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Inside Washington (11/29/2007)

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* WASHINGTON (11/30/07)—The House Financial Services subcommittee on housing and community opportunity announced it will conduct a Dec. 5 hearing on the affordable housing needs of the country’s low-income veterans. A witness list has not yet been made publicly available… * WASHINGTON (11/30/07)—House Financial Services Committee Chairman Barney Frank (D-Mass.) criticized the Security and Exchange Commission’s (SEC’s) decision to restrict shareholder access to company proxies. Frank said the result of the SEC’s vote would be “a step backward for shareholders, as evidenced in part by the thousands of comments received in opposition to the rule, primarily from those representing shareholder interests.” Frank said the approved amendments to the SEC’s proxy rules will leave shareholders with “inadequate recourse to influence insular boards that are unresponsive to shareholder concerns, by effectively precluding shareholders from proposing changes to director election procedures”… * WASHINGTON (11/30/07)--Treasury Secretary Henry Paulson was scheduled to meet with Washington Mutual Inc., Wells Fargo & Co., JPMorgan Chase & Co., Countrywide Financial Corp., and four thrift and banking representatives Thursday to agree on a plan that would help subprime borrowers refinance adjustable-rate mortgages. Federal Deposit Insurance Corp. Chairman Sheila Bair, Office of Thrift Supervision Director John Reich, Comptroller of the Currency John Dugan, Housing and Urban Development Secretary Alphonso Jackson and Federal Reserve Board Gov. Randall Kroszner also were expected to attend Paulson’s meeting (American Banker Nov. 29). Paulson's work to solidify a federal plan for mortgage modifications comes as individual states are unveiling their plans. Next week, the California Assembly is scheduled to reveal its initiatives to change the state's lending process. One suggestion, made by California Assembly Banking and Finance Committee Chairman Ted Lieu (D-El Segundo), is to require lenders to report their loan modification data each month. If federal regulators reach a consensus at Thursday's meeting, industry representatives anticipate that Paulson could announce the plan at a housing conference Monday ... * WASHINGTON (11/30/07)--Banks still fear that borrowing from the Federal Reserve Board’s discount window could be construed as accessing emergency loans for troubled financial institutions, Donald Kohn, central bank vice chairman, said Wednesday (American Banker Nov. 29). The Fed needs to think about how its liquidity facilities can be effective despite stress in the financial markets, he said. His speech, given before the Council on Foreign Relations, signaled that the central bank may cut interest rates further at its next meeting Dec. 11 … * WASHINGTON (11/30/07)--Leadership elections have been scheduled for Dec. 6 to replace Senate Minority Whip Trent Lott, who announced his resignation this week (CongressDaily PM Nov. 28). Candidates include Sen. John Kyl (R-Ariz.), Republican conference chairman; Sen. Kay Bailey Hutchison (R-Texas), Republican Policy Committee chairwoman; Sen. Richard Burr (R-N.C.) and Sen. Lamar Alexander (R-Tenn.), Sens. John Cornyn (R-Texas), John Thune (R-S.D.) and Jim DeMint (R-S.C.) have also expressed interest in running …

FACT Act rules on consumer report info issued

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WASHINGTON (11/30/07)—Consumers will be able to directly dispute inaccuracies about certain information reflected on their consumer reports with the furnishers of that information under an inter-agency proposal announced Thursday. The federal financial regulatory agencies and the Federal Trade Commission (FTC) approved proposed regulations and guidelines they say will help ensure the accuracy and integrity of information provided to consumer reporting agencies. The proposal would implement section 312 of the Fair and Accurate Credit Transactions (FACT) Act of 2003, which amended the Fair Credit Reporting Act. As required by the FACT Act, the agencies are:
* Proposing guidelines for use by entities that furnish information about consumers to a consumer reporting agency regarding the accuracy and integrity of the information that they furnish; and * Proposing regulations that would require each entity that furnishes information to a consumer reporting agency to establish “reasonable policies and procedures” for implementing the guidelines.
The proposal soon will be published in the Federal Register and the comment period will end 60 days thereafter. If adopted, the proposed rules will apply to federal credit unions through the National Credit Union Administration’s action and to state-chartered credit unions through the FTC’s authority. The Credit Union National Association will soon issue a comment call seeking credit union perspective on the proposed rule and will refer the issue to its Consumer Protection Subcommittee. Use the resource link below to access CUNA’s e-Guide entitled “FACTA Rulemaking - Agencies Issue Proposed Rules and Guidelines that Address Accuracy and Integrity of Consumer Report Information and Rules to Allow Direct Disputes.”

Slight sigh for CUs with FASB rule delay

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WASHINGTON (11/30/07)—Credit unions and other not-for-profit organizations may breathe a temporary sigh of relief since the Financial Accounting Standards Board (FASB) has proposed to defer the effective date of Interpretation 48 (FIN 48) for nonpublic entities, which addresses accounting for uncertainty in income taxes. FIN 48 is applicable to unrelated business income taxation (UBIT) for state-chartered credit unions and provides direction on how to financially recognize such tax when there is a question regarding the amount of the tax liability. Credit unions who are subject to UBIT and who made not have filed or paid would have had to record a liability on their financial statements anyway. The interpretation was to have taken effect for tax periods after Dec. 15, 2006, but FASB is now asking for public comment on pushing that back to periods after Dec. 15, 2007. There will be a 30-day period to comment on the proposed delay. Credit unions might welcome the delay, according to Scott Waite, chairman of the Credit Union National Association (CUNA) Accounting Task Force, because it would provide additional time determine just how to apply FIN 48 in the sometimes uncertain world of not-for-profit organizations. This is particularly true in the case of UBIT where there is still some uncertainty as to exactly what is and is not subject to the tax. Waite, who is also SVP-CFO of Patelco CU, San Francisco, said the CUNA task force is reviewing this and a number of other accounting issues for credit unions. He noted that FASB has also announced a partial delay of FAS 157, Fair Value Measurement, but not as it relates to financial assets and liabilities, except for those that are recognized or disclosed on a recurring basis. This is important to those who adopted FAS 159, Fair Value Option, earlier this year. The Accounting Task Force also is awaiting FASB's final determination on business combinations and will be analyzing that interpretation, which was expected earlier this fall, he said, adding that his group is also developing answers to questions for credit unions on the Visa IPO issue, which it plans to distribute to credit unions shortly.