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Washington Archive

Washington

NCUA wants input on guidance to bar convicts at CUs

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ALEXANDRIA, Va. (3/21/08)—-The National Credit Union Administration (NCUA) Board during its monthly meeting Thursday issued for a 60-day comment period proposed guidance on prohibition orders barring an individual from working with a federally insured credit union. The NCUA Board issued proposed Interpretive Ruling and Policy Statement (IRPS) No. 08-1, Guidance Regarding Prohibitions Imposed by Section 205(d) of the Federal Credit Union Act. The statute prohibits “a person who has been convicted or legally connected with prosecution of a criminal offense involving dishonesty or breach of trust from working or being affiliated with an insured credit union, except with prior written consent from the NCUA Board,” said the agency. NCUA said it has not previously published policies or regulations concerning Section 205(d) and recently became aware of several employees working at credit unions in violation of this prohibition. The three NCUA Board members voted unanimously in favor of the measure. Visit CUNA’s website for more information.

UBIT lawsuit scheduling date set

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GREEN BAY, Wis. (3/21/08)--A Wisconsin credit union’s lawsuit against the Internal Revenue Service (IRS) over unrelated businesses income taxes (UBIT) took another step forward this week when the case was assigned to a judge and a scheduling date set. The case involves Community First CU, Appleton, Wis., which filed a court challenge in January against the IRS regarding its determination on insurance products. This week, CUNA learned that U.S. District Court Judge William C. Griesbach will handle the case. A scheduling conference was set for May 9. According to CUNA General Counsel Eric Richard, the scheduling conference will allow the judge to set the future course of litigation. “After May 9, we should have a much better idea of when we might have a final outcome in the case in the district court,” said Richard. The credit union said at issue is about $54,000 in taxes it paid in 2006 on income from the sale of credit life and credit disability insurance, and guaranteed auto protection (GAP) insurance. While it is unlikely any outside parties will be allowed to join the suit, the credit union's action is backed by CUNA, American Association of Credit Union Leagues, National Association of State Credit Union Supervisors NASCUS), and CUNA Mutual Group, which comprise the credit union movement's UBIT Steering Committee.

Frank Big changes needed in financial regulation

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WASHINGTON (3/21/08)--In the wake of recent financial market turmoil, House Financial Services Committee Chairman Barney Frank (D-Mass.) yesterday called for a number of new policy options he said would help stabilize the housing market and address the current economic downturn, including creating a new or empowering the Federal Reserve to act as a ”Financial Services Systemic Risk Regulator.” In a speech in Boston Thursday, Frank said he wants to give the new regulatory body “capacity and power to assess risk across financial markets regardless of corporate form and to intervene when appropriate.” He said since the repeal of Glass-Steagall, a host of new players have emerged and old ones are doing new things. “To the extent that anybody is creating credit they ought to be subject to the same type of prudential supervision that now applies only to banks,” said Frank. This regulator also must focus on enhanced consumer protection, because “this crisis shows that consumer protection, safety and soundness and systemic risk are intertwined,” according to Frank. Frank also indicated a willingness to consolidate what he called “a duplicative regulatory structure,” but provided little detail in a written statement Thursday. Federal and state credit union regulators were not mentioned. The committee chairman called for a reassessment of capital, margin and leverage requirements because “this crisis has illustrated that seemingly well-capitalized institutions can be frozen when liquidity runs dry and particular assets lose favor.”

Inside Washington (03/20/2008)

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* WASHINGTON (3/21/08)--The Office of the Comptroller of the Currency (OCC) issued an emergency rule Wednesday that would allow JPMorgan Chase and Co. to fund Bear Stearns even though the debt would be higher than the normal lending limit. An OCC provision states that a bank cannot lend more than 15% of its capital to one borrower or more than 25% without secured collateral (American Banker March 20). The OCC defends its decision, saying that the limit was not broken. An interim final rule, scheduled to be effective yesterday and open for a 30-day comment period, would give the agency the ability to grant exemptions in emergency situations to well-capitalized and highly rated lending institutions ...

Realtors CU application fans lobbying alliance buzz

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WASHINGTON (3/21/08)--The National Association of Realtors (NAR) efforts to launch a credit union has raised the ire of bankers and hinted at a brewing powerful lobbying alliance on Capitol Hill, according to a newspaper report. The story in the March 20 American Banker newspaper sprouted after NAR last week applied to the National Credit Union Administration (NCUA) for a federal credit union charter to serve its 1.3 million members and their families nationwide. NAR in November voted to fund the credit union initiative with a $10 million grant (News Now Nov. 28). The Internet-based credit union would offer a complete array of services, including mortgages, auto loans and deposit accounts. The American Banker story surmised that a Realtors’ credit union could unite NAR and credit unions behind similar issues, creating “an even more potent lobbying force on issues such as expansion of credit unions' fields of membership and regulatory relief.” That theory apparently was bolstered after House Financial Services Committee Chairman Barney Frank (D-Mass.) reportedly said last week at an American Bankers Association conference, “Realtors and credit unions both have better grassroots organizations than banks do.” Bank lobbyists indicated they may oppose NAR’s application to form the credit union, according to the report.