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Washington Archive

Washington

Inside Washington (01/04/2011)

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* WASHINGTON (1/5/11)--As the next Congress focuses on modifying the Dodd-Frank Act, both regulators and lawmakers have pointed to the need for national mortgage servicing and foreclosure standards (American Banker Jan.3). Rep. Barney Frank (D-Mass.), outgoing chairman of the Financial Services Committee, has said conflicting incentives to foreclose or seek other loss-mitigation options have created a need for new servicing standards in the wake of recent problems with loan modifications. Both Sen. Chris Dodd (D-Conn.), outgoing chairman of the Banking Committee, and Sen. Tim Johnson (R-S.D.), who is in line to succeed Dodd, have invited regulators to submit a proposal for national mortgage servicing standards. One area of conflict of particular concern for regulators and lawmakers is when one company services a first mortgage for an investor pool and a second one for a different party. Rep. Brad Miller (D-N.C.) has proposed legislation that would prevent such conflict … * WASHINGTON (1/5/11)--A group of Senate Democrats is expected to call for new limits on filibusters when the new Congress convenes today The New York Times Jan.3). Sen. Tom Udall, (D-N.M.) said proposed legislation would require senators to be on the floor if they seek to derail legislation In the previous Congress, Republicans successfully blocked several Obama Administration bills using procedural tactics. Udall said the Constitution and previous Senate rulings empower senators to change the chamber’s rules by a majority vote on the first day of the new Congress. Senate leaders hope to gain more time for bipartisan talks and avoid a showdown on the Senate floor by putting the Senate in recess at the conclusion of today’s opening session. When members return on Jan. 24, the Senate would technically be in the same legislative day. In the interim, a rules compromise could be worked out among senate leaders, said the Times

NCUA applies salary freeze to part of work force

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ALEXANDRIA, Va. (1/5/11)--The National Credit Union Administration (NCUA) said yesterday it will apply President Barach Obama's recent executive-ordered federal pay freeze to those agency employees whose salary increases were not negotiated under existing union contracts. These employees' salaries will be frozen, NCUA Chairman Debbie Matz said, "and we will reduce our budget accordingly." The NCUA said that the cost savings from the pay freeze will be disclosed when the NCUA Board conducts its mid-year budget review in July. The pay freeze would not apply to any increases that are based on collective bargaining agreements between employee unions and their management that were executed before the Presidential order. The NCUA pay increase is one of these agreements. The NCUA on Tuesday told News Now that 217 of its employees will be subject to the pay freeze. A total of 894 union employees will not be subject to the terms of the pay freeze, according to the agency. The freeze, which was approved by the Congress in late December, is aimed at all civilian federal employees that are not military personnel. After reviewing the President's mandate, however, NCUA concluded that as a matter of law it could not apply the pay freeze to any increase required by a collective bargaining agreement that had already been executed and in effect at the time of the President's announcement, as was the case with its employees' bargaining agreement. “NCUA’s decision to apply the freeze to those employees not under the collective bargaining agreement will somewhat ease the cost impact on credit unions that are responsible for funding the agency’s budget, and we view that as a helpful step,” noted Credit Union National Association President and CEO Bill Cheney. “But we continue to share credit unions’ deep concerns over the level of agency expenditures at a time when so many in our industry are under extreme pressure to reduce their own expenses to bring their budgets into line. We can understand the legal constraints that limit the agency’s action with respect to freezing its unionized employees’ salaries, but we also believe the Board should have taken action early on to strike a more reasonable agreement to begin with,” Cheney said.

CUs CUNA prep for 112th Congress

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WASHINGTON (1/5/11)--With the 112th Congress set to start later today, credit unions, state credit union league representatives, and the Credit Union National Association (CUNA) are moving to meet with incoming and returning members of Congress. After the Congress convenes at noon, the House of Representatives will elect the Speaker of the House, swear in Representatives and approve officers and a rules package. The House will also begin the process of electing Members to standing committees, including the House Financial Services Committee, on Wednesday, and will likely remain in session on Thursday and Friday. CUNA Vice President of Legislative Affairs Ryan Donovan said that the House should be in session sporadically through the end of the month, but will likely avoid discussion of any large scale legislation until after President Barack Obama has completed his state of the union address later this month. The Senate will also be sworn in today, and may take up a new rules package that could include proposals related to the filibuster and secret holds later today. Member business lending will be one focus during the upcoming Congress, following up on many recent attempts to move the legislation both as an amendment and a standalone bill. The MBL cap legislation, which is sponsored by Sen. Mark Udall (D-Colo.) and has several Senate cosponsors from both major parties, would lift the cap to 27.5% of a credit union’s total assets, and could create up to $10 billion in new funding for small businesses. This untapped source of funding would create over 100,000 new jobs at no cost to taxpayers. CUNA this week also asked members of Congress to hold hearings on the Federal Reserve’s recently proposed interchange fee regulations, and urged the Fed to delay implementation of the new rules until the Congress can complete a full discussion of the rules with all parties involved. (See related 1/4/11 story: CUNA: Hearings on Fed interchange proposal needed)

CUNA concerned by CARD Act creditworthiness standard

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WASHINGTON (1/5/11)--The Credit Union National Association (CUNA) in a recent comment letter said it is concerned by a Federal Reserve proposal that would require creditors to consider only an individual credit applicant’s ability to make payments, and not other household income, when determining an individual’s creditworthiness. CUNA noted that this proposed change could have a negative effect on individuals’ access to credit, with a particular impact on women who “are members of households and are either not working themselves or underemployed.” “These individuals should be allowed to rely on household income when applying for credit and nothing in the CARD Act or other provisions of the Truth-in-Lending Act require a different result,” CUNA added, referring to the Credit Card Accountability Responsibility and Disclosure (CARD) Act. CUNA also questioned the Fed’s decision to include application and processing fees under a proposed 25% cap. The proposed cap would require financial institutions to ensure that all account fees charged during the first year of an account do not exceed 25% of the account’s total credit limit. CUNA said that Congress did not intend for this cap to apply to account opening fees. However, CUNA agreed that the Fed’s restrictions on charging multiple fees for single transactions and proposed prohibition on account inactivity fees were consistent with the intent of the CARD Act. CUNA also supported proposed clarifications related to the definition of a credit card and requirements that aim to ensure that accountholders receive their statements in a timely manner. CUNA also backed proposed limitations that would hold penalty fees to $25 for initial violations and $35 for additional violations of the same type during the next six billing cycles. The CARD Act also prohibits card issuers from imposing more than one over-the-limit fee per billing cycle, imposing more than one penalty fee based on a single event or transaction, or imposing multiple returned payment fees by submitting the same check for payment multiple times, CUNA noted. For the full comment letter, use the resource link.

NCUA announces agenda for Thursdays webinar

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ALEXANDRIA, Va. (1/5/11)--The definition of troubled debt restructured (TDR) loans, as well as what constitutes financial difficulty and how impairment measurement works when dealing with these loans, will be among the items on the agenda during a Jan. 6 National Credit Union Administration (NCUA) webinar. The webinar, which will take place at 2 p.m. ET, will be moderated by Board Member Gigi Hyland and will feature input from auditing firm Crowe Horwath LLP. The webinar, which is interactive and will feature a question and answer session, will facilitate credit union understanding of U.S. generally accepted accounting principles in relation to troubled debt restructurings, the NCUA said. TDR loans, which have very specific accounting and reporting requirements, sometimes occur as a result of loan modifications. The financial statement notes and call report data associated with TDRs are also unique. To register for the NCUA webinar, use the resource link.