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Washington Archive

Washington

Inside Washington (02/12/2008)

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* WASHINGTON (2/13/08)--The Treasury Department announced Project Lifeline, which would help borrowers who have missed more than three mortgage payments. Though they are not required, lenders would attempt to modify borrowers’ loans to be more affordable (The New York Times Feb. 12). Those who are bankrupt, who will face foreclosure within one month, or who purchased vacant or investment properties do not qualify for Project Lifeline. Lender participants include Citigroup, Bank of America, Countrywide Financial, Washington Mutual, JPMorgan Chase and Wells Fargo. About 575,000 borrowers could be helped by the project, according to Moody’s Economy.com. Ted W. Lieu (D), chairman of the banking and finance committee of the California State Assembly, said the plan was “like giving six students a homework assignment but not requiring that they turn in the assignment or even report on its progress.” Lieu told the newspaper that the banking industry has not followed through on its commitment to help homeowners ... * WASHINGTON (2/13/08)--The Office of the Comptroller of the Currency (OCC) has suspended the chairman of First National Community Bank in Dunmore, Pa. Louis A. DeNaples was charged with four counts of perjury on Jan. 23 during his testimony to Pennsylvania state officials. The suspension prohibits him from participating in any other depository institutions while his criminal charges are pending ... *WASHINGTON (2/13/08)--The Federal Reserve Board announced Wednesday that it has made amendments to Appendix A of Regulation CC that reflect the restructuring of the Federal Reserve's check processing operations in the Tenth and Eleventh Districts. As of April 19, 2008, the head office of the Federal Reserve Bank of Kansas City no longer will process checks, and banks currently served by that office will be reassigned to the head office of the Federal Reserve Bank of Dallas. As a result of these changes, some checks deposited in the affected regions that currently are nonlocal checks will become local checks that are subject to shorter permissible hold periods…

SBA notes CUs five-year 7a participation

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WASHINGTON (2/13/2008)—-Five years ago this month, the U.S. Small Business Administration (SBA) expanded its guaranteed loan program to all credit unions, regardless of charter. More than 385 credit unions now participate in the SBA 7(a) program.
Click to view larger image (CLICK TO ENLARGE) CUNA President/CEO Dan Mica (left) and SBA Administrator Steve Preston yesterday discuss credit union participation in SBA lending. (Photo provided by CUNA)
Credit unions’ increased participation in SBA programs was among the topics Credit Union National Association (CUNA) President/CEO Dan Mica and SBA Administrator Steve Preston discussed yesterday at the agency’s headquarters in Washington, D.C. Credit unions accounted for only about 1% of such lending in 2007. While Preston noted credit unions’ greater participation in SBA lending, and said he remains focused on providing more capital to help small businesses grow. Mica praised the SBA for improved paperwork processes, but said the agency should continue to improve efforts at speeding applications, a point Preston acknowledge and pledged to improve. Mica and Preston discussed other impediments to member business lending (MBL) for credit unions--including the statutory cap on MBLs. Even though the Federal Credit Union Act’s MBL cap does not apply to SBA loans, the restriction results in credit unions’ reluctance to even initiate MBL programs, according to Mica. “Because of credit unions’ restrictions, they can’t count on partnering with the SBA on all their MBLs,” said Mica. “MBL programs are costly to set up and administer and credit unions may reach the cap fairly soon with non-SBA loans.” Preston also explained to Mica two key SBA initiatives--the Patriot Express program to meet the business lending needs of military personnel; and the Rural Advantage Program, which provides a simplified application process for loans up to $350,000 or less in rural communities. “CUNA looks forward to working closer than ever with the SBA to help credit unions meet the lending needs of small businesses in their communities, which in turn can help strengthen the economy,” Mica told Preston. CUNA Deputy General Counsel Mary Dunn and SBA National Ombudsman Nick Owens also participated in the meeting.

CUNA NAFCU No support for lop-sided reg relief bill

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WASHINGTON (2/13/08)--A broad regulatory relief effort being considered by the Senate Banking Committee was scrapped late last night after the Credit Union National Association (CUNA) and the National Association of Federal Credit Unions (NAFCU) Tuesday said credit unions could not support the lop-sided language. In a rare joint letter, sent to Senate Banking Committee Chairman Christopher Dodd (D-Conn.), CUNA and NAFCU applauded Sen. Mike Crapo (R-Idaho) and other panel members for taking the lead in the Senate on regulatory relief for financial institutions in 2008. But the credit union groups said they could not back an amendment as drafted because it would not provide balanced regulatory relief for all financial services providers. For instance, the package proposes to increase business lending limits and auto lending investment limit for thrifts, but does not address the credit union member business lending ceiling or modification of the credit union prompt corrective action (PCA) system to a risk-based approach. “The credit union and bank amendments to this legislation are not in balance and we cannot, consequently, support them,” said CUNA President/CEO Dan Mica Tuesday. “We applaud and thank Sen. Crapo for this leadership on the overall issue of regulatory relief for financial institutions, especially credit unions. However, regulatory relief among financial institutions must be in equilibrium in order for all to have the same opportunities to thrive,” Mica said. “We will be working with senators to achieve regulatory relief that is balanced and we appreciate this opportunity to broach this issue in the Senate,” he added. The Credit Union Regulatory Improvements Act (CURIA, H.R. 1537), with 142 official supporters in the House, proposes to increase the member business lending cap to 20%, up from the current 12.25%, and also to modify PCA to a risk-based system. “Credit unions are well suited to help during these difficult economic times when credit is becoming scarce. We believe that providing balanced and meaningful evenhanded regulatory relief to all financial institutions would provide significant economic stimulus at no cost to taxpayers. We urge you to support such efforts,” the CUNA-NAFCU letter said. Sen. Crapo was expected to introduce his financial institutions regulatory relief provisions as an amendment to an industrial loan company bill that is scheduled to be considered by the Senate Banking Committee on Wednesday. Late Tuesday evening, Crapo's office announced it would not offer the amendment.

NACHA rule change to ID originators

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WASHINGTON (2/13/07)—The originators of automated clearinghouse transactions will have to be identified starting June 20 under a rule change recently adopted by NACHA, the electronic payments association. The Credit Union National Association (CUNA) has supported the identification plan. CUNA maintains that it would enhance a Receiving Depository Financial Institution’s (RDFI’s) customer service capabilities by reducing the time it would take to resolve customer service inquiries. Credit unions are more likely to be RDFIs than an originator of the payments transaction. NACHA has said that it is rare to encounter problems with the identification of companies in ACH transactions. (American Banker, Feb. 12) However, CUNA believes the new requirement will cut customer services costs by reducing the number of inquiries prompted when a consumer doesn’t recognize a transaction. CUNA is currently performing a final rule analysis of the NACHA action and will soon have more information for credit unions.