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Inside Washington (09/25/2008)

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* WASHINGTON (9/26/08)--As of Thursday, details of the Treasury’s proposal to buy illiquid assets from banks were unclear. The proposal did not yet specify how the assets would be priced, managed, identified or resold (American Banker Sept. 25). Details regarding executive compensation and use of facility would likely be determined later by the Treasury. The proposal draft includes foreclosure prevention efforts, but it was not yet known if the Bush administration would agree to those provisions. Democrats also indicated they wanted to add a measure allowing judges in the bankruptcy process to rework mortgages. Sen. John McCain (R-Ariz.) said he would suspend his presidential campaign to work on the crisis and said he didn’t think the proposal would pass as it was. Sen. Barack Obama (D-Ill.) noted presidential politics could delay the proposal’s passing ... * WASHINGTON (9/26/08)--House Financial Services Committee Chairman Barney Frank (D-Mass.) said he would like to change the Treasury’s proposal to bail out banks by adding tax breaks for institutions affected by losses in Fannie Mae and Freddie Mae preferred stock (American Banker Sept. 25). Frank said small banks seemed concerned that they were being left out from the plan. Fannie Mae and Freddie Mac were placed into conservatorship several weeks ago. Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke have not yet commented on whether the tax-break provision should be added to the bill. The Treasury’s plan as of Thursday would bail out banks through a $700 billion package. Frank also said he may introduce a bill next year that would increase the deposit insurance limit to more than $100,000 per account ...

CLF borrowing cap could be raised

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WASHINGTON (9/26/08)—As part of a continuing resolution to keep the government funded into 2009, the U.S. House of Representatives has approved a cap increase for the borrowing authority of the National Credit Union Administration’s (NCUA’s) Central Liquidity Facility (CLF) for Fiscal Year 2009. Currently the CLF is authorized by the Federal Credit Union Act to lend up to 12 times its paid-in capital—an amount that translates today to about $41 billion. However, Congress annually caps the CLF lending authority at $1.5 billion through the appropriations process. The House voted yesterday to temporary remove the arbitrary $1.5 billion cap and permit the CLF to lend up to its full statutory authority of $41 billion. The Credit Union National Association (CUNA) worked closely with NCUA and key House members and their staff to secure the higher CLF ceiling. “Eliminating the cap would be preventative and timely,” said Ryan Donovan, CUNA vice president of legislative affairs, Thursday. “We all are aware of the concerns regarding access to liquidity throughout financial markets. Because the elimination of the cap requires an act of Congress, we need this action now before Congress adjourns for the year,” he said. The CLF cap elimination passed the House 370-58 Wednesday as part of the Continuing Resolution and will now be considered in the Senate, where an economic stimulus package, and possibly the Troubled Asset Recover Program, might be added. If approved, then the entire package would have to be considered by the House again for concurrence. “It’s got a long way to go, but the legislation is moving in the right direction,” CUNA’s Donovan said.

NCUA takes three actions geared toward flexibility

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ALEXANDRIA, Va. (9/26/08)—The National Credit Union Administration (NCUA) Thursday approved a final rule giving federal credit unions more latitude in how they use the official share insurance sign in advertising and voted to put out for comment a plan that would give Reg Flex credit unions more flexibility in developing unimproved properties.
Click for slide show CUNA President/CEO Dan Mica (left) with NCUA Chairman Michael Fryzel before the start of Fryzel’s first monthly board meeting. CLICK TO VIEW SLIDESHOW (Photo provided by CUNA)
The board also approved a final regulation intended to streamline the agency's system for complying with freedom of information and privacy laws. It was the first open board meeting conducted by Chairman Michael Fryzel. Setting the tone and pace for the meeting in general, Fryzel made a concise opening statement. He said he was honored to sit as NCUA chairman and pledged that he and his “esteemed colleagues” on the three-member board will do “the best job we can.” Fryzel joins Vice Chairman Rodney Hood, whose term expires April 10, and board member Gigi Hyland, whose term extends to Aug. 2, 2011 on the board. Fryzel described the three items on the agenda Thursday as “noncontroversial” and there was a unanimous affirmative vote on each of the three actions. The revision to the agency’s rule governing the requirements for use of the official insurance sign and official advertising statement now gives credit unions the flexibility to use the basic form of the official statement, a shortened form, or just the official sign. The new rule also clarifies that the font of the text in the official sign may be modified to ensure it is legible when used in an ad. The change moves the NCUA’s rule into conformity with those of the Federal Deposit Insurance Corp. for banks. The final rule on Freedom of Information Act (FOIA) requests and privacy laws combined both housekeeping and substantive changes. The new rule incorporates recent amendments to the Freedom of Information Act, adds definitions, and revises and clarifies provisions implementing the Privacy Act. And in another action, the NCUA board agreed to seek comment for 60 days on a plan to allow credit unions eligible under the Regulatory Flexibility Program (Reg Flex) additional time to occupy properties bought in an unimproved state. Currently, when a federal credit union acquires unimproved land for future expansion and does not fully occupy the completed premises within one year, it must partially occupy the property within three years or obtain a waiver. The proposal would extend that three year period to six years. The 60-day comment period will commence once the NCUA plan is published in the Federal Register.

Mica on FOX TV CU members funds are safe insured

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WASHINGTON (9/26/08)—Credit Union National Association (CUNA) President/CEO Dan Mica Thursday again assured a national television audience that federally insured deposits in the nation’s credit union system are safe and have the full backing of the U.S. government. Live on Fox Business News, Mica was queried
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about the financial rescue plan wending its way through the Congress. The CUNA leader was introduced as “somebody who actually has been on Capitol Hill all week long speaking with congressional leaders behind the scenes.” Mica was asked whether credit unions are getting “frantic calls” from people worried about the safety of their deposits. The CUNA leader reiterated assurances he has made repeatedly in national news media in recent weeks: He emphasized that credit unions are federally insured through the National Credit Union Administration (NCUA) just like banks are insured through the Federal Deposit Insurance Corp. “A lot of people don’t know that,” Mica warned, and went on to detail how federal credit union insurance coverage matches that offered by the FDIC. Use the resource link below to hear the entire interview.

FDIC spokesperson issues special note to CU members

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WASHINGTON (9/26/08)--A television personality who is spokesperson for the Federal Deposit Insurance Corp. (FDIC) has written a special note on her website for credit union members, reassuring them that their deposits are backed by the U.S. government. Suze Orman had made public appearances, including an appearance on "The Oprah Winfrey Show" Wednesday, on behalf of FDIC and indicated that consumers whose deposits aren't insured by FDIC should withdraw their funds. She did not mention that the National Credit Union Administration also offers comparable insurance for credit unions through the National Credit Union Share Insurance Fund (NCUSIF). On her website, www.suzeorman, Orman addresses federal insurance for credit unions. "If your savings is at a credit union I want you to listen up right now. Most credit unions are just as safe as an FDIC-insured bank account, but as I explained in an earlier Suze Scoop, the wise move to make in these scary times is to double check that you are absolutely 100% protected." Her entire message can be viewed at the resource link. Thursday the Credit Union National Association (CUNA) issued a nationwide press release to help credit unions reassure their millions of members that savings in credit unions are federally insured, just like deposits in banks are insured by FDIC (News Now Sept. 25). “We felt we had to take this action in order to respond to a number of challenges to the fact that credit unions are federally insured, just like the banks,” said Pat Keefe, CUNA vice president of communications. “With FDIC spokesperson and TV personality Suze Orman extolling bank insurance coverage, President Bush’s omission of credit union insurance, and sagging confidence in the financial system overall, it was clear we had to take action for our members, and consumers,” Keefe said. CUNA has posted a video on both its website and the “America’s Credit Unions” website (at www.creditunion.coop) of CUNA President/CEO Dan Mica explaining federal savings insurance at credit unions. The press release points out that the money of virtually all credit union members is protected by federal insurance similar to that provided to banks by FDIC. It directs consumers to two websites for more information:
* For more about federal savings insurance at credit unions, they can go to the “America’s Credit Unions” website at www.creditunion.coop. * To determine how much of their savings at your credit union is covered by federal insurance, they can visit the NCUA insurance calculator at http://webapps.ncua.gov/ins/

CUs have federal savings insurance CUNA reminds

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WASHINGTON (9/26/08)--Following President George W. Bush’s Wednesday night speech on an economic rescue plan, the Credit Union National Association (CUNA) in a national press statement reminded consumers the money of virtually all credit union members is protected by federal insurance at their credit unions--insurance coverage that is similar to that provided to banks by the Federal Deposit Insurance Corp. (FDIC). “Regrettably, President Bush did not mention this important aspect of the federal safety net in his comments to the nation,” said CUNA President/CEO Dan Mica. “But, it’s important for the millions of credit union members across the nation--with billions of dollars saved in their credit unions--to know their money is as safe and sound as any deposits in federally insured banks,” he said. Virtually every credit union across the nation has federal deposit insurance. Just like FDIC insurance at banks, savings are insured to at least $100,000. The federal insurance safety net at credit unions is provided by the National Credit Union Administration (NCUA), a U.S. Government Agency. Additionally, the credit union insurance--just like the FDIC--is backed by the full faith and credit of the United States. “In fact, no one with their savings at a federally insured credit union has ever lost a dime of their savings,” Mica added. CUNA on Thursday issued a nationwide press release to help credit unions reassure their millions of members that savings in credit unions are federally insured, just like savings in banks are insured by the FDIC. Meanwhile, CUNA on Wednesday posted a video on both its website and the “America’s Credit Unions” website of CUNA’s Mica explaining federal savings insurance at credit unions. Access it at www.creditunion.coop. Consumers can determine how much of their savings at your credit union is covered by federal insurance, visit the NCUA insurance calculator at http://webapps.ncua.gov/ins.