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Matz asks directors to protect CUs safetysoundness

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ALEXANDRIA, Va. (12/10/09)--National Credit Union Administration (NCUA) Chairman Debbie Matz encouraged credit unions' volunteers to actively work with their management to ensure the "short-term perseverance and long-term success of our nation's credit unions." Matz made the comments while speaking to 500 attendees at the CUES Directors Conference in Palm Desert, Calif., this week. She updated volunteers on NCUA's recently proposed regulatory framework for corporate credit unions, and on examiners' increasing supervision of retail credit unions. Matz also reminded that both initiatives are intended to protect credit union members, and she called on credit union volunteers to do their part. "The policies I have outlined will provide support and, when necessary, intervention to prevent potential crises that could impact the financial security of credit union members," she said. "But at the end of the day, we look to credit union directors as the ultimate guardians of the industry's fiscal health." Matz focused on three areas where volunteers can play critical roles:
* Risk management. "Be active, well-informed and visionary," she said. "Question and challenge assumptions of your credit union's managers. You are your members' first line of defense in risk management. Right now, your utmost diligence is an absolute necessity." * Diversification. "Focus on your fields of membership and their diversity. Help make sure that our board and staff reflect that diversity so they can better understand your members' needs and respond to them," Matz advised. * Succession planning. "Engage in diligent succession planning. The safety and soundness of credit unions will depend in large measure on a healthy, well-planned continuity of leadership on volunteer boards," she said, adding, "Volunteer leaders should make this a high priority of service."
Matz noted that "this is a lot of work to ask of volunteers," and added she is "well aware that you volunteer not for any form of compensation but for your sense of civic duty and your belief that America's credit unions are worth fighting for. "You've never forgotten that credit unions were created to serve people too often ignored by for-profit financial institutions. Together we can seize this opportunity to safeguard their financial well-being and grow credit union membership from 90 million to 100 million and beyond." To access the full text of the speech, use the link.

CUNA seeks presidential support of MBL cap lift

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WASHINGTON (12/10/09)--In a Wednesday letter to President Barack Obama, Credit Union National Association (CUNA) President/CEO Dan Mica said that while “credit unions are working very hard to continue making loans, including business loans,” these efforts are being hampered by statutory restrictions on member business lending. This MBL ceiling, which currently stands at 12.25%, “limits credit unions business lending at the very time small businesses around the country are reaching out to credit unions for loans since often they cannot get credit from their bank,” Mica added. Legislation that would, among other things, increase the cap on credit union member business lending to 25% of a credit union's total assets, is currently in committee, and the bill’s sponsor, Rep. Paul Kanjorski (D-Pa.), is working with Reps. Nancy Pelosi (D-Calif.) and George Miller (D-Calif.) to include the MBL cap legislation in a developing jobs bill. 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. President Obama will reportedly meet with bankers early next week to “cajole them into making more loans,” and Mica said that credit unions “would welcome the opportunity to be part of that meeting.” Unlike banks, Mica said that “credit unions do not need to be persuaded that lending to small businesses is the right thing to do, from a community service as well as an economic standpoint.” “Credit unions just need a greater opportunity to do more -- an effort that banking trade groups are trying to block, not based on substance,” but rather, “on pure politics.” In the letter, which was also sent to Treasury Secretary Tim Geithner, Assistant to the President and Chief of Staff Rahm Emanuel, Counselor to the Treasury Secretary Gene Sperling, and Treasury Assistant Secretary for Financial Institutions Michael Barr, Mica commended Obama for his recent speech which outlined job growth initiatives, adding that CUNA is “particularly supportive of efforts to reduce or eliminate fees as well as increase the guarantees associated with Small Business Administration loans.”

CUNA to Congress Oppose extraneous additions to H.R. 4173

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WASHINGTON (12/10/09)--With significant regulatory reform action set to take place this week, the Credit Union National Association (CUNA) has reached out to legislators through a Wednesday letter on H.R. 4173, the Wall Street Reform and Consumer Protection Act. In the letter, Credit Union National Association (CUNA) President/CEO Dan Mica urged House members to oppose extraneous and unrelated amendments to H.R. 4173, which combines a total of seven financial regulatory reform and restructuring bills into one mammoth piece of legislation. Mica also sought congressional support of language that would explicitly direct the CFPA to streamline and simplify regulation and disclosure, and thanked the House Financial Services Committee for giving “serious consideration” to credit union concerns during the regulatory debate. While many credit union concerns regarding the CFPA were addressed in the committee process, CUNA believes that some require more thorough review, and advocated for legislative language that better ensures that the new agency will reduce regulatory burden and eliminate regulatory duplication, and in general simplify compliance with regulation. CUNA “strongly” prefers maintaining the National Credit Union Administration as sole regulator for credit unions, but nonetheless said it is pleased with Chairman Frank's Manager's amendment, which would retain the NCUA’s examination and enforcement authorities for credit unions with less than $10 billion in total assets. Mica said that while CUNA would have preferred that credit unions were “excluded from the scope” of pending systemic risk legislation, CUNA again thanked the Committee for adopting an amendment that would exclude any institution with assets of under $50 billion from inclusion in the systemic risk dissolution fund. That amendment was offered by Reps. Brad Sherman (D-Calif.) and Daniel Maffei (D-N.Y.). Over 250 amendments to H.R. 4173 have been filed, and work on those amendments continued at press time. A vote and possibly final passage of H.R. 4173 could happen as soon as Friday, but the legislation may linger into early next week. For the full letter, use the resource link.

Mica in iThe Hilli Even in recession plan for better days

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WASHINGTON (12/10/09)--In his most recent monthly K Street Insider column in The Hill, Credit Union National Association President/CEO Dan Mica writes that while “ambitious plans and initiatives can fall victim to tight budgets,” especially in times like these, “those of us on K Street still must plan for better times,” no matter how long the recession may last. Mica said that while there was some apprehension that the financial crisis could reduce the amount of lobbying activity undertaken by credit union executives, CUNA found that its members “remained engaged” and “continue to make the time and absorb the costs necessary to maintain a regular, active presence on Capitol Hill.” A clear example of this engagement is the heavy credit union participation in this week’s National Hike the Hill, during which over 600 representatives from state credit union leagues and associated credit unions are visiting with House and Senate legislators and their staffs. CUNA also resisted the urge to cut some funding for its yearly legislative conference, and has seen an uptick in registration compared to last year. Overall, Mica said, “sometimes there is a gamble,” and CUNA has had to make some tough budgetary decisions. However, “planning for growth, even when the going seems tough, is a must,” and “all trade association and lobbying firm heads should have several fiscal models in place.” These models, Mica suggested, “should include a best-case scenario with concrete plans included and a worst-case scenario with drastic budget cuts projected.” “Yes, you may be cutting now, but next year, even next month, your services, skills and organization could be more in demand than ever before,” Mica concluded.

Alabama CUs among those taking case to Congress

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WASHINGTON (12/10/09)--Credit unions took their case to Congress on Wednesday, much like representatives from the League of Southeastern Credit Unions and various credit unions within the state of Alabama who met with key legislators on Capitol Hill. The group reiterated the need for changes to the current member business lending (MBL) structure, telling the congressmen that while credit unions did not create the current economic problems, they can be part of the solution if the MBL cap is lifted.
Click to view larger image Representatives from Alabama-based CUs and the League of Southeastern Credit Unions pose with Rep. Robert Aderholt (R-Ala.), center. (CUNA Photo)
H.R. 3380, which was introduced earlier this year and may be added to developing jobs legislation, would, among other things, increase the credit union MBL cap to 25% of a credit union's total assets. Credit Union National Association (CUNA) has said that lifting the MBL cap would inject over $10 billion into the economy in the first year, and help create more than 108,000 jobs – at no cost to taxpayers. Listerhill CU President Brad Green said that his credit union could provide as much as $50 million in new loans if the MBL cap was lifted, and the Alabama group estimated that 17,000 jobs could be created statewide as a result of the MBL cap lift. Responding to the comments, Rep. Robert Aderholt (R-Ala.) said that he was aware that the credit union MBL issue “is a problem that needs to be dealt with.” The credit union representatives also sought support for a managers’ amendment, offered by Rep. Barney Frank (D-Mass.), that would exclude credit unions with $10 billion or less in assets from the examination and supervision authority of the proposed Consumer Financial Protection Agency. The Alabama delegation also covered hot button issues such as overdraft protection, interchange fee legislation, and the proposed Consumer Financial Protection Agency with Aderholt, and, later, with Sen. Richard Shelby (R-Ala.). Addressing the group, Shelby said that while he is working with Democrats in anticipation of the regulatory reform debate moving to the Senate, he believes strongly that regulatory authority over credit unions and other financial institutions should remain with their prudential regulators. The Alabama group was one of 42 state-based credit union groups taking part in CUNA's National Hike the Hill.

Comments on NCUA corporate CU plan due March 9

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WASHINGTON (12/10/09)--The National Credit Union Administration (NCUA) has given a deadline of March 9, 2010 for all comments on its proposed changes to corporate credit union rules to be submitted. The Credit Union National Association (CUNA) has re-formed its Corporate Credit Union Task Force, which will be led by VyStar CU President/CEO Terry West, to analyze the NCUA proposal and develop its own comment on the proposal. Comments that are directed to CUNA must be submitted by Jan. 20. The proposed rules for corporate credit unions, which were presented at the NCUA’s board meeting last month, would amend Part 704 of the NCUA's rules, adjusting the current corporate capital requirements by replacing the current 4% minimum total capital ratio with a 4% minimum leverage ratio, a 4% tier one risk-based capital ratio, and an 8% total risk-based capital ratio for adequately capitalized corporate credit unions. Corporate credit unions would be required to demonstrate capital ratios of 5%, 6% and 10%, respectively, to be considered well capitalized. The proposal would also prevent corporate credit unions from investing in collateralized debt obligations and net interest margin securities, and would limit so-called “golden parachutes” for troubled corporates and require corporate credit unions to disclose their executive compensation packages. The NCUA rules would also seek to ensure that corporate boards are mainly comprised of natural person credit union employees, and would require any of these board members to hold the position of CEO, CFO, or COO at their member entity. For CUNA's summary of the proposed rule, along with a copy of the proposed rule, as published in the Federal Register, use the resource link.

Inside Washington (12/09/2009)

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* WASHINGTON (12/10/09)--House Financial Services Committee Chairman Barney Frank (D-Mass.) said Tuesday he plans to introduce a bill that would encourage mortgage modifications by designating one investor to represent the interests of others (American Banker Dec. 9). Frank also planned to add an amendment Wednesday to regulatory reform legislation to allocate $3 billion of Troubled Asset Relief Program (TARP) money to help unemployed homeowners. Assistance would be capped at $50,000 per homeowner. The amendment also would use $1 billion from TARP to stabilize neighborhoods and redevelop foreclosed and abandoned homes … * WASHINGTON (12/10/09)--The Senate Banking Committee is slated to meet Dec. 17 to vote on President Barack Obama’s nomination of Federal Reserve chief Ben Bernanke to serve in his role another four years. Bernanke's nomination is expected to earn approval. His current term ends Jan. 31 (American Banker Dec. 9) … * WASHINGTON (12/10/09)--The Troubled Asset Relief Program (TARP), though flawed, served its purpose to stop an economic panic, according to a report released by the Congressional Oversight Panel. Treasury Secretary Timothy Geithner was criticized for failing to articulate specific goals for the program, and the program’s foreclosure mitigation efforts were cited as inadequate (The New York Times Dec. 9). Geithner is slated to testify today before the panel. The panel, headed by Elizabeth Warren, was created in 2008 to track TARP’s effectiveness … * WASHINGTON (12/10/09)--The Troubled Asset Relief Program (TARP) will be extended through Oct. 3, the Treasury Department announced Wednesday. The economy has improved, but TARP needs to be extended to help homeowners and small businesses, Treasury Secretary Timothy Geithner said. He noted he does not expect the program to extend more than $550 billion. The program will be limited to helping small businesses and community banks, mitigating foreclosures, and increasing the Term Asset Backed Securities Loan Facility. TARP will be used only for items deemed necessary to help the financial industry. If other actions are needed, Geithner said he would first consult with the Federal Reserve Board chairman and submit a notification to Congress (American Banker Dec. 9) …