Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Washington Archive


Financial Services subcommittee chairs nominated

 Permanent link
WASHINGTON (1/23/08)--House Financial Services Committee Chairman Barney Frank (D-Mass.) Thursday announced the committee's choices for six subcommittee chairs. The recommendations will next be forwarded to the Democratic Caucus for final approval. The Democratic subcommittee assignments can be seen using the link below.

Inside Washington (01/22/2009)

 Permanent link
* WASHINGTON (1/23/09)--The House Wednesday passed legislation that would limit how the Obama administration uses funds from the Troubled Asset Relief Program (TARP). Institutions receiving funds from TARP would be required to report on how the money is used and require that $40 billion to $100 billion be used to stop foreclosures (American Banker Jan. 22). House Financial Services Committee Chairman Barney Frank (D-Mass.) said a Senate vote on the bill is not likely. The Credit Union National Association (CUNA) has sought to include credit unions in TARP. Ryan Donovan, CUNA vice president of legislative affairs, 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 (News Now Jan. 22) ... * WASHINGTON (1/23/09)--On Thursday, the Senate Finance Committee approved the nomination of Timothy Geithner for Treasury Secretary with a vote of 18 to 5. Democrats unanimously supported the nomination (MarketWatch Jan. 22). Several Republicans said they could not vote for him due to problems with his personal tax return ...

NCUSIF sign vote pulled

 Permanent link
ALEXANDRIA, Va. (1/23/09)—Honoring President Barack Obama's
Click to view larger image NCUA Board Chairman Michael Fryzel announced he pulled from the agenda a final rule outling requirements for a new official insurance sign. (Photo provided by CUNA)
directive for all federal agencies, the National Credit Union Administration (NCUA) pulled its insurance sign final rule from Thursday’s board meeting agenda. In one of his first actions after being sworn in Tuesday as the country’s 44th President, Obama ordered a halt to implementation of pending regulations promulgated under the Bush administration during its waning days. The NCUA rule pulled from the agenda would provide official options for displaying the share insurance sign to reflect the increase in the maximum share insurance amount from $100,000 to $250,000.

December 08 NCUSIF insurance loss 113.4 million

 Permanent link
Click to view larger image Click for larger view
ALEXANDRIA, Va. (1/23/09)—The National Credit Union Share Insurance Fund (NCUSIF) projected an insurance loss for December 2008 at $113.4 million, according to its year-end report. At a National Credit Union Administration (NCUA) open board meeting Thursday, staff continued to project a 1.27% equity level for 2008. That figure precludes the possibility of an NCUSIF dividend to federally insured credit unions. The NCUSIF also posted gross income of $129.9 million in December 2008. Of that, $106 million of the gross income was from the NCUSIF’s sale of longer-term U.S. Treasury Department Securities that appreciated in value. Approximately $97 million of the $113.4 million insurance loss .
Click to view larger image Click for larger view
expense went to unallocated reserves in order to move the NCUSIF’s insurance loss reserves from the minimum level required to its “midpoint,” according to the NCUA. Other details: NCUSIF reported there are currently 271 low-ranked CAMEL 4 and 5 credit unions, up 28% from 211 at the end of 2007. The total insurance loss expense for 2008 is estimated to be $290.4 million.

CUNA opposes current bankruptcy bills

 Permanent link
WASHINGTON (1/23/09)—The Credit Union National Association (CUNA) informed House lawmakers Thursday that credit unions cannot support changes to the Bankruptcy Code that would give courts unlimited authority to modify any type of loan secured by a debtor’s principal residence. In fact, CUNA stated in a letter to leaders of the House Judiciary Committee, unless changes are made, CUNA would actively oppose such legislation. The letter to the committee chairman, Rep. John Conyers (D-Mich.), and its ranking member, Rep. Lamar Smith (R-Tex.), said that any amendment to the Code must target certain types of loans and be limited in duration. The committee conducted a hearing Thursday on bills currently under its consideration, 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. Those bills do not contain the limitations sought by CUNA on behalf of credit unions. “Therefore,” CUNA President/CEO Dan Mica wrote to the panel leaders, “Credit unions cannot support these bills in their current form, and CUNA opposes any amendment to the bankruptcy law being included in the economic stimulus legislation." Mica urged, “Adequate consideration needs to be given to the unintended consequences of amending the bankruptcy law and to the practical implementation issues associated with any amendment to the code since the bankruptcy law has no implementing regulations to serve as guidance to the courts.” Among its concerns, CUNA said a lender that made a mortgage loan using good underwriting standards should not bear the risk of a decline in the house’s value. CUNA also warned that imprudent legislative action could encourage financially fit borrowers to stop mortgage payments, triggering foreclosure, simply because they no longer want to make large mortgage payments on houses which have dropped notably in value. The letter noted that CUNA has worked for more than a year with Hill staff to design a bankruptcy amendment that would allow courts to amend only certain mortgage loan agreements secured by the debtor’s principal residence. Specifically, the authority would apply to loans determined to be “subprime,” with large re-sets of interest rates; loans with negative amortization; or loans that a court reasonably determines were fraudulent or abusive when made with no reasonable underwriting standards and expectation the borrower could actually repay the loan. For any loan falling within this category, CUNA said in the letter, a bankruptcy court should have the authority to:
* Cancel prepayment penalties; * Lower the interest rate to the current conventional fixed market rate; * Extend the maturity of the loan; and * Adjust the principal balance to no lower than the current market value of the house if, when the house is eventually sold by the debtor, the debtor would not only have to repay the remaining loan balance established by the plan, but also have to turn over to the original first and junior lien holders any net proceeds up to the original mortgage balances, even after discharge, also known as recapture.
Use the resource link below to read CUNA's complete letter.

CLF change to ease corporate balance sheet pressure

 Permanent link
ALEXANDRIA, Va. (1/23/09)—The National Credit Union Administration (NCUA) Thursday approved an action that will have the effect of changing the way current outstanding loans from the Central Liquidity Facility (CLF) are booked by corporate credit unions, as well as by US Central FCU. At its open board meeting, the NCUA Board voted
Click to view larger image NCUA Central Liquidity Facility President Owen Cole explains a proposed change in the way current loans oustanding are booked by corporate credit unions and U.S. Central. Cole made his presentation during yesterday's monthly NCUA Board meeting in Alexandria, Va. (Photo provided by CUNA)
2 to 1 to delegate to CLF President Owen Cole authority to sign an amendment to the Repayment, Security and Credit Reporting Agreement currently in place between US Central and the CLF. Cole could also amend an Assignment Agreement between US Central and CLF. The action was designed to execute a change in the way current loans outstanding from the CLF are booked by corporates and by US Central by allowing both US Central and participating corporates to assign the loans, without recourse, to the CLF. By removing the loans from the books of US Central and participating corporates, the new agreement will alleviate pressure on corporate balance sheets created by holding these assets, according to an NCUA staff document. The new approach, the document noted, will change the way loans are administered in the future as well. “(A)lthough (US Central) will retain its role as master servicer and the relevant corporate will continue to service the loan, loans will be booked exclusively as an asset of the CLF.
Click to view larger image NCUA Board Member Gigi Hyland during Thursday's monthly meeting questions an agency proposal that would change the way current loans outstanding from the Central Liquidity Facility are booked by corporate credit unions. Hyland voted against the proposal, which passed 2-1. (Photo provided by CUNA)
"In connection with this change, the corporate servicing the loan will agree in an ancillary agreement with USC (to which CLF is not a party) to subordinate any claims it may have to collateral also pledged to secure the CLF indebtedness,” the NCUA noted. Board Member Gigi Hyland cast the dissenting vote. She said she was “not convinced” that the CLF should assume the full the risk of default on these loans. Hyland said that the CLF would lose the corporates’ and US Central’s “guarantee” on these loans because they would be transferred without recourse, and she stated that she believes that “a guarantee is important” given the current financial crisis. Hyland also expressed concern that this program would not help natural person credit unions that are experiencing lower capital levels and possible sanctions under PCA because they have expanded their balance sheets by participating in the CU SIP and CU HARP programs.