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CUNA suggests changes to appraisal guidance

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WASHINGTON (1/22/09)—Credit unions are prudent real estate lenders and already apply necessary safeguards to ensure the integrity of the appraisal process, said the Credit Union Association (CUNA) commenting on proposed interagency appraisal guidelines. The National Credit Union Administration (NCUA), along with federal bank and thrift regulators, proposed interagency appraisal and evaluation guidelines in December that outline supervisory expectations for sound real estate practices. In its comment letter, CUNA noted that although many credit unions have been affected by the current economic crisis, their long-standing careful lending practices helped them avoid making many of the types of loans that have often been cited as a cause of the crisis. “For this reason, we are confident that credit unions have been and are continuing to take the necessary safeguards to ensure the integrity of the appraisal process and that they are meeting the expectations outlined in the guidelines,” wrote CUNA Senior Assistant General Counsel Jeffrey Bloch in CUNA’s comment letter. However, the CUNA letter noted, credit unions have raised a number of issues with the guidelines. CUNA suggested changes be adopted before the National Credit Union Administration (NCUA) and other federal financial regulators adopt the guidance. For instance, CUNA urged the regulators to consider whether lenders should have more flexibility in determining whether there must be an appraisal or valuation for every loan modification, particularly if an appraisal that is consistent with these Guidelines was obtained for the original loan. CUNA also recommended that final guidelines should clarify to what its definition of “appraisal” refers. It should define the extent to which the definition refers only to full-scale interior inspections and to the extent it could also include exterior-only inspections, commonly referred to as “drive-by” appraisals. Also, CUNA noted, the proposed guidelines indicate that a lending institution should discuss its needs and expectations with an appraiser. "We do not believe this is either practical or realistic and does not reflect current business practices, at least for larger credit unions and other financial institutions,” CUNA wrote. To read more of CUNA’s extensive comment, use the resource link below.

TARP bankruptcy part of busy Hill agenda

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WASHINGTON (1/22/09)--Even with the Martin Luther King, Jr. holiday and the Presidential Inauguration falling on consecutive days, this week is a busy one in both the House and the Senate. The House and the Senate were both in session Tuesday—the day Barack Obama became the 44th U.S. president. The House conducted a pro forma session, while the Senate met briefly to confirm certain nominees to the President's cabinet by unanimous consent. And then, according to Credit Union National Association (CUNA) Vice President of Legislative Affairs Ryan Donovan, things just get busier. Of most interest to credit unions, the House Thursday night passed H.R. 384, the TARP Reform and Accountability Act. “When the House suspended debate on this legislation last week, four additional amendments were pending, including language that would provide a limited form of alternative capital to help credit unions participate in government assistance programs,” noted Donovan. He said that while the TARP reform bill ultimately is not expected to go beyond House approval, it is a good development if the House goes on record supporting the credit union amendment. Neither the Senate Banking Committee nor the House Financial Services Committee are expected to meet this week, but Donovan noted several hearings that CUNA will closely follow. On Wednesday, the Senate Finance Committee held a confirmation hearing for Timothy Geithner to be Secretary of Treasury. Also, the Senate Homeland Security and Governmental Affairs Committee held a hearing on "Where Were the Watchdogs? The Financial Crisis and the Breakdown of Financial Governance." On Thursday, the House Judiciary Committee has scheduled a hearing on H.R.200, the "Helping Families Save Their Homes in Bankruptcy Act of 2009", and H.R.225, the "Emergency Homeownership and Equity Protection Act." “These bills are mortgage cramdown bills that are similar to the legislation that Sen. Durbin has introduced,” Donovan said. He added, “It is also worth noting that a number of committees on both sides of the Capitol will begin to mark-up the portions of the economic stimulus package that fall within the jurisdiction of the committee.” Also, it is expected that the Senate Finance Committee, House Appropriations Committee, House Ways and Means Committee, House Energy and Commerce Committee and the House Transportation and Infrastructure Committee will conduct committee meetings to consider the stimulus bill this week. The stimulus legislation likely will be on the floors of both Houses during the week of Jan. 26.

Inside Washington (01/21/2009)

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* WASHINGTON (1/22/09)—At a Senate Finance Committee hearing on his nomination for the position of Secretary of the U.S. Treasury Department, Timothy Geitner was grilled by senators of both parties. He was questioned closely about his views of the country’s current financial crisis, as well as about his reported errors in his personal income tax filings ( Jan. 21). Geitner, who is president of the Federal Reserve Bank of New York, told the committee that the Obama administration soon would propose an overhaul of the nation’s financial institutions regulatory system. He said he also to expect plans to change the Treasury’s use of the $700 billion financial bailout program. Geitner also apologized to the panel for his late payment of more than $34,000 in income taxes, something he called “careless” and “avoidable” mistakes, but also “unintentional.” Geitner is expected to be confirmed by the Senate by next week ... * WASHINGTON (1/22/09)--President Barack Obama’s pick for Treasury Secretary, Timothy Geithner, called for reform of the government’s $700 billion rescue plan on Wednesday during his confirmation hearing. Geithner said changes to the Troubled Asset Relief Program (TARP) are needed immediately (The New York Times Jan. 21). The program has given financial institutions “too much upside” and has done little for families and small business owners, he said. The program needs to be restructured so that there is enough credit to help the economy recover, he added. Congress has approved the second half of the TARP program, but the funds have not been deployed ... * WASHINGTON (1/22/09)--Sens. Charles Schumer (D-N.Y.) and Richard Shelby (R-Ala.) announced intentions to introduce legislation Thursday that would enable federal law enforcement to better police and prosecute investor fraud scams on Wall Street. The senators said they would unveil their bill today at a press conference, and predicted that the country’s ongoing financial crisis likely will expose more “bad actors” in the financial services industry. They will discuss the need for stepped-up efforts to bring these white-collar wrongdoers to justice ... * WASHINGTON (1/22/09)--The Treasury Department is asking recipients of the Troubled Asset Relief Program (TARP) fund to provide monthly reports on purchases of asset- and mortgage-backed securities (American Banker Jan. 21). Companies that received the Treasury’s request include: Wells Fargo & Co., JPMorgan Chase & Co., Goldman Sachs Group Inc., PNC Financial Services Group Inc., Morgan Stanley, U.S. Bancorp, SunTrust Banks Inc., Regions Financial Corp., Capital One Financial Corp., Fifth Third Bancorp., BB&T Corp., KeyCorp, Bank of New York Mellon Corp., Comerica Inc., CIT Group Inc., Northern Trust Corp., State Street Corp., and Marshall and Ilsley Corp. The Treasury had been criticized for not requiring institutions to provide information about how they used the TARP funds ...