (NCUA) and are thereby prohibited from participating in the affairs of any federally insured financial institution. The NCUA posted the following announcements its website:
* Aaron Bell, a former board member of Burlington Northern Santa Fe Railroad CU, Cicero, Ill., was convicted of laundering criminal property, by committing dishonest acts against the credit union, and sentenced to two years of supervised release; * Patricia H. Sherman, former teller of Obelisk FCU, New Albany, Ind. was convicted of embezzlement and sentenced to 97 months imprisonment, five years of supervised release, and ordered to pay $7,012,900 in restitution; * Pranee Kolesar, former employee of Boeing Helicopters FCU, Ridley Park, Penn., pled guilty to misapplication of credit unions funds and bank fraud. She was sentence to one day in prison, five years of supervised release, and ordered to pay $14,500 in restitution; * Elizabeth Montedoro, former teller of Patriot FCU, Chambersburg, Penn. pled guilty to one count of bank fraud and was sentenced to 21 months in prison followed by four years of supervised release, and was ordered to pay $182,777 in restitution; and * Josette L. Williamson, was convicted of petty larceny in connection with the failure of WIT FCU, Rochester, N.Y. and sentenced to 120 hours of community service.
The following individuals consented to a prohibition order, without admitting or denying fault, to avoid the time and cost of litigation, according to the NCUA:
* Ann M. Bryson, former employee of Good Samaritan Employees FCU, Cincinnati, Ohio; * Betty J. Hargrave, former manager of Kellogg Memphis Employees FCU, Syracuse, N.Y.; and * Linda Mattina, former employee of Long Island State Employees FCU, Hauppauge, N.Y.
Violation of a prohibition order is a felony offense punishable by imprisonment and a fine of up to $1 million. Use the resource link below to find NCUA prohibition orders online.

NCUA offers Share Insurance 101

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ALEXANDRIA, Va, (9/19/08)—Registration is open now for the National Credit Union Administration’s (NCUA’s) free webinar to review federal share insurance regulations. The Oct. 7 information session also will provide a discussion of available resources regarding share insurance issues, as well as address operational considerations. NCUA board member Gigi Hyland will host the event scheduled from 1-2:30 p.m. (ET). The webinar is designed to be interactive and participants’ questions and paired with agency responses will be an integral part of the presentation. To register fir the NCUA’s “Share Insurance 101” Webinar, use the resource link below. Alexandria, Va., September 18, 2008 – Registration for the Tuesday, October 7, 2008, webinar “Share Insurance 101” is now open.

2009 NCUA meeting schedule made public

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ALEXANDRIA, Va. (9/19/08)—The National Credit Union Administration (NCUA) Thursday its 2009 board meeting schedule and posted it to its websitre. The NCUA board is scheduled to convene each month on a Thursday at 10 a.m. on the following dates:
* January 15 * February 19 * March 19 * April 16 * May 21 * June 18 * July 16 * September 2 * October 15 * November 19 * December 17
The meeting schedule may be subject to change. The NCUA board historically does not meet in open session in August.