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Inside Washington (09/24/2009)

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* WASHINGTON (9/25/09)--H.R. 3614, portions of which correct the America’s Recovery Capital (ARC) loan program to give small businesses that qualify for 7(a) and ARC loans greater flexibility in how they use those loans, passed the House by a 417 to 2 vote earlier this week. The bill also extends all Small Business Administration programs through the end of October. The Credit Union National Association recently spoke in support of expanding the 7(a) Business Loan Program, saying that changes in the size criteria would help alleviate negative economic conditions by facilitating lending to small businesses ... * WASHINGTON (9/25/09)--At a Wednesday hearing, Treasury Secretary Timothy Geithner said that a draft bill by House Financial Services Committee Chairman Barney Frank (D-Mass.) on financial reform embraces some of the Obama administration’s reform ideas. Frank’s bill is expected to drop a requirement that forces banks to offer “plain vanilla” versions of their products (American Banker Sept. 24). Until Wednesday’s hearing, the Obama administration had supported the vanilla products idea, saying that it was necessary to protect consumers. However, banking groups had argued that the vanilla requirement would prevent innovation in the market and limit consumer choice. Geithner did not note any other compromises, but Frank said Wednesday that he expects disagreement in the House committee about a provision that would end national bank preemption. If passed, the legislation would give state regulators the ability to enforce national and state laws governing commercial banks. Lobbyists have said that the preemption rule would making financial institutions’ operation more difficult ... * WASHINGTON (9/25/09)--The Federal Reserve Board was absent at a House Financial Services Committee hearing attended Wednesday by officials of the Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and the Office of Thrift Supervision. Fed Chairman Ben Bernanke did not attend the hearing because of a scheduling conflict and asked the panel if he could meet with the committee later, a spokesperson said (American Banker Sept. 24). He is scheduled to testify in front of the committee Oct. 1. The Fed has been viewed as a contender by financial observers to take over the role of systemic regulator ... * WASHINGTON (9/25/09)--Senate Banking Committee Chairman Christopher Dodd (D-Conn.) says he doesn’t think that easing overdraft fee programs at JPMorgan Chase, Wells Fargo and Bank of America will stop legislative efforts regarding the fees. Dodd is expected to release a bill that would require financial institutions to give accountholders the ability to opt in for overdraft protection (American Banker Sept. 24). He said that the changes enacted by the large banks to ease the fees is a positive step. He added that the legislation would target abusive fee practices that “should have never been instituted in the first place” ... * WASHINGTON (9/25/09)--A press conference is scheduled for today by Reps. Barney Frank (D-Mass.) and Carolyn Maloney (D-N.Y.) to move up the date that Credit Card Accountability, Responsibility and Disclosure (CARD) Act provisions go into effect. Maloney and Frank hope to move the date to December from February (The Wall Street Journal Sept. 24). Part of the legislation, which requires credit card companies to give their accountholders more time to pay their bills, was effective in August. Other changes aren’t slated to go into effect until spring. The conference comes as several card companies have announced interest rate increases and fees, a move that some say is being triggered by a weak economy. If the effective date is moved, it would signal that lawmakers are not happy with how credit card companies have reacted to the legislation, according to John Ulzheimer, president of education at, a credit card educational website ... * WASHINGTON (9/25/09)--The House Financial Services Committee is slated to have a hearing today on H.R. 1207, the Federal Reserve Transparency Act of 2009. Witnesses include Scott G. Alvarez, general counsel at the Board of Governors of the Federal Reserve System, and Thomas E. Woods, from the Ludwig von Mises Institute. H.R. 1207 would change how the Board of Governors of the Fed is audited by the Comptroller of the Currency and how such audits are reported ...

New bill would advance some CARD Act protections

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WASHINGTON (9/25/09)--Reps. Carolyn Maloney (D-N.Y.) and Barney Frank (D-Mass.) on Thursday introduced legislation that would change the effective date of portions of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act. Aside from generally setting an earlier effective date for the CARD Act, H.R. 3639, the “Expedited CARD Reform for Consumers Act of 2009,” would push forward the effective dates for CARD Act provisions addressing gift cards, reviews of past consumer interest rate increases, and requirements addressing the penalties and fees that can be assessed to credit accounts to Dec. 1. Commenting on the legislation, Maloney said that the “breadth and depth” of interest-rate hikes that credit card companies are imposing ahead of the full imposition of the CARD Act points to the need for “faster consumer protections.” Ryan Donovan, Credit Union National Association (CUNA) vice president of legislative affairs, said the outlook for the legislation is uncertain. "The legislation seeks to move a February effective date up to this December, which is only about 10 weeks from now. In order for the bill to become law in that timeframe, it would seem that the bill would need to move through the legislative process at incredible speed," he noted. The legislation will not affect the 21-day rule on open-end credit that took effect in August, and CUNA continues to be in contact with the Federal Reserve, the National Credit Union Administration, and key members of Congress to resolve the compliance issues that continue to face credit unions.

Keys FCU placed into conservatorship

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ALEXANDRIA, Va. (9/25/09)--The National Credit Union Administration (NCUA) on Thursday assumed control of the 13,000-member and $180 million assets Keys FCU of Key West, Fla. According to an NCUA release announcing that the credit union has been placed into conservatorship, service to members of Keys FCU will continue, and they will be able to continue to make deposits and loan payments while the credit union is under NCUA control. The deposits of members will continue to be insured by the National Credit Union Share Insurance Fund, the release added.

Former Fed Chairman Greenspan to speak at CUNA GAC

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WASHINGTON (9/25/09) -- Alan Greenspan, the former chairman of the Federal Reserve Board, will be a keynote speaker at the Credit Union National Association’s (CUNA’s) 2010 Governmental Affairs Conference in February. Greenspan, who served as Fed chairman for 18 1/2 years until Jan. 31, 2006, plans to engage in conversation with GAC attendees, devoting a large share of his presentation to fielding questions from the audience. “Alan Greenspan last addressed the GAC in 2004 as Fed chairman. In that role, his remarks were carefully measured. It will be very interesting to hear Dr. Greenspan’s take on the economy and current events given that he is no longer under those earlier constraints,” said Mark Wolff, CUNA senior vice president, communications. The former Fed chairman joins a GAC lineup that also includes remarks on the economy from Lawrence Kudlow, host of CNBC’s The Kudlow Report, and a political point-counterpoint discussion that pairs former Vermont governor and Democratic National Committee chairman Howard Dean with Joe Scarborough, former Republican congressman and now host of MSNBC’s popular “Morning Joe” program. Also, CUNA has already launched its housing and registration process. Those planning to attend can reserve hotel rooms Monday-Friday, 9 a.m. to 5 p.m. ET, both online and via phone call. New this year, a number of state credit union leagues have obtained housing blocks for use by their affiliated credit unions. CUNA’s 2010 GAC takes place Feb. 21–25 at the Washington Convention Center in Washington, DC.

Matzs first meeting 0.15 NCUSIF assessment CLF changes

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ALEXANDRIA, Va. (9/25/09)--As anticipated, the National Credit Union Administration (NCUA) on Thursday approved a 0.15% of insured shares assessment on federally insured credit unions. The action is intended to help the NCUA return the National Credit Union Share Insurance Fund’s (NCUSIF) equity to 1.3% of June 30, 2009 shares and repay $310 million in funds the Stabilization fund has borrowed from the U.S. Treasury. The assessment would also repay all interest accrued by the NCUSIF as of June 30, 2010. Assessments will be invoiced no later than mid-November of this year, and payments will be due by mid-December.
Click for slide show NCUA Chair Deborah Matz talks with CUNA President/CEO Dan Mica before she calls her first open board meeting to order in her role as the agency’s new leader. (CUNA Photo)
The NCUA did indicate that additional assessments could be imposed in 2010 or 2011. However, whether or not additional assessments would be charged is dependent on future economic conditions. NCUA Chairman Deborah Matz said that while the board cannot fully predict how much any future assessments, if necessary, would cost credit unions, she did say that the board would try to provide credit unions with a budgetary range for any future assessments at its upcoming October board meeting. The NCUA did not alter the NCUSIF’s operating level of 1.3%, but changes to that level could be proposed in the future. Agency staff indicated they are studying this issue and if an increase is recommended, the agency would seek public comments on such a move. Opening her first meeting as NCUA Chairman, Matz spoke on her new role as leader of the credit union system, saying that her first priority as a regulator is to protect the deposits of all credit union members. The NCUA Board approved amendments that will “clarify and reinforce” the NCUA’s guarantee for corporate credit unions issuing unsecured debt under the agency's Temporary Corporate Credit Union Liquidity Guarantee Program (TCCULGP) and “further enhance” corporate credit unions’ liquidity by increasing their access to low-cost borrowed funds. This means that additional borrowing costs for the corporates could be reduced because the “highest possible rating” could now be obtained for debt that is issued under the TCCULGP. Natural person credit unions could benefit from NCUA’s revisions to the investment and earnings retention policies of the Central Liquidity Fund (CLF). These changes will allow the CLF to support its own operations through retained earnings while “greatly enhancing” the CLF’s ability to support natural person credit unions, CLF President J. Owen Cole said. NCUA Chief Financial Officer Mary Ann Woodson also discussed natural person credit unions during the meeting, reporting that there are currently 315 CAMEL 4 and 5 credit unions, an increase from the 242 reported in August of 2008.