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Realtors group joins CUNA-led MBL coalition

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WASHINGTON (12/17/09)--In what Credit Union National Association (CUNA) President/CEO Dan Mica called a “highly significant development,” the National Association of Realtors (NAR) joined a coalition of organizations that support lifting the cap on credit union member business lending. The NAR joins 15 other think tanks and associations, including the National Farmers Union, the National Cooperative Grocers Association, the National Association of Manufacturers, the National Association of Mortgage Brokers, the League of United Latin American Citizens, and the National Cooperative Business Association, in calling for lifting the business lending cap and providing much-needed credit into the economy. The National Cooperative Business Association also backed MBLs by joining the coalition of associations last week. In a recent open letter to President Barack Obama and members of Congress, CUNA and its associates advocated lifting the current cap on MBL for credit unions. While the bill is still awaiting congressional action, Rep. Paul Kanjorski’s (D-Penn.) H.R. 3380, the Promoting Lending to America's Small Businesses Act, would raise the current MBL ceiling of 12.25% of total credit union assets to 25%. CUNA has estimated that expanding the capacity of credit unions to make business loans could result in $10 billion in new business loans through credit unions and at least 108,000 new jobs in the first year after enactment, with no additional costs to taxpayers. The NAR supported Realtors FCU, a credit union that serves NAR members, their families, and staff, with a $15 million gift when the credit union opened in May of this year. NAR has 1.2 million registered members nationwide.

House appropriations bill extends SBA funding

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WASHINGTON (12/17/09)--Funding for some U.S. Small Business Administration (SBA) programs will continue for another two months after the House of Representatives passed a $636.3 billion defense appropriations bill by a vote of of 395-34 on Thursday. While the bill is aimed to fund the Department of Defense for 2010, portions of legislation added to the bill would grant the SBA $125 million in funds for its business loan program. The funds will, according to a House summary, allow the SBA to “continue two temporary enhancements to its loan guarantee program through February 28, 2010 to make loans more attractive to borrowers and lenders and to free up capital.” Recognizing that “small businesses represent a major engine for the U.S. economy,” but have “had a difficult time securing needed loans in these tight economic times,” the legislation would permit the SBA to raise the percentage of loan amounts that it can guarantee to 90%. The SBA would also be given the authority “to waive or reduce loan fees.” The SBA extension is “fully offset,” according to the House summary. Speaking at the National Press Club earlier this week, SBA Administrator Karen Mills said that involving additional lending partners, including credit unions, in SBA guaranteed loan programs is the "right formula" to get more credit to markets currently being underserved. The Credit Union National Association has also supported lifting the member business lending cap for credit unions, which currently stands at 12.25%, as another means of providing the funding that many small businesses need.

Inside Washington (12/16/2009)

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* WASHINGTON (12/17/09)--The Federal Deposit Insurance Corp. (FDIC) Tuesday delayed a proposal to put new restrictions on securitizations. John Bowman, Office of Thrift Supervision acting director, and John Dugan, Comptroller of the Currency, convinced the board to issue an advance notice of proposed rulemaking asking for comment on how to proceed (American Banker Dec. 16). The proposal’s goal is to curb improper mortgage underwriting before mortgages are sold into the secondary market, but Dugan and Bowman said the proposal could hurt the securitization market and conflict with other regulatory reform legislation. Chairman Sheila Bair, Vice Chairman Martin Gruenberg and board member Thomas Curry supported the proposal. The proposal stems from a Financial Accounting Standards Board rule, which takes effect next year and requires lenders to report securitized assets on their balance sheet in the event of failure. Normally, FDIC would not touch those assets. However, with the new rule, FDIC must have a plan to handle the assets ... * WASHINGTON (12/17/09)--House Financial Services Committee Chairman Barney Frank (D-Mass.) said the panel likely would tackle the issue of creating a covered-bond market in the U.S. next year (American Banker Dec. 16). The committee met Tuesday and briefly talked about the bond market. Rep. Scott Garrett (R-N.J.) introduced legislation this year aimed at enhancing the market for covered bonds, which add liquidity for loans without securitization risks. In an interview after the meeting, Garrett said Congress needs to act quickly or investors could lose interest before covered bonds become an option. Covered bonds are popular in Europe but have not caught on in the U.S. ... * WASHINGTON (12/17/09)--Troubled Asset Relief Program (TARP) funds should be used to help community banks, said Sen. Carl Levin (D-Mich.) in a letter to Treasury Secretary Timothy Geithner. Treasury needs to provide help for small banks so they can offer credit to small businesses, Levin said. TARP has only helped large financial firms, and financial institutions with assets of $100 billion or only accounted for 22% of small business lending, Levin added. Credit Union National Association President/CEO Dan Mica has urged lawmakers to lift credit unions’ caps on business lending because credit unions have money to lend to the businesses, which would create jobs and help the economy ...

CDFI Fund certifies 11 new CUs

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WASHINGTON (12/17/09)--The U.S. Treasury Department’s Community Development Financial Institutions (CDFI) Fund has announced that 11 credit unions have been certified as CDFIs during the fund’s most recent round of certifications, which took place between August and November of this year. The newly certified credit unions are Brewton Mill FCU, Fairfax County FCU, First Peoples Community FCU, Kerr County FCU, Maine Highlands FCU, Marvel City FCU, NCI Community Development CU, New Covenant Dominion FCU, New Pilgrim FCU, Table Rock FCU, and Union Baptist Church FCU. All of the credit unions serve low-income communities or other various groups in their states, which include Alabama, Indiana, Maryland, Maine, Missouri, New York, Texas, and Virginia. A total of 160 credit unions are currently certified under the CDFI program, which helps locally based financial institutions offer small business, consumer and home loans in communities and populations that lack access to affordable credit. The program added a total of 34 new certified CDFIs between August and November of this year. The new CDFIs are spread throughout the country, with headquarters in Alabama, Arkansas, California, Colorado, Washington D.C., Illinois, Indiana, Kentucky, Louisiana, Massachusetts, Maryland, Maine, Michigan, Missouri, North Carolina, New Hampshire, New York, Ohio, Pennsylvania, Texas, Virginia and Washington. The CDFI program will make a total of $113 million in funding available in 2010.

Charter FOM process on NCUA agenda today

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ALEXANDRIA, Va. (12/17/09)--The National Credit Union Administration (NCUA) has revised its board meeting schedule for 2010, rescheduling its July 2010 meeting to 10 a.m. ET on Thursday, July 29. The NCUA will open 2010 with a board meeting scheduled for Jan. 29, with the usual August recess scheduled. According to the schedule, the NCUA will conclude 2010 with a board meeting on Dec. 16. The NCUA’s December board meeting, which will take place in Alexandria, Va. this morning, will include discussion of ways to streamline the community credit union charter process as part of a revision of the NCUA's chartering and field of membership policies. The agency board will also consider a final rule that would create a limited exception to the 20-year maturity limit on second mortgage loans. Under the new final rule, federal credit unions that take part in the U.S. Treasury Department's Making Home Affordable (MHA) Program would be permitted to extend second mortgages beyond 20 years to match the terms of modified first mortgages, which can have up to a 40-year maturity. The board also will be updated on the status of its insurance fund during the meeting. A closed meeting of the board will follow the open session. For the NCUA’s full 2010 board meeting schedule, use the resource link.

Matz responds to CUNA letter on corporates budget

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WASHINGTON (12/16/09)—Responding to a Dec. 3 letter from the Credit Union National Association (CUNA), Chairman Debbie Matz of the National Credit Union Administration (NCUA) reiterated that the agency is "continuing the process of evaluating the future disposition" of corporate credit union assets. Matz, in her letter addressed to CUNA President/CEO Dan Mica, said her agency's efforts to elicit stakeholders' views on future asset distribution have yielded "constructive if not conclusive" examinations of the options. She told Mica, "...let me assure you that we continue broad-based explorations of ways in which 'legacy' assets can be addressed." CUNA has continued to push the NCUA for a reasonable approach regarding possible recoveries on corporate credit union legacy assets if confirmed future losses are below current estimates of those losses. In her letter to Mica, Matz assured she is confident that the agency will find a "workable, practical, legal solution...despite the complex and evolving financial situation before us." The NCUA chairman also responded to concerns CUNA has communicated about the agency's proposed 2010 budget. Mica had written that some budget increase is to be expected to support agency efforts to handle additional safety and soundness concerns wrought by troubled financial times. But he urged the agency to consider it a priority to determine how to reduce spending once the crisis has passed. Matz said of the 2010 budget, it balances "the needs for additional personnel and oversight with a recognition that the resources present are limited and the industry NCUA supervises is under financial duress." The total 2010 budget proposed Nov. 19 by the NCUA is $200,923,512, an increase of 13% over the 2009 budget. CUNA has raised credit unions’ concerns regarding the size of the increase for agency staff compensation next year—a 6.6% net growth in merit pay and locality adjustment. The agency needs to be sensitive, Mica has said, to the fact that credit unions across the nation are scaling back expenses, including employee benefits, and have been forced to reduce salaries, enforce unpaid furloughs, as well as execute reductions in the number of workers.