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Washington Archive

Washington

Inside Washington (01/06/2010)

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* WASHINGTON (1/7/10)--Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, said Tuesday that the Fed needs to consider how to break up banks considered to be “too big to fail” so they don’t pose a systemic risk to the economy (American Banker Jan. 6). One way to define such institutions is to take firms with more than $50 billion in assets or $100 billion or more of assets under management. He spoke at an American Economics Association panel ... * WASHINGTON (1/7/10)--A Federal Housing Finance Agency rule may mean more members for the Federal Home Loan Banks, but is not expected to boost the agency’s bottom line. The rule will allow community development financial institutions (CDFI) to join the banks. The expansion comes after the banks posted a $165 million loss during the third quarter (American Banker Jan. 6). Most CDFIs have an average size of $21 million, so it’s unlikely they will be big borrowers. In 2008, Congress mandated that CDFIs are allowed to access the banks as a part of the Housing and Economic Recovery Act ... * WASHINGTON (1/7/10)--Regulators and industry representatives fear that a spike in interest rates could pare down institutions’ abilities to weather a boomerang effect on funding costs (American Banker Jan. 6). Rates have remained low so banks can build their balance sheets, but representatives expect the rates to increase. The Federal Deposit Insurance Corp. (FDIC) is scheduling a conference on the matter Jan. 29. John Douglas, former FDIC counsel, said there is a legitimate concern about how rising interest rates could affect some banks’ balances sheets. He pointed to the crisis of the early 1980s, which “decimated” the thrift industry. Donald Musso, president/CEO of FinPro Inc., a consulting firm, said while there may be exceptions, the industry is in a much better position to deal with changing rates than in the 1980s ...

Compliance All CUs must report NSF fees monthly

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WASHINGTON (1/7/10)--Credit unions have inquired whether a new Truth in Savings (TIS) disclosure requirement for overdraft services applies to institutions that do not offer overdraft protection services to their members but do charge returned-item (NSF) fees. “The answer to that question is, yes: credit unions that charge returned item/NSF fees must disclose these fees,” according to Valerie Moss, CUNA’s director of compliance information. She said they must use the tabular format found in Appendix B-12 of the National Credit Union Administration’s (NCUA’S) TIS regulation to do so. The credit unions’ questions revolve around the NCUA’s revision last year to its TIS rules. Those changes require all credit unions that provide periodic statements to disclose the periodic and aggregate year-to-date overdraft fees and returned item fees on member statements, regardless of whether they advertise or promote the use of overdraft services. The regulation aligned NCUA’s TIS regulation with the Federal Reserve Board’s Regulation DD, as required under the Truth in Savings Act. The mandatory compliance date was Jan. 1. The regulatory revisions expanded the applicability of the aggregate fee disclosure to all financial institutions, except for institutions that don’t charge any fees. So, Moss points out, credit unions are not required to disclose that "$0" has been charged for the statement period or year-to-date. However, the credit union may provide the disclosure if it so chooses. If a fee is waived in a later periodic statement period, the credit union may--but is not required to--show that adjustment in the year-to-date total on that later statement. And, if the fee is assessed and waived during the same statement period, the credit union may, at its option, show the adjustment in both the year-to-date total and the total for that statement period.

GAC housing sign-up deadline is extended

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WASHINGTON (1/7/10)—There has been a deadline extension to Jan. 27 for reserving hotel accommodations to attend the Credit Union National Association’s (CUNA’s) Governmental Affairs Conference (GAC) Feb. 21-25 in Washington, D.C. Those attending the GAC can enjoy special conference lodging rates by signing up through CUNA’s Housing Bureau through the extended deadline. Reservations, changes and cancellations can be handled through the CUNA housing bureau, with one exception. The Grand Hyatt Hotel will accept no changes through CUNA housing bureau beyond Jan. 13. After that date changes will have to be executed directly through that hotel. Credit union representatives still needing to reserve accommodation for the GAC should contact the CUNA Housing Bureau website using the resource link below, or call 1-800-974-3084 Monday-Friday from 9 a.m. to 5 p.m. (ET). At this year’s GAC, credit union attendees will hear from such high-ranked federal lawmakers as House Majority Whip Rep. James Clyburn (D-S.C.), House Financial Services Committee Chairman Barney Frank (D-Mass.), that committee’s ranking Republican member Rep. Spencer Bachus (R-Ala.), and senior members of the committee, Reps. Paul Kanjorski (D-Pa.) and Ed Royce (R-Calif.). Also among featured speakers: National Credit Union Administration Chairman Debbie Matz, Financial Accounting Standards Board Chairman Robert Herz, Larry Kudlow, economist and host of CNBC's The Kudlow Report, former Federal Reserve Chairman Alan Greenspan, and Richard Phillips, Captain of the Maersk Alabama, which was hijacked by Somali pirates in 2009.

Dodd gave CUs fair consideration Mica

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WASHINGTON (1/7/10)--Thanking his constituents for giving him the “opportunity” to serve, Sen. Chris Dodd (D-Conn.) on Wednesday announced that he would not run for re-election to his current Senate seat this November. Commenting on the retirement, Credit Union National Association President/CEO Dan Mica said that Dodd “has always given credit unions fair consideration” during his time as Chair of the Senate Banking Committee, adding that CUNA looks forward to working with Dodd “as he completes his term.” Dodd, who served the citizens of Connecticut in Congress for 35 years, expressed his “deepest gratitude to the people of Connecticut for the remarkable privilege of being elected eight times over the past four decades to our national assembly.” Dodd has been busy over the past year, serving as Senate Banking Chair and as acting Chair of the Senate Health Committee, and managing “four major pieces of legislation through Congress.” Current Connecticut Attorney General Richard Blumenthal, a Democrat, is widely expected to announce that he will run for Dodd's vacant Senate seat. Sen. Tim Johnson (D-S.D.) is expected to take up Dodd's Senate Banking chairmanship. Rep. Barney Frank (D-Mass.), who currently chairs the House Financial Services Committee, said he would miss the “leadership” provided by Dodd, who worked to provide “skillful, creative, and forceful leadership on some of the most important problems facing our country and the world.” Frank added that he is looking forward to “working closely” with Dodd as the Senate finishes “the job of significant financial regulatory reform.” Dodd and ranking Committee member Richard Shelby (R-Ala.) in a recent statement said that "meaningful progress" has been made in the area of financial regulatory reform, with accord being reached on some aspects of enhanced consumer protections and preventing government bailouts of financial firms, modernizing the country's financial regulatory structure and the current oversight of the derivatives market.