WASHINGTON (3/23/11)—Teachers and education support professionals could be hurt by the Federal Reserve's proposed interchange fee cap, according to a national association that represents the country's educators. The National Educators Association (NEA) said in a letter to key senator that the Fed rule “could have a significant negative impact on the cost of mainstream banking services" to many middle and lower-income consumers, including the group's constituents. The letter was sent to Senate Majority Leader Harry Reid (D-Nev.), Senate Minority Leader Mitch McConnell (R-Ky.), House Speaker John Boehner (R-Ohio) and House Minority Leader Nancy Pelosi (D-Calif.). The Fed's proposal would cap debit card interchange fees that are paid by merchants to large debit card issuers at no more than twelve cents per transaction. Issuers with under $10 billion in assets are entitled to be exempted from the interchange fee rate setting provisions, but there is great concern that this proposed exemption would not work as planned. “Further study is warranted to determine if the proposed federal controls on interchange fees for debit swipes as currently mandated by the amendment will meaningfully benefit merchants and their customers, or if such controls will instead result in consumers paying higher prices for the banking services critical to their financial wellbeing,” the letter added. The interchange legislation may also have many unintended consequences, the NEA said. The NEA is a 3.2 million member advocacy organization that represents current and retired teachers, faculty members, and other education support professionals. Other organizations, including the U.S. Hispanic Chamber of Commerce (USHCC), have also called for a delay in the implementation of the new interchange regulation. Legislation that would delay the implementation of the interchange fee cap was introduced in the Senate and House on Tuesday. The two bills would also order regulators to study the impact that the proposed interchange rules would have on credit unions, small issuers, consumers and merchants. The Credit Union National Association (CUNA) supports the legislation. CUNA has encouraged credit unions across the country to contact their federal lawmakers, at home this week for a District Work Period, and ask them to "stop, study and start over” on interchange legislation.
WASHINGTON (3/23/11)—The deposit insurance assessments charged by regulators to credit unions and banks will be “very similar” over the coming decade, revising previous estimates that predicted higher bank assessments, Credit Union National Association (CUNA) Chief Economist Bill Hampel said in a white paper released yesterday. CUNA’s previous estimates showed NCUA assessments averaging 8.2 basis points (bp) per year and FDIC assessments averaging 13.1 bp per year during the coming decade. However, Hampel noted that both the National Credit Union Administration (NCUA) and the Federal Deposit Insurance Corporation (FDIC) have recently released new information. “The NUCA estimates are down slightly; the FDIC estimates for smaller banks (with under $10 billion in assets) have fallen considerably” in the newly created estimates, Hampel said. Credit union assessments could average 7.7 bp over the next 10 years, while bank assessments could average 6.7 bp, Hampel predicted. The NCUA estimates changed in part due to indications that the agency may not charge an insurance premium this year, and may not use a prepayment feature to even out corporate credit union stabilization expensing. Given those two changes, NCUA total assessments will be higher than previously expected in the first two years, but lower in the following nine years. The FDIC has changed its assessment structure, with that regulator transferring much of the burden of rebuilding the FDIC’s fund balance to the very largest institutions. Hampel in the white paper noted that these predicted assessment rates could change. The rate of economic recovery, the performance of legacy assets held by the NCUA, or additional FDIC or NCUA policy changes could alter the course of assessment, he said. For the full white paper, use the resource link.
WASHINGTON (3/23/11)--The Federal Reserve this week reported $2.428 trillion in total reserve bank assets as of December 31, 2010, $193 billion more than was reported at the end of 2009. The Fed numbers were released as part of its 2010 comparative financial statements. The Fed in a release said that the statements combine the financial results of the Fed’s Banks, its 12 individual Federal Reserve Banks, the limited liability companies that were created to respond to strains in financial markets, and the Fed’s Board of Governors. The statements noted that the Fed’s U.S. Treasury securities holdings increased by $261 billion and its holdings of federal agency and government-sponsored enterprise (GSE) mortgage-backed securities (MBS) increased by $86 billion. The Fed said that this $347 billion increase was partly offset by two factors: a $96 billion decrease in loans to depository institutions and a $23 billion decrease in loans extended under the Fed’s Term Asset-Backed Securities Loan Facility. The Federal Reserve Banks' comprehensive income increased to $82 billion in 2010, up $28 billion from the previous year’s total. The Fed noted that the Reserve Banks transferred $79 billion of that $82 billion total to the U.S. Treasury. A total of $47 billion in comprehensive income was transferred to the Treasury in 2009, according to the Fed. For the full Fed financial statements, use the resource link.
ALEXANDRIA, Va. (3/23/11)--Associate directors or other credit union officials that occupy volunteer positions established by credit union directors may be reimbursed for any training expenses or related traveling expenses, the National Credit Union Administration (NCUA) has said. The NCUA statement came in the form of a legal opinion. The legal opinion was a response to a question from Credit Union Executives Society President/CEO Fred Johnson. The NCUA opinion noted that the agency has previously stated that volunteer members of non-voting, advisory committees, such as emeritus or associate directors, should not be eligible to receive expense reimbursement or insurance benefits from the credit union they are serving. However, NCUA Associate General Counsel Hattie Ulan said that the NCUA has reconsidered this position, and has decided that these types of volunteers would be eligible for reimbursement for training and training-related expenses, so long as the volunteers are not simply serving in an honorary capacity and are providing services that are established by the credit union’s management team. “This interpretation is consistent with NCUA’s regulations on reimbursement,” Ulan said. Board and committee members are also allowed to be compensated for these sorts of expenses under the Federal Credit Union Act. For the full NCUA opinion, use the resource link.
* ALEXANDRIA, Va. (3/23/11)--The National Credit Union Administration (NCUA) is conducting one of its free special training sessions on the duties of federal credit union directors on April 12 at its headquarters in here. The session promises to cover the key requirements of the new rule (NCUA Regulations 701.4) addressing the financial education of credit union board members, including understanding the credit union’s balance sheet and income statement. Online registration
is available. The NCUA headquarters is at 1775 Duke Street, Alexandria, Va…. * WASHINGTON (3/23/11)--The Supreme Court upheld a ruling that the U.S. Federal Reserve must disclose details about its emergency lending program to banks during the financial crisis in 2008. The Clearing Housing Association--representing large commercial banks--had asked the high court to reverse a ruling by a federal appeals court that required disclosure of the lending records (American Banker
March 22). The justices today left intact a court order that gives the Fed five days to release the records, sought by Bloomberg News
. The Fed responded to Bloomberg’s
May 2008 Freedom of Information Act request by releasing only partial data regarding its lending programs, claiming exemptions that protected "trade secrets and commercial or financial information." A Fed spokesperson said the agency was in the process of fulfilling the requests following the Supreme Court ruling … * WASHINGTON (3/23/11)--Housing and Urban Development Secretary Shaun Donovan and Treasury Secretary Tim Geithner's responses to a question about whether the government-sponsored enterprises would be exempted from pending risk-retention requirements has created anxiety among investors (American Banker
March 22). The question was posed by during a Senate Banking Committee hearing by Sen. David Vitter (R-La.) who asked if either Donovan or Geithner supported proposals to exempt GSE loans from risk-retention requirements. Donovan said he did not believe discussions about exemptions had taken place. He said the day’s discussion was focused on ensuring that the GSEs held adequate capital against their commitments. Geithner said the Obama administration’s objective is to have private markets with banks and investors shouldering more of the risk in housing finance. Douglas Harter, an analyst with Credit Suisse, said an absence of concrete information leaves such statements open for wide interpretation …