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Inside Washington (02/11/2008)

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* WASHINGTON (2/12/08)--The Securities and Exchange Commission (SEC) is weighing its credit-rating-company rules after investors lost on products backed by subprime mortgages (Bloomberg Feb. 11). The SEC could propose new rules this spring that would provide more information about past ratings and the difference between ratings on corporate and municipal bonds versus ratings on structured debt. Banks and securities have lost $146 billion since 2007, the agency said ... * ALEXANDRIA, Va. (2/12/08) -- National Credit Union Administration (NCUA) Vice Chairman Rodney Hood said he would come away from the 25th anniversary celebration for the nation’s largest student-run federal credit union with best practices to incorporate in his Blueprint 2020 Initiative. At the celebration, Hood commended Georgetown University Alumni and Student Federal Credit Union (GUASFCU) for its 25 years of service and for spreading knowledge of the philosophy and mission of credit unions and raising awareness of the careers available in this industry. The goal of Hood’s Blueprint initiative is to attract well-trained and highly competent new credit union employees, board members, supervisory committee members and credit committee members to the credit union movement. Hood noted that GUASFCU is entirely student-run; currently, with over 150 interns, and raises awareness of the careers available in the industry …

CUNA watches CRA developments

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WASHINGTON (2/12/08)—It is important to note that credit unions are not a target of this week’s hearing on the Community Reinvestment Act (CRA), said Ryan Donovan, vice president of legislative affairs for the Credit Union National Association, Monday. The House Financial Services Committee has scheduled a “commemorative” hearing on Wednesday entitled "The Community Reinvestment Act: Thirty Years of Accomplishments, but Challenges Remain." (News Now, Feb. 6) “Obviously, we are watching this very closely,” Donovan said of the proceedings, “It would be naïve to believe the credit unions won’t come up at all during the hearing. But the committee chairman has never indicated an interest in applying CRA requirements to credit unions. However, we have been told that we are not the focus of the hearing and that this is not a legislative hearing." ” “In fact, Chairman Frank has been heard to say that if every lender operated as credit unions do, there would be no need of CRA,” Donovan added. He noted that the chairman, Rep. Barney Frank (D-Mass.), has said he intends to conduct a series of hearings on CRA this year and is looking at expanding its coverage beyond banks and thrifts to such entities as finance and insurance companies. "Regardless of the focus Wednesday, we know that at a hearing like this, anything can happen. Members of the committee and the witnesses can bring up just about anything--including credit unions--either in the testimony or during the question-and-answer period," Donovan said. There are no credit union witnesses scheduled among the 15 slated to appear, Donovan said, because “in general, the credit union industry does not have CRA expertise.” Congress enacted CRA in 1977 in response to the "redlining" of lower income and minority neighborhoods by banks and thrift institutions during the 1960s and early 1970s. The purpose was to ensure that for-profit financial institutions were adequately meeting the financial service needs of all parts of the communities from which they draw deposits. To see names and affiliations of witnesses, use the resource link below.

Credit union SBA participation on agenda

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WASHINGTON (2/12/08)—Credit Union National Association (CUNA) President/CEO Dan Mica is scheduled to meet today with the administrator of the Small Business Administration (SBA) to explore greater credit union involvement in SBA programs. CUNA has been in regular contact in recent years with the SBA urging the agency to remove structural roadblocks to programs like its 7 (a) guaranteed lending program to enable more credit unions to participate. Bucking a general trend of decline in 7 (a) participation, the SBA reports that 386 credit unions are currently in the 7a program—up from 315 a year ago. However, CUNA has told the SBA and testified on Capitol Hill that more credit unions want to use the program but are kept out because of costs and complex paperwork. Credit unions represent only about one percent of SBA lending, CUNA says. Last month, SBA Administrator Steven Preston said that loan volume for its signature 7 (a) program has decreased overall, and that originations dropped to 20,000 in the fourth quarter. He said his agency is attempting to expand participation, but acknowledged that such things as slow loan turnaround times, a lack of support services for lenders, and complex rules and paperwork can be roadblocks to participation. Because of these roadblocks, the SBA has lost 368 financial institutions in the past two years--a 7% decline, Preston said. (American Banker, Jan. 23) In November, the agency started a program to speed up payments of loan guarantees, but it faces challenges such as inefficient workflows and information technology systems. It could take until April or May to streamline the program, according to Preston.

Rep. Lantos CURIA co-sponsor dies at 80

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WASHINGTON (2/12/08)—Rep. Tom Lantos (D-Calif.), known to credit unions as a supporter of regulatory relief legislation, died Monday morning at Bethesda Naval Medical Center, according to his office. Lantos, the only survivor of the Holocaust ever to serve in Congress, was diagnosed with esophageal cancer in December and subsequently announced he would not seek re-election due to his anticipated medical treatments. At the time of his decision, Lantos said, “It is only in the United States that a penniless survivor of the Holocaust and a fighter in the anti-Nazi underground could have received an education, raised a family, and had the privilege of serving the last three decades of his life as a Member of Congress. I will never be able to express fully my profoundly felt gratitude to this great country.“ “Tom Lantos was a distinguished member of Congress and a friend to credit unions,” Ryan Donovan, vice president of legislative affairs fro the Credit Union National Association (CUNA), said Monday. “He will be sorely missed in the House, and in the country, and across the world,” he added. Lantos, known as a unwavering human rights advocate, was a co-sponsor of the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537).