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Deficit panel adopts rules package

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WASHINGTON (9/8/11)—The Congressional Joint Select Committee on Deficit Reduction conducted its organizational meeting Thursday as planned and approved a rules package that will guide its actions in the coming months. The 12 panel members, including co-chairs Rep. Jeb Hensarling (R-Texas) and Sen. Patty Murray (D-Wash.), made opening statements that, in part, vowed to get the job done in the timeframe mandated by Congress. As Hensarling said of the panel’s daunting task of identifying areas or cost savings and revenue raising that will start to attack the country’s debt level, “I will not sit idly by and watch the American dream disappear for my 9-year-old daughter and my 7-year-old son," he said. "And I believe that is a sentiment shared by all of my colleagues." Co-chair Murray reminded her colleagues, who are split on the issue oof whether tax increases are on the table, that all member of the super committee must remain open to one all views and must be prepared to compromise. Credit Union National Association Senior Legislative Representative John Hildreth said after attending the committee’s initial meeting, "The panel members used the session primarily to pass a package of rules to govern the proceedings of the select committee, as well as to make opening statements to indicate their hopes for the panel and their shared desired outcome that the committee will produce a bill on time that will prevent the automatic sequestration requirements mandated by the Budget Control Act of 2011." The other members of the committee are:
* Democratic House members Xavier Becerra (D-Calif.), Chris Van Hollen (D-Md.), and James Clyburn (D-S.C.); * Republican House members Dave Camp (Mich.) and Fred Upton (Mich.); * Democratic Sens. Max Baucus (Mont.) and John Kerry (Mass.); and * Republican Sens. Jon Kyl (Ariz.), Pat Toomey (Pa.) and Rob Portman (Ohio).
Congressional committees must make their deficit-cutting recommendations to the committee by Oct. 14, and the deficit reduction committee must vote on its final reduction plan by Nov. 23. The committee's final report on deficit reduction, and related legislation, must be provided by Dec. 2, and that legislation must be voted on by Dec. 23.

Senate panel approves NFIP extension

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WASHINGTON (9/8/11)—The Senate Banking Committee Thursday approved by voice vote a bill to extend the National Flood Insurance Program (NFIP) for an another five years. The U.S. House last month overwhelmingly passed its version of a bill to extend the program, but before the extension can become law, the House and Senate must work out differences between their legislation. The House bill has a provision, backed by the Credit Union National Association, that would preserve the rights of credit unions to protect their collateral from flood hazards. The provision addresses situations where borrowers have allowed flood insurance to lapse, and clarifies that subsequent flood insurance purchased by a credit union, or other lender, would date back to the date the existing policy lapsed or became insufficient in coverage amount, including any premiums or fees incurred during the 45-day notification period. The Senate NFIP reform discussion draft, approved by the panel yesterday, includes a provision--opposed by CUNA--that would require all mortgage lenders to escrow for NFIP premiums. Current law only requires lenders that escrow for taxes and insurance to also escrow for NFIP premiums. CUNA has warned lawmakers the escrow requirement could drive some small mortgage lenders, including credit unions, out of the mortgage business because there is a significant cost involved with establishing escrow accounts, particularly for community banks, credit unions, and community-based lenders that have small lending volumes. CUNA Senior Vice President of Legislative Affairs Ryan Donovan said after the Senate committee vote Thursday that he expects there will be another temporary extension of NFIP before the House and Senate can resolve differences between their approaches to NFIP reform and approve a single bill for the president’s signature.

Schumer backs CU MBLs as jobs initiative

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WASHINGTON (9/9/11)--In a significant action in support of credit union member business lending (MBL), Sen. Charles Schumer (D-N.Y.) yesterday publicly backed adding MBL cap lift language to a developing jobs bill. Schumer in a statement said that lifting the "job-killing" lending cap "would be a win" for small businesses. "In these difficult economic times, we must ensure that they have access to the credit they need to grow and create jobs," he added. The senator also noted "small businesses are job creators and the lifeblood of Long Island's economy." Long Island, N.Y.'s Bethpage FCU is close to reaching its MBL cap, and Bethpage CEO Kirk Kordeleski said that "since the financial crisis hit in 2008, credit unions have stepped up to the plate to serve main street business owners which has accelerated our timeline of reaching the cap. If it is not lifted it will limit our ability to lend, which is not what the economy needs at this time—another financial institution not lending." The Credit Union National Association (CUNA) also supports the addition of MBL legislation to an economic job stimulus package, and estimates 140,000 jobs would be created within the first year after enactment. Separate House (H.R. 1418) and Senate bills (S.509) would, in part, increase the MBL limit to 27.5% of assets, up from the current 12.25% restriction. Taking this action would inject more than $13 billion in new funding into the economy, at no cost to taxpayers. Credit Union National Association President/CEO Bill Cheney said the jobs discussions that will follow last night's unveiling of the Obama administration's jobs plan present a “tailor-made opportunity to push a member business lending (MBL) cap lift for credit unions as one of the many ways job creation can be kick-started.” (See related story: CUNA presses MBLs as president launches jobs plan)

Patent law changes pass Senate

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WASHINGTON (9/9/11)--The Senate yesterday approved by an 89-9 vote the Leahy-Smith America Invents Act (H.R. 1249), which, among other things, would protect credit unions and other businesses from outside claims that some specific customer service, payment and marketing practices have already been claimed under existing business method patents. These types of patent challenges, which are often brought by non-practicing entities, can become expensive for credit unions and others if they are heard in court. Overall, H.R. 1249, which is named for Sen. Patrick Leahy (D-Vt.) and Lamar Smith (R-Texas), would alter the patent application system by awarding a patent to the first inventor to file a given application. The legislation also provides greater time for the public to provide input on a patent and changes the rules under which an existing patent may be challenged. The Credit Union National Association was one of several trade groups that backed the legislation, and sought senate support earlier this week in a letter to congress. The legislation now only needs President Barack Obama’s signature to become law.

CUNA presses MBLs as president launches jobs plan

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WASHINGTON (9/9/11)--The discussions and deliberations that will follow last night’s release of President Barack Obama’s proposal for an economic and job market revival present a “tailor-made opportunity to push a member business lending (MBL) cap lift for credit unions as one of the many ways job creation can be kick-started,” Credit Union National Association (CUNA) President/CEO Bill Cheney said. “Especially now, when our country is experiencing zero job growth, we believe Congress and the administration will be drawn to a measure that will generate $13 billion in new lending to small business and create 140,000 new jobs without burdening taxpayers or adding to the national debt,” Cheney added. Pending legislation in both the House and Senate would lift the MBL cap to 27.5% of assets, up from 12.25%. The president himself said Thursday night that he does not "pretend" that the plan unveiled before the joint session of Congress "will solve all our problems." "It shouldn’t be, nor will it be, the last plan of action we propose. What’s guided us from the start of this crisis hasn’t been the search for a silver bullet. It’s been a commitment to stay at it--to be persistent--to keep trying every new idea that works, and listen to every good proposal, no matter which party comes up with it." Ahead of Obama’s Thursday night speech before a joint session of Congress, Cheney in an editorial published on political news blog The Daily Caller said that lifting the credit union member business loan cap could be one of many “smaller-sized but still helpful measures” aimed at growing the ailing economy. “Small though it may be in the grand scheme, this is one good and politically viable solution. Undoubtedly there are others. Helpful measures such as these should not get lost in the larger jobs debate to come,” he added. House and Senate members have backed an MBL cap lift in recent days, with Sen. Charles Schumer (D-N.Y.) yesterday saying that lifting the "job-killing" lending cap "would be a win" for small businesses. (See related story: Schumer backs CU MBLs as jobs initiative) Sen. Mark Udall (D-Colo.), who is the main sponsor of MBL cap lift bill S. 509, and Reps. Ed Royce (R-Calif.) and Carolyn McCarthy (D-N.Y.), who are co-sponsors of House MBL cap lift legislation, also urged Obama to add an MBL cap lift to his job creation package. About 450 credit union advocates are expected to visit Capitol Hill lawmakers during CUNA’s Hike the Hill, which begins on Sept. 14 and lasts through mid-October. The MBL cap is high on their list of priorities.

NCUA OIG Agency action could have prevented Corp. CU failure

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ALEXANDRIA, Va. (9/9/11)--The National Credit Union Administration (NCUA) “failed to adequately assess or timely identify key risks” related to the concentration of mortgage-backed securities held in now-liquidated Constitution Corporate FCU’s investment portfolios “until it was too late,” the NCUA’s Office of the Inspector General has found. Constitution was one of several corporates whose investments in risky mortgage-backed securities eventually led to troubles. Members United Bridge Corporate FCU assumed the assets of Constitution Corporate FCU late last year after Constitution was liquidated. Constitution held a total of $1.2 billion in marketable securities as of July 31, 2010, and the NCUA estimated that $238 million of that total was comprised of private label mortgage-backed securities, $21 million of that total was comprised of commercial mortgage-backed securities, and $93 million of that total was comprised of asset-backed securities. The Office of the Inspector General in a material loss review of Constitution Corporate said that “stronger, more-timely supervisory actions and restrictions on concentrations could have provided opportunities for reasonable divestiture of investment securities,” helping the credit union to avoid the losses that ultimately led to liquidation. The inspector also noted that the NCUA at that time did not impose “specific investment concentration limits” and other regulatory structures that could have helped address “Constitution’s concentration risk and increasing exposure to credit, market, and liquidity risks.” In the report, the Office of the Inspector General also found the lack of adequate and timely regulatory oversight “was partially attributable to [NCUA] corporate examiners not having the appropriate regulatory support, such as more specific investment concentration limits, to adequately address Constitution’s concentration risk and the exposure to credit, market, and liquidity risks.“ The NCUA in its response said that its new corporate credit union rules and its large-issuer working group will help prevent the issues faced by Constitution and other corporates in the future. The agency also noted the unprecedented nature of the economic issues faced by the corporates in recent years. The inspector general also noted that the NCUA was not the only one to blame in this case, as the failed corporate “relied heavily on ratings assigned to the securities” that it purchased and “did not establish prudent sector concentration limits to reduce the credit risk exposure related to the underlying assets of the mortgage-backed securities.” The corporate also failed to “properly identify and monitor credit risk exposure in the underlying mortgage loan collateral of the mortgage-backed securities held in the investment portfolio,” the report added. For the full report, use the resource link.

Inside Washington (09/08/2011)

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* WASHINGTON (9/9/11)--Republican presidential candidate Mitt Romney would repeal the Dodd-Frank Act and replace it with “a streamlined regulatory framework,” according to his economic plan, which was released Wednesday. Romney said some Dodd-Frank reforms “have a place,” including greater transparency for inter-bank relationships, enhanced capital requirements, and provisions to address new forms of complex financial transactions. But Romney said Dodd-Frank is “a massive overreach of the federal government into private markets.” His plan also would modify the Sarbanes-Oxley law, which was passed in the wake of the accounting scandals of the early 2000s as part of any financial reform. The requirements of Sarbanes-Oxley were designed for large companies but impose unnecessary burdens when applied to mid-size firms, Romney said … * WASHINGTON (9/9/11)--The Federal Housing Finance Agency (FHFA) clarified that losses suffered by Fannie Mae and Freddie Mac were the result of misrepresentation by banks selling the securities rather than a lack of sophistication on the part of the government-sponsored enterprises in making the investments. The FHFA, Freddie and Fannie’s conservator, filed lawsuits against 17 financial institutions for the lost investments. “At the heart of the suits is FHFA’s conclusion that the actual mortgages backing many of the securities had characteristics that differed in a material way from what had been represented in securities filings. Under the securities laws at issue here, it does not matter how ‘big’ or ‘sophisticated’ a security purchaser is, the seller has a legal responsibility to accurately represent the characteristics of the loans backing the securities being sold,” the FHFA said in a statement. The agency also disputed press reports that it is seeking nearly $200 billion in damages or recoveries. “Actual recoveries will be determined based on filings by the parties, evidence and judicial findings,” the statement said … * WASHINGTON (9/9/11)--One hundred nonprofit organizations from 44 states and the District of Columbia received grants under the Program for Investment in Microentrepreneurs Act (PRIME), the U. S. Small Business Administration (SBA) announced Thursday. Grants will be used to provide business-based training and technical assistance to low-income and very low-income entrepreneurs to help them start, operate or grow their small businesses. Grants used to better equip community-based nonprofit organizations to provide training. “In the midst of the economic downturn the country has been experiencing, SBA’s PRIME grants are an increasingly important tool in our toolbox to help small businesses,” said SBA Administrator Karen G. Mills. “With these grants to nonprofit organizations, more entrepreneurs will have access to the training and technical assistance they need to have their businesses grow, succeed, create jobs and promote stronger local economies.” PRIME grants are intended to help qualified community-based organizations provide training to small businesses with five or fewer employees and that are economically disadvantaged, and businesses owned by low-income individuals, including those who live on Indian reservations and tribal lands. The PRIME grants competition was open to all 50 states and territories, with about $7.9 million available for grants this year ...

NEW Schumer backs CU MBLs as jobs initiative

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WASHINGTON (UPDATED: 4:45 p.m. ET, 9/8/11)--In a significant action in support of credit union member business lending (MBL), Sen. Charles Schumer (D-N.Y.) has publicly backed adding MBL cap lift language to a developing jobs bill. Schumer in a statement said that lifting the “job-killing” lending cap “would be a win” for small businesses. “In these difficult economic times, we must ensure that they have access to the credit they need to grow and create jobs,” he added. The senator also noted "small businesses are job creators and the lifeblood of Long Island’s economy.” Long Island, N.Y.’s Bethpage FCU is close to reaching its MBL cap, and Bethpage CEO Kirk Kordeleski said that “since the financial crisis hit in 2008, credit unions have stepped up to the plate to serve main street business owners which has accelerated our timeline of reaching the cap. If it is not lifted it will limit our ability to lend, which is not what the economy needs at this time—another financial institution not lending.” The Credit Union National Association (CUNA) also supports the addition of MBL legislation to an economic job stimulus package, and estimates 140,000 jobs would be created within the first year after enactment. Separate House (H.R. 1418) and Senate bills (S.509) would, in part, increase the MBL limit to 27.5% of assets, up from the current 12.25% restriction. Taking this action would inject more than $13 billion in new funding into the economy, at no cost to taxpayers. "During this difficult time in our economy, many small businesses require capital to stay afloat, remain competitive, and ramp up hiring. By increasing the credit union cap, we can help fill this void and create job creation without spending additional tax dollars," Reps. Ed Royce (R-Calif.) and Carolyn McCarthy (D-N.Y.), who are co-sponsors of the House bill, said sent a joint letter sent to President Barack Obama yesterday. Sen. Mark Udall (D-Colo.) in a separate letter told the president that the Senate's bipartisan bill to "ease government restrictions on credit unions and help small businesses--at no cost to taxpayers--is a no-brainer and should be part of the (president's) proposal." President Obama has scheduled a speech for this evening before a joint session of Congress and strengthening small business in America will be front and center.

Obama taps CFTC counsel for Treasury post

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WASHINGTON (9/9/11)--President Barack Obama on Thursday nominated Cyrus Amir-Mokri to serve as the U.S. Treasury Department’s Assistant Secretary for Financial Institutions and as a member of the National Consumer Cooperative Bank’s board of directors. The Treasury’s Assistant Secretary for Financial Institutions is charged with developing and coordinating Treasury's policies on legislative and regulatory issues affecting financial institutions. The Credit Union National Association (CUNA) has worked closely with Treasury officials in this position. For instance, CUNA worked with former assistant secretary Michael Barr last year, as CUNA President/CEO Bill Cheney discussed the National Credit Union Administration’s corporate credit union legacy asset plans, increasing the credit union member business lending cap, and other credit union issues during meetings last November. Amir-Mokri recently worked in the Commodity Futures Trading Commission (CFTC), serving as senior counsel to the chairman. He was also the CFTC’s agency’s deputy representative to the Financial Stability Oversight Council. The Wall St. Journal reported that Amir-Mokri helped write portions of the Dodd-Frank Wall Street Reform Act that focused on derivatives regulations. The Tehran, Iran-born Amir-Mokri has also worked in the United States Court of Appeals for the First Circuit, and received his law degree from the University of Chicago Law School. He also holds a Ph.D. in History from the University of Chicago and an A.B. in Biochemistry from Harvard College, according to an administration release.