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CFTC sets Sept. 12 swaps meeting

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WASHINGTON (9/7/12)--Proposed rules that would enhance customer protections and final rules that would adapt existing regulations to incorporate swaps are scheduled to be discussed at a Sept. 12 Commodity Futures Trading Commission (CFTC) open board meeting.

The meeting is scheduled to begin at 9:30 a.m. ET at CFTC headquarters in Washington.

The CFTC said the proposed rule would enhance protections that are afforded to customers and customer funds that are held by futures commission merchants and derivatives clearing organizations.

A broadcast of the meeting will be made available to the public through a webcast and a toll-free phone line.

The CFTC earlier this year finalized definitions of swaps, security-based swaps and security-based swap agreements, and these new swap definitions are in effect.

Under a recent CFTC proposal, credit unions and other co-ops with $10 billion or more in assets would avoid swap clearing requirements when loans that are originated for members are sold on to other entities. This exemption also would be extended to swap transactions that are used to hedge against risks associated with member loans.

The exemption would apply to cooperatives whose members are non-financial entities, financial entities to which the small financial institution exemption applies, and cooperatives. Credit unions and other financial institutions with under $10 billion in assets are already exempt under a separate CFTC proposal.

The exemptions would help minimize the additional costs and fees associated with mandatory clearing and provide flexibility for credit unions to use non-cleared swaps, Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn has said.

National Credit Union Administration regulations currently permit a limited number of federal credit unions to use certain derivatives, such as interest-rate swaps and caps, to hedge or reduce their interest-rate risks. Some state-chartered credit unions also have similar derivatives authority for risk management purposes. Relatively few credit unions use derivatives to hedge interest-rate risk.

September financial services schedule set

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Fyi: WASHINGTON (9/7/12)--Credit reporting issues, Consumer Financial Protection Bureau (CFPB) oversight and issues created by the Federal Reserve's interest rate setting practices will be among many topics of discussion when the House Financial Services Committee reconvenes next week.

The Democratic National Convention ended last night, and with that convention and the earlier Republican National Convention complete, legislators are scheduled to return to Washington. Their stay, however, will be a short one, with a weeklong congressional district work period scheduled to begin on Sept. 24.

The committee's September schedule includes:

  • A Sept. 13 House financial institutions and consumer credit subcommittee hearing on credit reporting agency issues;
  • A Sept. 20 full Financial Services Committee hearing to review CFPB Director Richard Cordray's semi-annual report to Congress;
  • A Sept. 20 House domestic monetary policy and technology subcommittee hearing on the monetary impact of interest rates and the consequences of interest-rate setting as a Federal Reserve monetary policy tool; and
  • A Sept. 13 House capital markets subcommittee/oversight and government reform subcommittee hearing on implementation of the Jumpstart Our Business Startups (JOBS) Act.
The committee has also set a Sept. 11 House subcommittee on insurance, housing and community opportunity hearing on the Terrorism Risk Insurance Act and a Sept. 14 House subcommittee on insurance, housing and community opportunity hearing about the barriers that homeless and low-income military veterans face when they attempt to secure government-funded housing assistance and services.

A Sept. 12 full committee markup session has also been scheduled, but the bill that will be marked up has not been specified yet.

For more on the House hearings, use the resource link.

A volunteer at DNC tells the CU story

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CHARLOTTE, N.C. (9/7/12)--Phillip Kridel has been hitting the streets of Charlotte before 3:30 a.m. each day this week to reach a job he doesn't even have to do. The credit union director has rolled up his sleeves as a Democratic National Convention volunteer, working to sort and assign credentials--the coveted passes that make the difference between getting in or being locked out of the convention events.

"We understand how important policy is to our future--as an individual credit union and as a movement," Kridel told News Now early this week. He said his long-term experience in his past as an employee of the U.S. Postal Service--35 years as a city letter carrier--opened his eyes to the importance of being aware of the policy issues that surround one's work life. He has carried that perspective forward into his credit union life.

Kridel has served as a voter registration volunteer in the past so as the convention volunteer opportunity came open in his home base of Charlotte, he stepped forward to get involved. He said more people offered to volunteer than there were spots to fill, despite the fact that the DNC had, he said, some 10,000 volunteer positions to fill.

At first he filled a couple of shifts at the credentials office, but since July 16 he has been serving five days a week and some weekend days for four- to five-hour shifts verifying and organizing and supervising delivery of credentials.

So, why do it, News Now asked. What's the personal benefit or the professional benefit to political volunteerism?

"For myself, I see it as making my own, very small contribution to the re-election of Barack Obama, which is important to me, personally, to my family, and to our future.

"For credit unions? The more we can tell our story to everybody--and I talk to everyone I can about credit unions, without making them crazy--the more people know about credit unions, the more people understand how important they are in the financial marketplace," Kridel explained.

He said as a convention volunteer he is working alongside people who "work for a living and need the best possible rates on loans and savings, and need not to be nickel-and-dimed" on financial services--and these are people, he says, who need to know about credit unions.

His mission, he adds, is particularly important here in Charlotte, where credit unions operate in the shadow of the Bank of America headquarters here.

CU boots keep moving in Charlotte

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CHARLOTTE, N.C. (9/7/12)--Even as the Democratic National Convention (DNC) prepared Thursday for its climatic event--when President Barack Obama took the stage last night to accept the party's nomination for president--credit unions stayed involved in convention activities to the end.

House Democratic Leader Nancy Pelosi (Calif.) poses with CUNA President/CEO Bill Cheney, left,  CUNA Vice President of Political Affairs Trey Hawkins, center, and CUNA Senior Vice President of Legislative Affairs Ryan Donovan, right. (CUNA Photo)
Credit Union National Association (CUNA) senior officials, including President/CEO Bill Cheney, continued to meet with high-level Democrats and discuss credit union issues. CUNA interactions included those with House Democratic Leader Nancy Pelosi of California, Sen. Mark Udall of Colorado, and Rep. James Clyburn of South Carolina, who is the third-ranking Democrat in the House and who participated in the ribbon cutting ceremony Wednesday of the credit union project that renovated a rooftop playground for young patients at Levine Children's Hospital.

CUNA and the leagues also interacted with, to name but a few, New York's Rep. Carolyn Maloney, of the Joint Economic Committee, Rep. Ed Perlmutter of Colorado, and Rep. Suzanne Bonomici of Oregon, who signed on to CUNA-backed legislation to increase the credit union member business lending cap as her first bill co-sponsorship when elected.

CUNA and the state leagues also met with a host of state legislators during the four-day convention.

Credit union participation in the national political conventions started in 1988.

"Our participation," says CUNA Vice President of Political Affairs Trey Hawkins, "is a dynamic way of keeping credit unions and the credit union philosophy of 'people helping people' in the national spotlight.

"The conventions are an opportunity to talk to and communicate with all of the policy and media and political elites in one place. That's an opportunity we want to take on behalf of credit unions."

Among the highlights of credit union involvement at the DNC, CUNA, the North Carolina Credit Union League, the South Carolina Credit Union League and other credit union representatives continued a tradition started in 2000 of leaving behind a charitable project for the host city when they participate in national political conventions.

With Clyburn participating, credit unions unveiled their community project at Levine Children's Hospital Wednesday. (Use resource link to read more.)

CUNA, the state credit union leagues, CUNA Mutual Group, and credit unions also honored all delegates this week, when hundreds of them, along with more than a dozen federal and state lawmakers, attended an event hosted at the Aria Tuscan Grill Restaurant.

CUNA has also been a sponsor of the National Journal's Convention Daily Briefings, which feature party newsmakers. Similar activities were held at last week's Republican National Convention in Tampa, Fla.

Inside Washington (09/06/2012)

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  • WASHINGTON (9/7/12)--During speeches at the Democratic National Convention Wednesday, Democrats rebutted Republican charges that President Barack Obama is stifling the economy through overregulation. Massachusetts Senate candidate Elizabeth Warren, who helped form the Consumer Financial Protection Bureau, shaped Obama administration's efforts to employ the reforms of the Dodd-Frank Act as a battle to clean up Wall Street and a fight for the middle class. "President Obama believes in a level playing field," Warren told DNC delegates and attendees. "He believes in a country where nobody gets a free ride or a golden parachute, a country where anyone who has a great idea and rolls up their sleeves has a chance to build a business, and anyone who works hard can build some security and raise a family." In her speech, California Attorney General Kamala Harris said rules are necessary to create a level playing field. "We've all seen what happens when you roll back those rules," Harris said. "What happens are rows of foreclosure signs. What happens are mountains of family debt. What happens is a middle class that's hurting" …

Audio conference to cover NCUA CFPB priorities

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WASHINGTON (9/7/12)--Recent National Credit Union Administration (NCUA) multi-featured lending (MFL) guidance, the Consumer Financial Protection Bureau's (CFPB) remittance transfer rule, and that agency's latest mortgage proposals will all be addressed during the Credit Union National Association's (CUNA) upcoming quarterly pressing compliance issues audio conference.

The 1.5 hour-long CUNA conference will begin at 2 p.m. ET on Sept. 11.

CUNA Senior Vice President for Compliance Kathy Thompson, Senior Compliance Counsel Mike McLain, Director of Compliance Information Valerie Moss, Federal Compliance Counsel Colleen Kelly and Senior Assistant General Counsel Jared Ihrig will host the conference. CUNA Mutual Group Director of Regulatory Compliance Bill Klewin will also discuss how the recent MFL guidance could impact that company's LOANLINER program.

The audio conference will also address:

  • The Financial Crime Enforcement Network's latest advisory on identifying and reporting suspicious activity related to mortgage fraud;
  • Changes that have been made as a result of a recent National Flood Insurance Program extension;
  • Servicemember Civil Relief Act developments; and
  • The NCUA's work regarding credit union risk exposure.
To register for the audio conference, use the resource link.

NCUA sues UBS over WesCorp USC losses

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ALEXANDRIA, Va. (9/7/12)--UBS Securities on Thursday joined the list of Wall Street firms that have been sued by the National Credit Union Administration (NCUA). The agency alleged that UBS violated federal and state securities laws when it sold securities to U.S. Central Corporate FCU and Western Corporate FCU that caused losses.

The NCUA's complaint, which was filed in Kansas federal district court, states that UBS sellers and underwriters made numerous material misrepresentations in the offering documents when that firm sold a combined $1.1 billion in securities to the two failed corporates.

These misrepresentations caused U.S. Central and WesCorp to believe the risks of loss associated with these investments were minimal, when in fact the risks were substantial, said NCUA.

"The strength of our entire financial system relies on trust and accountability," NCUA Board Chairman Debbie Matz said in a release. "As our complaint makes clear, UBS Securities violated this trust, which contributed to the collapse of two corporate credit unions and the resulting crisis in the credit union industry. NCUA has worked to restore stability to the credit union system. Now we intend to hold UBS Securities, as well as other responsible parties, accountable," she added.

For the full NCUA release, use the resource link.

The agency has also settled with Citigroup, Deutsche Bank Securities, and HSBC, avoiding the cost of litigation and bringing in more than $170 million in funds that were lost due to the corporate credit union investments. The NCUA has also filed five similar actions against J.P. Morgan Securities, RBS Securities, Goldman Sachs, and Wachovia, and each of these suits are progressing through the court system.

U.S. District Judge Richard D. Rogers of the U.S. District Court for the District of Kansas in late July gave the agency permission to move forward with a combined lawsuit against RBS Securities and Wachovia.

While elements of the NCUA's suit had been questioned by the defendants, the judge said the agency had met the statute of limitations requirement in filing the suit with an extension of time, called an "extender clause," and had provided enough evidence to make a "plausible" claim of misrepresentation by the banks regarding the risk of the securities bought by the corporates.

The certificates in question were offered and sold to U.S. Central in 2006 and 2007, more than three years before NCUA filed the lawsuit on June 20, 2011. The banks had argued that NCUA had not met the required statute of limitations, as the securities in question were sold to the corporates in 2006 and 2007. However, the judge said NCUA had not waited too late to file its suits. He also noted that the NCUA could not have known the specifics of the securities offered to the corporates until it took them under conservatorship. (See related July 27 News Now story: Court: NCUA's Wall St. bank suits can proceed)