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Inside Washington (09/26/2008)

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* WASHINGTON (9/29/08)--On Thursday, Congressional leaders said they had reached a deal on the Treasury’s $700 billion proposal to bail out banks, but details of the plan were not announced and Republicans had not yet indicated if they would sign on (American Banker Sept. 25). Rep. Spencer Bachus (R-Ala.) said there was no agreement on the plan except to continue discussions. Sen. Richard Shelby (R-Ala.) agreed, saying there were a lot of differing opinions. Congress is not prepared to give $700 billion, but would give $250 billion with another $100 billion down the road, Sen. Charles Schumer (D-N.Y.) said, speaking on behalf of lawmakers who noted they had reached an agreement. The plan is good enough to stabilize the markets, and Republicans can support it, according to Sen. Robert Bennett (R-Utah) ... * WASHINGTON (9/29/08)--Federal regulators have proposed requiring institutions to submit more data on residential construction loans and structured investment products in call reports (American Banker Sept. 26). The proposed changes were published Tuesday in the Federal Register. Comments will be taken until Nov. 24. More changes could be down the road when the Treasury’s $700 billion proposal to bail out banks goes into effect, said a Federal Deposit Insurance Corp. (FDIC) official ...


* WASHINGTON (9/29/08)--National Credit Union Administration Chairman Michael Fryzel (center) met with delegations from the Wisconsin, Georgia, Ohio and Oregon credit union leagues. He encouraged credit union professionals and volunteers to get involved in the governmental affairs process. “It is crucial that lawmakers know the credit union story and by coming to Washington and conveying what your credit union does for its members,” he said. “I commend you on this outreach." (Photo provided by the National Credit Union Administration) ...

Two nominated by CUNA to Feds TIAC

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WASHINGTON (9/29/08)—The Credit Union National Association (CUNA) has nominated two credit union representatives for membership on the Federal Reserve's Thrift Institutions Advisory Council (TIAC), and described both as individuals who would bring significant expertise to the cork of the Fed council. In a nominating letter to Fed Governor Randall S. Kroszner, CUNA Chairman Tom Doherty put forward the names of Patsy Van Ouwerkerk, president/CEO of Travis CU, Vacaville, Calif., and Rod Staatz, president/CEO of State Employees CU of Maryland (SECU CU), in Linthicum. Doherty noted that Van Ouwerkerk has been involved in the credit union system for more than 18 years. In addition to her current position at the $1.6 billion-asset Travis CU, which has 155,000 members, she also has served as president/CEO of Alliance CU in San Jose and at Columbia Community CU, Vancouver Wash. Van Ouwerkerk also has served in a leadership capacity on many boards and committees, including those under CUNA and the California CU League, the letter noted, and added that the nominee currently is chair of the Filene Research Council, a member of the Solano Economic Development Committee’s board of directors, and is chair of the Travis Regional Armed Forces Committee, which is a community and business partnership with Travis Air Force Base. On behalf of the Staatz nomination, Doherty noted Staatz has been at the head of $1.8 billion SECU, which has 252.411 members, for five years and throughout a distinguished career has held many executive and senior role in several financial institutions. Staatz also currently chairs the Credit Union Auto Lending Network, Credit Union Business Capital and is treasurer of Card Services for Credit Unions. He also is on the boards of Open Technology Solutions and the Maryland-D.C. CU Association. He is chairman of the Large CU Roundtable as well. TIAC is an advisory group established by the Fed in 1980, which meets three times a year with the Board of Governors to discuss developments relating to thrift institutions, mortgage finance, and certain regulatory issues. The Fed is expected to announce its selection of new TIAC members later this Fall.

NCUA to consider revocable trust coverage

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WASHINGTON (9/29/08)—The National Credit Union Administration (NCUA) is looking into simplifying its rules used to determine insurance coverage for revocable trust accounts. Specifically, the agency may be investigating the definition of “qualifying beneficiary” used for these accounts, known commonly as payable-on-death accounts. Just last week, the Federal Deposit Insurance Corp. (FDIC) announced changes to its coverage rules for the revocable trusts. The agency announced an interim rule, effective immediately, that eliminated the concept of qualifying beneficiaries, so that coverage is based on the naming of virtually any beneficiary. Under the revised FDIC rules, coverage for the vast majority of account owners at FDIC-insured banks is now based on the number of beneficiaries named in a depositor's revocable trust account or accounts. In as release, the FDIC noted that the insurance limit will still be based on $100,000 per named beneficiary. And for revocable trust account owners with more than $500,000 in such accounts naming more than five beneficiaries, the coverage is the greater of either $500,000 or the sum of all the named beneficiaries' proportional interest in the trusts, limited to $100,000 per different beneficiary. "We believe the interim rule will not only result in faster deposit insurance determinations after bank closings, but will help improve public confidence in the banking system," said FDIC Chairman Sheila Bair.

CUNA urges Congress to act on economic rescue

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WASHINGTON (9/29/08)—The Credit Union National Association (CUNA) urged every U.S. Senator and every member of the U.S. House to take “appropriate action” to restore the strength of the nation’s economy. “Inaction at this critical time is unacceptable given that the consequences of inaction may have devastating effects on the financial system and American consumers,” wrote CUNA President/CEO Dan Mica Friday. The CUNA letter reminded lawmakers that, despite current economic conditions, credit unions remain strong. The safety and soundness of the credit union movement can largely be attributed to the cooperative structure that “does little to encourage excessive risk taking,” the CUNA letter noted. However, the letter also reminded the federal lawmakers that credit unions are a sector of a much larger financial system which, by all accounts, is very ill. “Credit unions did not cause the subprime lending crisis because they generally avoided the weak underwriting practices which contributed to the crisis. Still, despite the movement’s good practices and overall health, credit unions are not immune to the effects of this economic crisis,” the letter said. CUNA urged that as Congress acts to restore the economy, the body must assure that credit unions have access to any programs created. The letter said CUNA appreciates that early drafts of the Troubled Asset Relief Act (TARA) give credit unions access to relief, if necessary. “We hope that, as Congress coalesces around a remedy, credit unions will continue to be included.” Lawmakers were reminded that in the aftermath of the Great Depression, American consumers turned to credit unions to help meet their financial services needs. CUNA assured that as the economy recovers from this crisis, credit unions will continue to be there for their members on Main Street. “We know credit unions cannot be the entire solution to the problems our economy faces, but we remain an important resource to the 90 million credit union members in the United States,” the letter said.