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Inside Washington (08/31/2009)
* ALEXANDRIA, Va. (9/1/09)—The National Credit Union Administration (NCUA) has sent out a follow-up communication to its fraud alert last week regarding a bogus Letter to Credit Unions that itself masqueraded as an NCUA fraud alert. The false alert, the NCUA said, appears to be confined to the activity of a single credit union. According to the agency, as part of an internal "system penetration" test, a credit union created a facsimile of an NCUA Fraud Alert. “This was an unauthorized and improper use of the NCUA logo, and also included a falsified signature of then-Chairman Michael Fryzel,” NCUA said. The bogus alert was forwarded to the NCUA and that prompted the issuance of the Aug. 25 Fraud Alert. Credit unions are not authorized to create facsimile documents bearing NCUA logos or signatures, or to improperly represent communications from NCUA, even during the legitimate conduct of business such as a computer security assessment. The NCUA said it takes any type of security breach very seriously. "We also place a high priority on making federally insured credit unions aware of any illegal, fraudulent or deceptive activities that are frequently aimed at financial institutions. NCUA vigilance in this important area will continue, as will our efforts to make certain that credit unions take all proper precautions to protect sensitive member information and maintain financial security.”… * WASHINGTON (9/1/09)--Taxpayers should start to see profits as big banks repay their government bailout funds (The New York Times Aug. 31). Eight of the nation’s largest banks have completely repaid their bailouts, amounting to about $4 billion in profits, the newspaper said. The government also earned profits of $1.4 billion from Goldman Sachs, $1.3 billion from Morgan Stanley and $414 million from American Express when they repaid their bailouts. Bank of New York Mellon, State Street, U.S. Bancorp, BB&T, and Northern Trust also helped bring profits ranging from $100 million to $334 million. The repayments represent a small portion of the government’s financial rescue of banks and other companies, but taxpayers could collect more profits as banks repay their debts. When the bailout funds were issued, taxpayers were told they would make a modest return on the bailout funds. Critics had warned taxpayers, saying they may not reap any profits if some banks could take years to repay the money ... * WASHINGTON (9/1/09)--The Federal Deposit Insurance Corp. (FDIC) has agreed to guarantee $80 billion in loans and other assets from more than 50 deals, or “loss shares,” to encourage banks to buy up assets from their failed counterparts. The exposure is about six times the amount remaining in the FDIC Deposit Insurance Fund, according to The Wall Street Journal (Aug. 31). The government has shifted into cleanup mode from financial crisis mode, though its financial burden is not receding, the newspaper said. The FDIC has paid $300 billion so far to banks under loss-share agreements ... * WASHINGTON (9/1/09)--The Federal Deposit Insurance Corp. (FDIC) said Friday that it is extending the “de novo” period for newly insured financial institutions to seven years from three years for exams, capital and other requirements. Typically, newly insured financial institutions are subject to higher capital requirements and more examinations during a de novo period. The FDIC also must approve material changes in business plans for the institutions during the first seven years of operation. The changes address the elevated risk that newly insured institutions pose to the FDIC Deposit Insurance Fund, the agency said ... * WASHINGTON (9/1/09)--The Securities and Exchange Commission (SEC) has been historically slow in its oversight of credit-rating agencies, according to a report by SEC Inspector General David Kotz. In 1994, the SEC began issuing concept releases, conducting exams, issuing reports, conducting hearings and proposing regulations. However, it didn’t adopt any regulations regarding nationally recognized statistical rating organizations. There also are certain instances of non-compliance with requirements of the Rating Agency Act, the report said. However, Kotz stated that the SEC has identified improving the quality of credit ratings as a priority ...


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