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NCUA to testify Thursday on underserved consumers

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WASHINGTON (9/21/11)-- National Credit Union Administration (NCUA) Executive Director David Marquis is scheduled to testify Thursday at 9:30 a.m. (ET) before the House Financial Services subcommittee on financial institutions and consumer credit. The topic: “An Examination of the Availability of Credit for Consumers.” Marquis is part of a first panel of witnesses, which also will include Barry Wides, deputy comptroller for community affairs, Office of the Comptroller of the Currency, and Robert Mooney, deputy director for consumer protection and community affairs, Federal Deposit Insurance Corp. A second panel of witness is expected to include Gerri Guzman, executive director, Consumer Rights Coalition, Melissa Koide, vice president of policy, Center for Financial Services Innovation, Ryan Gilbert, CEO of Bill Float, Michael Grant, president, National Bankers Association, and Dr. Kimberly Manturuk, research associate, University of North Carolina Center for Community Capital. Also on the calendar for Thursday, the NCUA is scheduled to vote on its final rule on “Net Worth and Equity Ratio Definitions.” In March, the agency proposed amending the Federal Credit Union Act's definition of net worth for natural-person credit unions under NCUA's Prompt Corrective Action authorities to allow the NCUA's Section 208 Assistance made to troubled credit unions to qualify as regulatory net worth.

CUNA Serious talks on access to capital must include MBLs

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WASHINGTON (9/21/11)--Noting that “one of the crippling blows to economic recovery over the last few years has been the significant decline in business lending by large and community banks,” the Credit Union National Association (CUNA) encouraged the House Financial Services subcommittee on capital markets and government-sponsored enterprises to add lifting the credit union member business lending cap to any discussion on capital creation. The letter was sent to subcommittee chairman Scott Garrett (R-N.J.) and ranking member Maxine Waters (D-Calif.) ahead of today’s hearing on "Legislative Proposals to Facilitate Small Business Capital Formation and Job Creation." CUNA in the letter said that while banks have blamed their reduced business lending portfolios on regulator and examiner pressures, a lack of capital, and reduced demand, “a lack of demand has not been an issue for credit unions, many of which have former bank customers seeking business loans after having lines of credit withdrawn by the banks.” In fact, many credit unions have experienced growth in their own business lending portfolios after banks have turned their backs on many small business customers. Some credit unions are being forced to curtail their lending practices as they near the 12.25% of assets cap on credit union member business lending. CUNA estimates that lifting the MBL cap to 27.5% of assets would inject more than $13 billion in new funding into the economy, at no cost to taxpayers, creating 140,000 new jobs in the first year after enactment. The only obstacle to further credit union business loan growth is banker opposition to lifting the MBL cap, the letter notes. The CUNA letter notes that credit unions have been engaging in safe and sound business lending since their inception in the United States more than 100 years ago, and adds that some of the first loans credit unions ever made were for business purposes. For the full letter, use the resource link.

New Arrowhead Central CU CEO named by NCUA

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ALEXANDRIA, Va. (9/21/11)--Darin Woinarowicz has been named permanent CEO of San Bernardino, Calif.-based Arrowhead Central CU, a credit union that recently showed an improved financial results but remains under National Credit Union Administration (NCUA) conservatorship. The $681 million-in-assets credit union, which was founded in 1949, has been held under NCUA conservatorship since June 2010. The agency took control of the credit union on June 25, 2010, and fired then-CEO Larry Sharp and three other senior-level employees. These moves were made due to the credit union’s declining financial condition. The credit union as of June 30, reported net income of $11.3 million and improved its net worth to 5.06% of assets, up from 3.44% at Dec. 31, 2010. Total assets at the end of the second quarter were $681 million compared to $808 million for the same period last year. NCUA Region II Director Jane Walters said “the placement of a permanent CEO is another key accomplishment in the credit union’s complete recovery and lays the groundwork for its continued health and safety and soundness.” The selection of Woinarowicz, who is currently CEO of Bakersfield, Calif.’s Kern Schools FCU, will ensure that Arrowhead Central “has sound strategic processes, a member-oriented focus, and the strong risk management and oversight necessary to rebuild and prosper,” Walters added. Woinarowicz played a “vital role” in Kern Schools FCU’s restructuring and financial turnaround, the NCUA said. Kern Schools FCU in early 2010 announced it lost $40 million in 2009 from borrowers who had difficulties paying their auto loans and mortgage payments as the recession intensified.

NCUA website issues appear to be resolved

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WASHINGTON (9/21/11)—The National Credit Union Administration’s (NCUA) homepage and its internet connection, which were down for most of Tuesday, were up and running late yesterday. Agency staff told News Now that the website outage was caused by a cable issue--someone, likely a utility company, accidentally cutting a communication line. In the evening, the agency's public affairs office sent a communications asking parties, "If you emailed NCUA today, please ensure the recipient received your email." The NCUA's September open board meeting is scheduled to take place tomorrow.

CFPB must minimize CU burden as it aids servicemembers CUNA

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WASHINGTON (9/21/11)--The Consumer Financial Protection Bureau’s (CFPB) Office of Servicemember Affairs must “minimize compliance burdens on credit unions that provide important and reasonably priced products and services” to servicemembers and their families, the Credit Union National Association (CUNA) said in a comment letter. The CFPB earlier this month asked credit unions and other financial institutions for general information on products, services, programs, policies, or practices that are tailored to the unique financial needs of servicemembers and their families, or marketed to them. The agency also asked for more specific information on any assistance institutions offer to servicemembers who are distressed homeowners and their families and information on any servicemember-specific short-term lending products. The CUNA letter noted that credit unions “offer a broad range of financial products and services well-tailored to the needs of the nation’s servicemembers, veterans, and their families, fully support sufficient financial disclosures to servicemembers and their families so they can make informed, sound consumer finance decisions, and back efforts to eliminate abusive financial practices that harm the servicemember community.” CUNA added that it supports CFPB efforts to empower and educate servicemembers and their families to make informed consumer finance decisions, and encouraged the CFPB’s servicemember affairs office “to coordinate consumer protection efforts with other federal and state regulators to minimize all compliance burdens and duplicative requirements placed on credit unions. Additional information and details will be provided to CFPB staff soon, and CUNA plans to work with the CFPB on this servicemember protection endeavor. CUNA also encouraged the CFPB to work with credit union leagues, the Defense Credit Union Council, and individual credit unions to further support the CFPB effort.

Inside Washington (09/20/2011)

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* WASHINGTON (9/21/11)--Foreclosed borrowers will be able to have their cases reviewed for errors and misrepresentations on the part of servicers and may be eligible for restitution, John Walsh, the acting comptroller of the currency said Monday (American Banker Sept. 20). The review process is part of consent orders issued against the 14 top mortgage servicers. Cases will be reviewed by an independent consultant who may require servicers to develop a remediation plans, said Walsh, speaking at American Banker’s regulatory symposium. Borrowers with a foreclosure either pending or completed between Jan. 1, 2009, and Dec. 31, 2010 will be contacted through direct mailings, Walsh said. Individuals seeking a review will be able to go to a website and either file a request for review online or ask for a form that can be filled out and submitted by mail. “As we explored the best means of ensuring that injured homeowners had the opportunity to seek relief, it became clear that what was needed was a robust, transparent and accessible complaint process that will give borrowers the opportunity to request an independent foreclosure review,” Walsh was reported to have said … * WASHINGTON (9/21/11)--The Dodd Frank Wall Street Reform and Consumer Protection Act did not address many of significant problems created by the financial crisis, Robert G. Wilmers, chairman and chief executive officer of M&T Bank Corp. said Monday (American Banker Sept. 20). Wilmers, in remarks to American Banker’s regulatory symposium, specifically cited credit rating agencies, government-sponsored enterprises Freddie Mac and Frannie Mae and large bank holding companies as entities that continue to operate with government protection. Credit rating agency assessments were inaccurate leading up to the financial crisis, creating a false sense of confidence on the part of investors, Wilmer said. Wilmer called for new entrants to the credit ratings market and a more competitive, accurate ratings system. Despite the losses that Fannie Mae and Freddie Mac subjected American taxpayers to during the crisis, the percentage of American households owning homes did not, on net, increase as the housing bubble inflated, and eventually burst, between 2000 and 2009. Still, no action has been taken to resolve the question of how to restructure Fannie Mae and Freddie Mac, Wilmer said. Also, Dodd-Frank did not address the increased concentration of financial service providers that deal in speculative investments rather than traditional banking practices. “The major bank holding companies who engage in and rely on trading revenue can continue to do so with the protection of the FDIC system--established to protect depositors, not speculators,” Wilmer said. “It is a system in which a number took refuge in the wake of the 2008 financial crisis and in which they remain” ...