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Inside Washington (09/07/2010)

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* WASHINTON (9/8/10)--The Federal Reserve is watching for Wall Street banks that devise more complicated derivatives instruments in an effort to avoid new regulations. Regulators worry that bank derivatives dealers could structure more over-the-counter derivatives to fall outside standardized transactions, which are regulated under the Dodd-Frank Act, said American Banker (Sept. 7) ... * WASHINGTON (9/8/10)--The Internal Revenue Service has released a draft version of Form 8941 that small businesses and tax-exempt organizations can use to calculate small business health care tax credit when they file income tax returns next year. A small business will include the amount of the credit as part of the general business credit on its income tax return. Tax-exempt organizations will claim the small business health care tax credit on a revised Form 990-T. The 990-T is used by tax-exempt organizations to report and pay the tax on unrelated business income. The form will be revised for the 2011 filing season so eligible tax-exempt organizations can claim the small business health care tax credit ...

Low loan growth historic but an opportunity CUNA

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WASHINGTON (9/8/10)—Despite ongoing tough economic conditions, Credit Union National Association (CUNA) Chief Economist Bill Hampel has said that there is room for loan growth at credit unions if credit unions gain adequate market share. CUNA’s recently released monthly review of credit unions (News Now Sept. 3) found that credit union savings balances rose 0.8% in July, bringing the total amount of savings held in credit unions to $801.5 billion. Savings rates in general are being held down as credit union members and consumers use extra cash to pay down their existing debts, Hampel added. "Households seem to be directing much of their available cash balances to paying down loans rather than increasing savings," said Hampel. "This will make building loan portoflios particularly difficult without an increase in market share." CUNA’s monthly survey also found that credit union loan balances again were down in July, contributing to a total loan balance decline of 1% during 2010. The most notable declines in credit union loans, which have decreased by nearly $5 billion compared to 2009 numbers, have come in both fixed and adjustable mortgages for primary residences. Hampel said that the current period represents the slowest rate of loan growth charted since World War II, and predicted that 2010 could end with zero loan growth for credit unions.

CUs can comment on national fin. ed. policy plan

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WASHINGTON (9/8/10)--The Financial Literacy and Education Commission (FLEC) is seeking comment before it finalizes its new draft version of a national strategy for financial literacy. Comments must be received by Sept. 19. FLEC was created by the U.S. Congress in 2003 and charged with boosting the country’s financial literacy through development of a national strategy for consumer education. It’s led by the U.S. Treasury and is comprised of the leaders of 19 other federal agencies, including the National Credit Union Administration. In 2006, the commission released its first National Strategy for Financial Literacy and in July 2009, the body set up a new working group to create a “comprehensive and inclusive process” for education. The working group identified five action areas--policy, education, practice, research, and coordination. The working group's next steps will focus on implementation of the National Strategy and how different types of organizations might integrate the plan into their work. In its request for public comment, FLEC poses a series of specific questions ranging from “do you agree with the vision statement” to “how would your organization implement the draft National Strategy”. Use the resource link below to read the Treasury’s request for comment.

MBL push vital before Senate return Cheney

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WASHINGTON (9/8/10)--Credit Union National Association (CUNA) President/CEO Bill Cheney began the shortened, post-Labor Day week by again proclaiming in national media that the government needs to unshackle credit unions and allow them to help the economy by increasing their member business lending (MBL) potential. In editorials published in The Washington Times and on the political blog dailycaller.com, Cheney stressed that increasing the MBL cap would allow the government to aid the economy at no cost to taxpayers. CUNA has estimated that lifting the current cap to 27.5% of total credit union assets would create at least 108,000 new jobs and inject more than $10.8 billion in new credit for small businesses in the first year following enactment. There is currently a 12.25% statutory cap on such lending. “While (increased MBL authority) alone would not solve the nation's unemployment and growth problems, it certainly would help, and it would be an easy, painless fix,” Cheney added in the Times editorial. Senate passage of an MBL proposal offered by Sen. Mark Udall (D-Colo.), which would “open up a lending channel and create new jobs,” should be “a no-brainer,” Cheney added. President Barack Obama will reportedly propose a number of tax breaks aimed at helping businesses, including small businesses. Cheney and CUNA contacted Obama last week, urging him to help credit unions help the economy by supporting MBL legislation, and CUNA this week will again take the case for an MBL cap lift directly to the White House during a meeting with President Obama’s economic advisors. Cheney called on readers to urge their legislators to support the MBL legislation, as credit union leagues and credit union backers nationwide continue to do. Cheney noted that these supporters have written letters to editors, submitted their own editorials to local press, and directly contacted their legislators through in-district town hall meetings. Cheney on Tuesday targeted this week as a pivotal opportunity to increase Senate support before Congress returns on Sept. 14. For both of the editorials, use the resource links.