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CUNA supports Cherry Blossom Run for seventh year

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WASHINGTON (3/31/09)--More than 13,000 runners will course this weekend through the streets of Washington, D.C., as the Credit Union Cherry Blossom 10-Mile Run is held – fully supported by the Credit Union National Association (CUNA). This year marks the seventh straight year that CUNA has worked in support of credit union involvement in the race, proceeds of which benefit Children’s Hospitals throughout the nation. “One of our goals each year is to showcase to Congress and others in the Washington area the work credit unions do in support of their communities,” said CUNA President/CEO Dan Mica. “The Cherry Blossom Run has proven to be an ideal vehicle for this purpose. CUNA proudly supports the Cherry Blossom Run.” This year CUNA will again participate in a number of events related to the run, including:
*Co-sponsor the “Capitol Hill Competition,” a race-within-a-race for runners from congressional offices; *Participate in a Friday press conference at Children’s Hospital in Washington to promote the race to trade and local press; and *Send a team of volunteers to the race to serve in the “bag check” tent, where more than 10,000 runners will store their belongings while they race.
CUNA also serves as sponsor of the event and participates in a number of additional programs. For a short presentation on the people who participate in the annual event, use the resource link below.

Litigation efforts on hold options explored Mica

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WASHINGTON (3/31/09)—The legal team at the Credit Union National Association (CUNA) has determined that a variety of options are available to seek answers from the National Credit Union Administration (NCUA) about its actions involving corporate credit unions, and CUNA said it would not file a legal challenge at this time. CUNA President/CEO Dan Mica issued a statement that the association decided against challenging the NCUA’s appointment of conservators for U.S. Central FCU and Western Corporate FCU (WesCorp) because the 10-day timeframe for filing could force haste. Mica said CUNA is committed to keeping as many options open as possible in obtaining answers for credit unions from NCUA about how it reached the conclusions it did for conserving U.S. Central and WesCorp – including through Congress, the regulatory process and the courts. Mica said CUNA’s legal research has determined that other legal remedies are available that are likely to be more fruitful if CUNA decides to go to court. In addition, he said, these other remedies are not subject to the 10-day deadline that applies to challenges to conservatorships. This would avoid pressure to make the kind of hasty legal decisions that would have been necessitated by a decision to file a case today, Mica said. Mica emphasized that CUNA continues to believe there is much NCUA can do unilaterally to mitigate the financial impact of its Corporate Stabilization Program on natural person credit unions. “We hope that a combination of initiatives by NCUA, plus legislation if possible, will make litigation unnecessary,” Mica said. "But that remains an avenue open to us." CUNA General Counsel Eric Richard said Monday that NCUA’s legislative proposal to create a stabilization fund goes a long way to address the problems facing the corporate credit union system, as well as allowing natural person credit unions to spread out premium payments over several years. He said CUNA intends to work with the National Association of Federal Credit Unions to work to persuade the NCUA to expand its legislative proposal to include authority to allow the Central Liquidity Facility to lend money directly to corporate credit unions, and to raise NCUA’s borrowing authority above the $6 billion the agency has requested.

Congress to mark up TILA abusive card bills this week

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WASHINGTON (3/31/09)--Congress is expected to mark up two bills of interest to credit unions this week that involve abusive credit card practices and the Truth in Lending Act. S. 414 would amend the Consumer Credit Protection Act to ban abusive credit practices, enhance consumer disclosures and protect underage consumers. Several amendments of interest to credit unions could be offered, including:
* The Crapo-Corker FTC amendment, offered by Sens. Mike Crapo (R-Idaho) and Bob Corker (R-Tenn.), which would remove language that would expand the Federal Trade Commission’s authority with respect to mortgage lending and increase state attorneys’ general authority to enforce the Truth-in-Lending Act; and * The Crapo-Corker Federal Deposit Insurance Corp. (FDIC) and the National Credit Union Administration (NCUA) Borrowing Authority amendment by Sens. Crapo and Corker. The amendment would increase NCUA’s authority to $6 billion from $100 million and the FDIC’s authority to $100 billion from $30 billion.
H.R. 627, which would amend the Truth in Lending Act, also is scheduled for mark-up. The act would establish fair and transparent practices related to the extension of credit under an open-end consumer credit plan. Several amendments also could be added:
* Manager’s amendment. CUNA expects that an amendment will be offered to align the provisions of H.R. 627 to the Unfair and Deceptive Practices rules recently approved by NCUA and the Federal Reserve; and * A bi-partisan amendment extending the effective date of the legislation also could be offered, a key concern that CUNA raised it testimony on the legislation two weeks ago; and
Possible interchange amendments could be added to both pieces of legislation, which CUNA is closely monitoring.

Whats ahead in Congress this week

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WASHINGTON (3/31/09)--The Credit Union National Association (CUNA) is monitoring numerous hearings this week that are of interest to credit unions. CUNA also is keeping an eye on mortgage bankruptcy provisions in H.R. 1106, the Helping Families Save Their Homes Act. “We believe there is a desire among Senate leadership to move this legislation when the Senate reconvenes in mid-April,” said Ryan Donovan, CUNA vice president of legislative affairs. “We oppose the bill that passed the House and we are working to mitigate the effect that this legislation would have on credit unions if it were to become law.” CUNA continues to discuss the legislation with Senate leaders and moderate Democratic and Republican offices. H.R. 1106 also would make permanent the $250,000 deposit insurance coverage limits, extending the period of time within which National Credit Union Administration (NCUA) must replenish the National Credit Union Share Insurance Fund, and increase the NCUA's borrowing authority. CUNA expects, based on conversations with committee and leadership staff, that H.R. 1106 will be the vehicle for NCUA’s legislative proposal aimed at reducing the immediate cost of the corporate stabilization premium on credit unions. On Tuesday, the Senate Banking Committee is scheduled to hold a hearing on Troubled Asset Relief Program oversight. The House Homeland Security Committee’s Subcommittee on Emerging Threats, Cybersecurity and Science and Technology also will hold a hearing, “Do the Payment Card Industry Data Standards Reduce Cybercrime?” On Wednesday, the Senate Small Business Committee is scheduled to hold a confirmation hearing for Karen Mills to be administrator of the Small Business Administration. The House Judiciary Committee also will meet on several pending financial crimes bills including the “Fight Fraud Act of 2009” [not yet introduced]; H.R.1292, to amend Title I of the Omnibus Crime Control and Safe Sts. Act of 1968; H.R.1667, the “War Profiteering Prevention Act of 2009”; the “Financial Crimes Resources Act of 2009”; the “Money Laundering Correction Act of 2009”; and H.R.78, the “Stop Mortgage Fraud Act.” On Thursday, the House Judiciary Committee Subcommittee on Commercial and Administrative Law will hold a hearing entitled, “Are Credit Cards Bankrupting Americans?” The House Financial Services Committee Subcommittee on Financial Institutions and Consumer Credit also is expected to meet on H.R. 1214, the Payday Loan Reform Act of 2009. CUNA is analyzing this bill and discussing it with its sponsor, Rep. Luis Gutierrez (D-Ill.), chairman. CUNA may file a statement for the record of this hearing. A previously scheduled mark-up in the House Financial Services Committee on H.R. 1728, the Mortgage Reform and Anti-Predatory Lending Act of 2009, has been postponed to a date to be determined. Congress also will mark up two bills dealing with the Truth in Lending Act and abusive credit card practices (SEE RELATED: Congress to mark-up TILA, abusive card bills this week).

Inside Washington (03/30/2009)

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* WASHINGTON (3/31/09)--The U.S. Treasury Department’s Community Development Financial Institutions (CDFI) Fund Monday announced the appointment of José Villar to serve as its chief operating officer (COO), effective immediately. As the COO, Villar will serve as CDFI Fund Director Donna Gambrell’s principal executive for operations and program processes. He will primarily be responsible for managing day-to-day activities of the CDFI Fund and “ensuring that operational infrastructure can support enhanced business practices.” Prior to the CDFI Fund, Villar has held several positions within Treasury. Most recently, he served as the director of the Office of Financial Management, where he was responsible for managing the budget, accounting and procurement functions, and travel services for all of Treasury’s 32 program offices ... * ALEXANDRIA, Va. (3/31/09)--National Credit Union Administration (NCUA) Chairman Michael E. Fryzel last week highlighted the importance of an early start on financial education during a tour of
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a Virginia high school student-run branch. Fryzel visited Arlington Virginia FCU’s student-run Triple $ branch. The branch, named to stand for “Students Serving Students,” is part of the school’s business and finance curriculum. “It is always both rewarding and impressive to see hands-on, useful financial skills being taught to students. This branch is one of many I have had the opportunity to observe in action, and I am optimistic that the students learning lessons of today will become the savvy, financially literate consumers of tomorrow,” Fryzel said. (Photo provided by the National Credit Union Administration) ... * WASHINGTON (3/31/09)--Starting in June, the Office of the Comptroller of the Currency (OCC) will gather more information from large banks--those that exceed $10 billion in assets--on derivatives, the agency said Friday. All commercial banks will be required to comply (American Banker March 30). The agency said it is collecting the information to get a better idea of the banks’ credit risk. Commercial banks reported a $9.2 billion trading loss for the fourth quarter of 2008, the agency said in a release. For 2008, banks reported an annual trading loss of $836 million, compared to trading revenues of $5.5 billion in 2007 ... * WASHINGTON (3/31/09)--“Healthier” banks may be the first to apply for the Treasury Department’s Public-Private Investment Program, causing it to have a rough start, financial industry observers said (American Banker March 30). The program needs to attract the participation of banks carrying bad assets on their books that prevent them from raising capital. Ken Zerbe, Morgan Stanley analyst, said most banks likely to use the program already have written down their toxic assets. Some of those banks include Marshall & Ilsley Corp., East West Bancorp. Inc. and First Horizon National Corp. Weaker institutions may not participate if they will take hard losses on their loans that affect their capital ratios, said Maclovio Pina, equity analyst with Morningstar Inc. The Federal Deposit Insurance Corp. (FDIC) said it may be open to allowing banks that have sold loans into the program to receive a stake in the funds that acquire the assets. If bankers see things are moving along, they may want to join, FDIC Chairman Sheila Bair said ...

CUNA follows up with FOIA on corporates

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WASHINGTON (3/31/09)—Following up two earlier requests for information, the Credit Union National Association (CUNA) has filed a formal Freedom of Information Act (FOIA) request with the National Credit Union Administration (NCUA) regarding its recent actions involving corporate credit unions. The FOIA request seeks information on the following:
* All records generated since Jan. 1, 2008 concerning the calculation of the estimated credit losses on mortgage and asset-backed securities announced in NCUA Letter No. 09-CU-06; * All records generated since Jan. 1, 2008 concerning the calculation of the $4.7 billion National Credit Union Share Insurance Fund (NCUSIF) liability estimate announced in NCUA Letter No. 09-CU-02, including but not limited to the assumptions used to make that calculation; * All records generated since Jan. 1, 2008 concerning the calculation of the $5.9 billion revised NCUSIF liability estimate announced in NCUA Letter No. 09-CU-06, including but not limited to the assumptions used to make that revised calculation; * The report submitted to NCUA by Pacific Investment Management Company, LLC concerning the value of mortgage and asset-backed securities held by corporate credit unions (the “PIMCO Report”); * All records generated since Jan. 1, 2008 concerning the methodology, models, and assumptions used by NCUA to value mortgage and asset-backed securities held by corporate credit unions and to determine NCUSIF’s required reserve for potential credit loss; * All records generated since Jan. 1, 2009 concerning the methodology, models, and assumptions used by PIMCO to value mortgage and asset-backed securities held by corporate credit unions and to determine NCUSIF’s required reserve for potential credit loss; * All communications since Jan. 1, 2008 between NCUA and the former or current officers and directors of U.S. Central FCU (U.S. Central) concerning the methodology, models, and/or accounting principles used to value U.S. Central’s mortgage and asset-backed securities; and * All communications since Jan. 1, 2008 between NCUA and the former or current officers and directors of Western Corporate FCU (WesCorp) concerning the methodology, models, and/or accounting principles used to value WesCorp’s mortgage and asset-backed securities.
The FOIA was filed Friday. The NCUA has 20 business days to respond, but extensions to that deadline are possible.

Reg E needs hybrid approach to opt-ins CUNA

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WASHINGTON (3/31/09)--The Credit Union National Association (CUNA) generally supports proposed changes to the Federal Reserve Board’s Regulation E that would impose restrictions on overdraft protection plans as they pertain to automated teller machine (ATM) and one-time debit card transactions. The Fed proposal will not apply for other types of transactions, such as checks, automated clearinghouse (ACH) transactions, and preauthorized electronic funds transfers. CUNA said in a comment letter that it backs efforts to provide more consumer protections for electronic funds transfers, but urged the regulator not to impose significant operational burdens on credit unions and other financial services providers. The Fed plan proposes an “opt-in” approach for overdraft plans, in which fees could not be charged unless the consumer chooses to participate in the plan. That approach, CUNA wrote, should be modified to a “hybrid” approach to avoid burdens to financial institutions, according to CUNA. Financial institutions should be allowed to use an opt-out system for existing accounts, while the opt-in alternative could be required for new accounts. “This will alleviate burdens for credit unions in making this transition, while insuring that the opt-in alternative will become more prevalent over time as new accounts are opened,” CUNA said. CUNA used the opportunity of the comment letter to reiterate its strong support of overdraft protection plans. Those plans provide a valuable service for consumers, especially for check transactions, as the overdraft fee is often equivalent to the returned-check fee and the use of the overdraft plan will avoid additional merchant fees and other adverse actions, CUNA said. CUNA also agreed with the Fed that financial institutions should not require consumers to choose overdraft services for checks, ACH, and other transactions on the condition that they elect this service for ATM and one-time debit card transactions. “However, these and other operational aspects of the rule will require significant time to implement and, therefore, credit unions will need at least one year after the proposal is finalized to implement these changes and compliance with this rule should not mandatory until that time,” the CUNA letter said.

ACCU adds voice to call for transparency

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WASHINGTON (3/31/09)--The Association of Corporate Credit Unions (ACCU) wrote recently that it is deeply concerned about the conservatorship actions the National Credit Union Administration took against two corporate credit unions and the “extreme degree of credit union capital depletion and overall system impact these actions dictate.” In a letter to NCUA Chairman Michael Fryzel, the ACCU added its voice to the call for more transparency with regard to how the agency arrived at its valuations of the securities analyzed. The information, ACCU Executive Director Brad Miller wrote, should include the average default and loss severities used in analysis so that the industry can see if the agency’s future assumptions are “reasonable and in line with the actual cash flow evidence of these securities.” “Also, we question the decision and timing to conserve U.S. Central and WesCorp given the movement on stimulus measures, the Treasury’s private-public asset purchase plan, proposed accounting rule changes, and other positive steps being taken to revive the economy that will improve the condition of corporate credit unions and the system as a whole,” Miller wrote. The NCUA announced March 20 that it had placed U.S. Central FCU, Lenexa, Kan., and Western Corporate FCU (WesCorp), San Dimas, Calif., into conservatorship. The Credit Union National Association (CUNA) and credit unions have been urging the NCUA to provide greater transparency regarding a report by Pacific Investment Management Company LLC (PIMCO) on the corporates. The PIMCO report was the basis, in part, of the NCUA's decision to place the two corporate credit unions into conservatorship. In addition to more seeking transparency, the ACCU letter also encouraged the NCUA to continue to pursue alternatives for spreading out the cost impact to credit unions. Miller wrote that his group would like to see further action to develop a mechanism that matches actual losses with insurance fund expenditures if and when they occur, instead of requiring credit unions to pre-fund projected expenditures based on security modeling assumptions that will continually change.

NCUA touts FinCENs CTR for consumers

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ALEXANDRIA, Va. (3/31/09)—A recently released Financial Crimes Enforcement Network (FinCEN) pamphlet to explain currency transaction report (CTR) requirements to consumers could be helpful to credit unions’ discussions with their members, the National Credit Union Administration (NCUA) noted recently. Bringing the FinCEN material to the attention of federal credit unions, the NCUA wrote that the educational pamphlet explains the CTR reporting requirement to members who may not be familiar with the credit union’s obligations under the Bank Secrecy Act (BSA). Federal law requires financial institutions to report currency transactions over $10,000 conducted by or on behalf of one person, and multiple currency transactions that aggregate to be more than $10,000 in one day. The federal law requiring these reports was passed to safeguard the financial industry. “This pamphlet does not alter a credit union’s BSA reporting requirements. The pamphlet explains that large currency transactions are not illegal, and that credit unions are required to obtain information from their members when conducting such transactions,” the NCUA communication said. It also noted that the pamphlet, “Notice to Customers: A CTR Reference Guide,” explains what constitutes structuring and explains that if a member attempts to structure transactions there are potential civil and criminal consequences. News Now reported the pamphlet's release March 4. There is no requirement to use the pamphlet, but credit unions may print the booklet from the FinCEN website. Use the resource link below to access the FinCEN material.