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Inside Washington (01/02/2009)

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* WASHINGTON (1/5/09)--In a letter to financial institutions sent Wednesday, the Federal Deposit Insurance Corp. (FDIC), the Office of the Comptroller of the Currency and the Federal Reserve Board reminded banks to record the amount and number of their non-interest-bearing transaction accounts of more than $250,000. The FDIC offered the extra coverage to banks in October. The temporary increase will expire later this year ... * WASHINGTON (1/5/09)--Regulators are deploying loss sharing to deal with expected bank failures this year and to provide an incentive for healthy institutions to take on the troubled assets of failed institutions (The Wall Street Journal Jan. 2). Loss sharing could be costly to the Federal Deposit Insurance Corp. (FDIC) if the agency bears responsibility for exotic assets normally assumed by the acquiring institution, or if loss-sharing is applied to institutions that have not failed. But loss sharing could also help reduce the losses the government would absorb during a failure, like bad real estate loans. FDIC last year used the loss sharing model to help Citigroup, Wachovia and two failed California institutions. Loss sharing was primarily used during the savings and loan crisis of the 1980s and 1990s ...

Compliance ID theft info for CUs

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WASHINGTON (1/5/09)—The subject of identity theft may have been eclipsed in the news lately by the country’s economic woes, but it remains a huge issue for financial institutions and consumers alike, reminds Valerie Moss, Credit Union National Association (CUNA) director of compliance information. The Federal Trade Commission has estimated that 8.3 million Americans were identity theft victims in 2005, the most recent data available. Moss brings credit unions’ attention to a sometimes-forgotten section of the Fair Credit Reporting Act (FCRA) added in 2003, of which they should be aware. Section 609(e) of FCRA requires a business that has provided credit to an identity thief to make available, upon the request of the victim or law enforcement, a copy of the application and any business transaction records maintained by the business or another person on behalf of the business entity. And a credit union or other business must provide this information free of cost, under the law, Moss says. This is the process that is to be followed, Moss advises: Before providing any information, a credit union must verify a victim’s identity unless it has a “high degree of confidence” already of that individual’s identity. The victim must provide the following as proof at the time of the request:
* A government issued ID; * Identifying information of the same type as was provided to the credit union by the unauthorized person; or * Identifying information that the credit union typically requests from new applicants or for new transactions, including the information described above.
As proof of the claim of ID theft, the credit union can also request a copy of a police report evidencing the victim’s claim; a properly completed copy of the FTC’s standardized affidavit of ID theft; or an affidavit of fact that the credit union considers acceptable for that purpose. The request must be in writing and mailed to an address specified by the credit union. In addition, the credit union may ask the ID theft victim to include relevant information about any transaction alleged to result from ID. This topic was included in compliance tips in CUNA’s December Compliance Challenge. Use the resource links below to read more on this and other compliance topics.

CUNA asks key lawmakers to loosen MBL restrictions

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WASHINGTON (1/5/08)—Just prior to an important Democratic policy meeting in the U.S. House, the Credit Union National Association (CUNA) sent letters to key lawmakers encouraging them to consider elimination of the cap on member business lending (MBL) by credit unions. The letters were sent to Reps. George Miller (D-Calif.) and Rosa DeLauro (D-Conn), who chair the House Democratic Steering and Policy Committee. That panel is scheduled to conduct a hearing on economic stimulus legislation Wednesday. In its letter CUNA noted that removing the 12.25% of assets cap on MBL authority for credit unions could help offset a “troubling trend” of declining commercial credit availability at banks. “Banks are pulling back at a time when the small business owner needs them the most,” wrote CUNA President/CEO Dan Mica, who cited a Federal Reserve System survey that showed 75% of senior loan officers at America’s banks indicated that their institution was making less business credit available. Noting that “The engine of our economy is the American small business owner. “ Mica told the lawmakers that the country’s credit unions continue to lend to their business-owning members, even in these difficult times. “The credit union system remains generally healthy and credit unions are not only willing, but able, to continue lending to their members,” the CUNA leader noted. He added that if the cap on MBLs was lifted, credit unions could lend up to an additional $10 billion to the nation's businesses in the first 12 months of being granted the authority. This is an economic stimulus measure that does not cost the taxpayers a dime, and does not increase the size of government, Mica wrote. CUNA took a similar opportunity to present the credit union system’s case for greater member business lending authority to President-elect Barack Obama last month. On Dec. 18, Obama remarked during a press conference that problems in the U.S. economy will continue "if small and large businesses cannot get access to enough credit." CUNA’s Mica fired off a letter to the incoming President that day explaining how credit unions could help.