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Inside Washington (11/29/2009)
* WASHINGTON (11/30/09)--National Credit Union Administration Board Member Michael Fryzel visited First Trust CU, Valparaiso, Ind., where he met with CEO Ronald Budzinski and Board Chair Arnold Bass, and Indiana Credit Union League President John McKenzie. Fryzel said he was pleased with the efforts First Trust has made to serve its diverse field of membership and reach out to the community with school programs and financial education. Pictured (from left) are Budzinski, Fryzel and Bass. First Trust has $77 million in assets. (Photo provided by the National Credit Union Administration) ... * WASHINGTON (11/30/09)--The banking industry managed to profit and boost capital during the third quarter, but it has backed off from risk and lending to small businesses (American Banker Nov. 25). While Federal Deposit Insurance Corp. Chair Sheila Bair applauded banks for “charging off problem loans and building reserves and capital,” she said banks need to make more loans to their business customers to help economic recovery. The Credit Union National Association has been in contact with representatives from the Senate and House, and key Obama administration officials, urging that credit unions’ member business lending cap be raised. CUNA reasons that credit unions, which are restricted from lending more than 12.25% of their assets, can bridge the gap created by banks pulling back credit from small businesses in the struggling economy ... * WASHINGTON (11/30/09)--The Federal Reserve Board is working on a plan to help banks repay the money they received in the government bailout as a part of the Troubled Asset Relief Program. Nine banks that were part of a stress test the Fed conducted this year have not yet paid back their funds. The Fed has asked the institutions to submit plans for repayment. The banks include GMAC Inc., Wells Fargo, Bank of America and Citigroup (American Banker Nov. 25). In other news, the Fed is working on a strategy to extract the cash it injected into financial markets during the crisis. According to meeting minutes released Tuesday, there are three options: increasing the interest the Fed pays on reserves, reversing repurchasing agreements, and creating separate accounts for banks to hold their reserves. The Fed also has been debating whether it should sell the assets that boosted its balance sheet to $2.2 trillion last week. Selling the assets “would help reinforce the effectiveness of paying interest on excess reserves,” the minutes stated ... * WASHINGTON (11/30/09)--Federal Reserve Board policymakers have become more optimistic about the economic recovery, but they predict that unemployment will remain above 9% next year. Minutes the Fed released last week from a meeting earlier this month indicate that policymakers also are unsure whether the recovery is strong enough to survive without government stimulus measures. The Fed is expected to raise the overnight interest rate--which has remained at zero since last December--and also is expected to end its program to boost mortgage lending by buying $1.25 trillion in securities. The Fed’s minutes hinted at a debate among policymakers on ending the securities program, raising interest rates, and selling securities, but no start dates were noted ...


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