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Inside Washington (03/27/2009)
* WASHINGTON (3/30/09)--A letter from the Credit Union National Association (CUNA) to federal regulators to request more information on corporate credit unions drew the attention of the Wall Street Journal last week. CUNA President/CEO Dan Mica wrote to the National Credit Union Administration (NCUA) requesting records of the securities held by the two corporate credit unions placed into conservatorships recently--U.S. Central FCU and Western Corporate FCU, known as WesCorp. The article noted CUNA welcomed the agency’s recent legislative proposal to spread out over seven years costs associated with the NCUA’s corporate stabilizations actions. But it also noted that Mica told the NCUA that credit unions are concerned about a lack of transparency, including how the NCUA arrived at estimates of losses and its decision to take control of the two corporates. The March 27 article noted CUNA’s willingness to “do everything possible to avoid a legal battle” with the regulator while still looking at all options. Affected parties must decide by today whether to legally challenge the conservatorships of the two wholesale credit unions… * WASHINGTON (3/30/09)--Sen. Christopher Dodd’s (D-Conn.) legislation to crack down on abusive credit card practices could come up for a committee vote Tuesday. His bill would define universal default and double-cycle billing as unfair (American Banker March 27). It also would require that credit cardholders under 21 take a credit course or have a parent co-sign on the account and ban interest on fees. The Federal Reserve Board has proposed similar card regulations, but Dodd’s proposal would be effective immediately, whereas the Fed’s would take effect in 2010. Consumer groups said the bill is overdue, while the banking industry said they would fight it ... * WASHINGTON (3/30/09)--An independent investigator of the Treasury Department indicated that it found cases where a bank regulator may have “ignored questionable backdating of capital injections” (Reuters March 27). The investigator found backdating while reviewing the IndyMac case, and indicated that an OTS official may have allowed the backdating to happen. On Thursday, the Office of Thrift Supervision (OTS) announced that Treasury Secretary Tim Geithner had removed Scott Polakoff, OTS acting director, and appointed John E. Bownman, deputy director and chief counsel, effective immediately. Polakoff is on leave pending a review by the Treasury of the OTS’ August 2008 actions related to post-period capital contributions, OTS said ... * WASHINGTON (3/30/09)--Though Treasury Secretary Timothy Geithner detailed his ideas for regulatory reform Thursday, he did not indicate which agency he thinks should oversee systemically significant institutions (American Banker March 27). Financial industry observers anticipate that the Federal Reserve Board would fill this role, but Geithner said there may be danger in giving one agency all of the power. The Treasury is looking at a range of suggestions, he added. Some lawmakers have said a new regulator should be created to oversee the institutions, but others, such as Rep. Barney Frank (D-Mass.), said doing so would take up too much time. The Treasury has introduced a bill that would place the Fed over systemically significant institutions, thought the Federal Deposit Insurance Corp. (FDIC) must consult with it before taking over an institution ... * WASHINGTON (3/30/09)--The Financial Services Committee Thursday approved H.R. 1664, the Grayson-Himes Pay for Performance Act of 2009, which would prohibit certain compensation payments by companies that received money under the Troubled Asset Relief Program (TARP). The bill prohibits compensation payments that are unreasonable or excessive, restricts all non-performance based bonuses, and repeals a provision in the American Recovery and Reinvestment Act that would prevent employees from receiving bonuses if their company has not paid back TARP money. Financial institutions subject to the requirements also would have to submit a report the Treasury Secretary annually showing how many employees would or will receive compensation above specific dollar amounts during the fiscal year. The House could take up the bill this week ...


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