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Congress this week Mortgage bankruptcy back

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WASHINGTON (3/3/09)—Business in Washington, legislative and otherwise, may have gotten a little bit of a delayed start Monday morning because of the storm that pelted much of the East Coast, but the U.S. Congress moved forward with its heavy agenda for the week. That agenda in the House could include consideration of the mortgage “cramdown” bill that was yanked from the calendar last week. The Senate Monday, as expected, began consideration of H.R. 1105, the FY 2009 Omnibus Appropriations Act. This legislation was passed by the House last week. It includes language to remove the cap on the National Credit Union Administration’s Central Liquidity Facility lending authority. The House began consideration of several bills under suspension of the rules, which means they were considered noncontroversial in nature. The schedule for Monday may have shifted slightly as a result of the weather event, but Credit Union National Association Vice President of Legislative Affairs Ryan Donovan said it will work itself out because additional suspension bills were expected to be considered today. Come Tuesday or Wednesday, the House may resume consideration of H.R. 1106, the Helping Families Save Their Homes Act, which includes the “cramdown” provision that would allow bankruptcy judges to change terms of existing mortgages. (See related story: CUNA urges Pelosi delay on “cramdowns”) Donovan said it is unclear at this point what form additional amendments to the bill may take, but he does expect changes to be suggested. On the committee level, credit unions may be interested in the following hearings:
* On Tuesday, the Senate Banking Committee will hold a hearing on consumer protections in financial services; * On Wednesday, the House Financial Services Committee subcommittee on financial institutions and consumer credit will hold a hearing entitled, "TARP Oversight: Is TARP working for Main Street?"; * On Thursday, the Senate Banking Committee will hold a hearing on government intervention and implications for future regulation. Federal Reserve Vice Chairman Donald Kohn is expected to testify at this hearing; and * Also on Thursday, the House Financial Services Committee subcommittee on capital markets, insurance and government-sponsored enterprises will hold a hearing on perspectives on systemic risk, focusing on how to improve the ability of government to prevent private sector activities from putting at risk the stability of the U.S. economy.

Analysis of FDIC assessment shows bank cost CUNA

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WASHINGTON (3/3/09)—Analyzing the Federal Deposit Insurance Corp.’s (FDIC) recently announced assessment on banks, the Credit Union National Association (CUNA) notes that bankers will pay premiums of between 32-36 basis points this year, and then pay annually between 12-16 basis points in premiums. Further, CUNA notes the banks face future, additional “special assessments,” as they are being asked to pay this year, should the FDIC require it. The FDIC has given banks seven years to make the payments intended to keep the deposit insurance fund strong. If banks were required to pay the whole amount up front, as credit unions have been asked to do to fund the National Credit Union Administration’s (NCUA) corporate stability plan, the banks’ costs would be significantly higher than that faced by credit unions. CUNA President/CEO Dan Mica said Monday that, still, the premium payment still will not be easy for banks. “So far, the banks’ first year cost is about 40% of the total cost to credit unions. After the first three years, banks will have paid as much as CUs -- and still have another four years of premium payments to go,” Mica said.

Obama fair value task force sought by CUNA

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WASHINGTON (3/3/09)—The Credit Union National Association (CUNA) is advancing a new idea to address problems created by accounting rules on fair value, mark-to-market and the reporting of assets that are "Other Than Temporarily Impaired." In a letter to President Barack Obama, CUNA urged the formation of a Presidential Task Force on these accounting issues as soon as possible. CUNA President/CEO Dan Mica told the president that CUNA applauds his leadership in pursuing workable solutions to the multitude of significant problems facing the nation. “However, Mr. President, a major contributing factor to the nation’s financial crisis is the application of fair value and mark-to-market accounting standards during the current dislocated market,” Mica wrote. He noted that those accounting standards were originally intended to enhance accuracy of public financial information, but under current market conditions are having the opposite effect. Mica said a presidential task force could bring together the accounting profession, government policy makers and representatives of credit unions and others in the financial sector to develop feasible recommendations to enhance financial statement accuracy through more appropriate recognition of the present uncertain market. Mica said that CUNA feels efforts to date to address fair value accounting have been inadequate, including those by the Securities and Exchange Commission under the Bush administration. He also noted that the Financial Accounting Standards Board has announced a review, but that its efforts will not begin until June, following a comment period. Mica urged the formation of a task force as soon as possible.

NCUA staff shuffle

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ALEXANDRIA, Va. (3/3/09)—Effective March 1, National Credit Union Administration (NCUA) Region I Director Mark Treichel was named acting director of the agency’s Office of Corporate Credit Unions. The NCUA said Scott Hunt, who has been heading the department, will remain on detail there. The NCUA also said that, effective March 16, Region 2 Director Jane will be on detail as the Acting Regional Director of Region 5. Larry Blankenberger will be detailed to Region 2 as acting regional director. He is currently association regional director for Region 4.

Gambrell CDFI demand skyrockets

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WASHINGTON (3/3/09)—The economic and political changes witnessed over the past year, and a serious drop in lending originations by some in the mainstream lending community, have caused demand for Community Development Financial Institutions (CDFIs) to “skyrocket,” according to CDFI Fund Director Donna Grambrell. Gambrell, addressing the 2009 CDFI Institute here Monday, said she believed the most “tangible recognition of the good work that the CDFI Industry has done over the past few years” is the inclusion of funding provisions in the new stimulus legislation. That bill, The American Recovery and Reinvestment Act of 2009, carries an additional $100 million to enhance the lending capacity of CDFIs in order to provide distressed communities with affordable financial services and products. The U.S. Treasury Department’s CDFI Fund helps locally based financial institutions offer small business, consumer and home loans in communities and populations that lack access to affordable credit. CDFIs are financial intermediaries such as certain credit unions, banks, loan funds, venture capital funds, corporation-based lenders and microenterprise development loan funds. The Credit Union National Association (CUNA) is also working to address the credit gap that is occurring because of current economic conditions. CUNA has petitioned the U.S. Congress and the Obama administration to consider lifting the credit union member business lending cap. CUNA has noted that the 12.25%-of-assets cap has been in place only 10 years and was “arbitrarily set in response to banking lobbyists who wanted to restrain credit unions.” Without that ceiling, CUNA has estimate, credit unions could lend up to $10 billion in new business loans during the first year after the credit union business lending cap was eliminated.

Mica on Fox Let CUs help economy

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WASHINGTON (3/3/09)—Fox Business Network Monday aired a segment called “Betting on Credit Unions,” in which Credit Union National Association (CUNA) President/CEO Dan Mica explained how credit unions could bring billions of dollars into the economy without costing taxpayers a dime.

On the Fox show “Money for Breakfast,” Mica underscored for the national TV audience that the credit union system is in good financial shape with solid capital levels, very low delinquency rates, and with savings and lending volumes increasing even in the troubled economy. The CUNA leader noted that credit unions have money to lend to small businesses and said if Congress would remove an arbitrary cap of 12.25% of assets, credit unions could quickly infuse $10 billion of credit into small businesses. “And it doesn’t cost taxpayers a dime,” Mica reminded. When the FOX host asked if credit unions could get themselves into leveraging problems as banks and other lenders did with subprime mortgages, Mica stated that credit unions “have always been mindful and conservative managers of people money.” He added that the credit union system is well capitalized at over 11%, against a government 7% requirement for being ranked well capitalized. Also participating on the Fox morning show, Scott Arney, CEO of Chicago Patrolmens FCU, answered the question: Why choose a credit union over a bank? Arne said credit unions “know exactly who they serve,” and noted that each member is a credit union owner. That structure, Arne added, translates into the self disciplined business philosophies of credit unions.

CUNA urges Pelosi delay on cramdowns

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WASHINGTON (3/3/09)—Time is needed to analyze the Obama administration’s proposals on mortgage bankruptcy and how they compare with the U.S. Congress’ approach to the issues, and the Credit Union National Association (CUNA) asked the House to delay consideration of its bill. In a letter sent Monday to House Speaker Nancy Pelosi (D-Calif.), CUNA President/CEO Dan Mica wrote, “We respectfully request sufficient time to analyze the President’s proposal and continue to work with proponents of judicial modification.” “Our hope,” Mica added, “is that the President’s proposal with respect to pre-bankruptcy loan modification and the legislative remedy providing for judicial modification can work in concert.” The House bill, which would allow bankruptcy courts to change existing mortgage terms, was postponed for consideration last week. However, it is scheduled to be brought up again in the House this week. In the CUNA letter to Pelosi, Mica noted that credit unions keep nearly three-quarters of all mortgages in portfolio. As a result, credit unions have more flexibility in working with their members, he added. “In fact, in a recent survey of credit union executives, the vast majority of respondents indicated that they are pro-actively offering services aimed at preventing foreclosures including loan payment deferrals, extension of maturities and reduction of interest rates, among other things,” Mica told the leader of the House.

Inside Washington (03/02/2009)

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* WASHINGTON (3/3/09)--The Treasury Department has released guidance to help financial institutions repay Troubled Asset Relief Program (TARP) funds. The guidance, presented in a frequently-asked-questions format, addresses where institutions should send funds and how much must be repaid--25% of the issue price of preferred stock--if institutions want to begin paying back TARP funds now ... * WASHINGTON (3/3/09)--Freddie Mac announced Monday that its CEO, David Moffett, has resigned from the organization. Freddie’s board of directors is working with the Federal Finance Housing Agency (FHFA) to appoint Moffett’s successor and expects to name an interim CEO by March 13. Moffett served as CEO since September and previously served as a senior adviser to the Carlyle Group in Washington, D.C. (The New York Times March 3) ... * WASHINGTON (3/3/09)--The Maine Credit Union League announced that all four members of Maine’s congressional delegation attended the league’s annual breakfast Feb. 24 during the Credit Union National Association’s Governmental Affairs Conference in Washington, D.C. During the breakfast, Sen. Olympia Snowe (R-Maine) thanked credit unions for being a stable source of lending and said she supported raising the cap on member business lending. Sen. Susan Collins (R-Maine) expressed her support of credit unions, saying they play a significant role in moving the economy forward. Rep. Mike Michaud (D-Maine) expressed support for raising lending caps and Rep. Chellie Pingree (D-Maine( said she looks forward to working with credit unions. From left are Snowe and Tucker Cole, president/CEO of Evergreen CU and the chair of the Maine CU League's Governmental Affairs Committee. (Photo provided by the Maine Credit Union League) ... * WASHINGTON (3/3/09)--According to the New Jersey Credit Union League (NJCUL), 22 New Jersey credit unions and 50 credit union leaders attended the Credit Union National Association’s Governmental Affairs Conference in Washington, D.C., last week. New Jersey credit union representatives met with the offices of their entire congressional delegation, with seven congressional members meeting credit unions in person. Some New Jersey representatives also toured Credit Union House. They included, from left, front row: Ray Del Nero, president/CEO of Merck EFCU; Yvette Segarra, manager of special events of NJCUL; Lou Vetere, president/CEO of Garden Savings FCU; Jim Merrill, senior vice president league service corp. of NJCUL; and Christina Olender, president/CEO of Parlin DuPont EFCU. From left, back row: Tom O’Shea, president/CEO of FAA Eastern Region FCU; Leo Ardine, president/CEO of United Teletech Financial FCU; Paul Gentile, president/CEO of NJCUL; Mike Reilly, president/CEO of Central Jersey FCU; and Shawn Gilfedder, president/CEO McGraw-Hill EFCU and league chairman. Photo provided by the New Jersey Credit Union League) ...