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CUNA urges Fed on zero reserves

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WASHINGTON (4/2/08)--The Credit Union National Association (CUNA) took the opportunity of a comment letter to the Federal Reserve Board on its Regulation D proposal to urge that agency to reduce reserve requirements to zero. The Fed’s proposed amendments to Regulation D, which governs reserve requirements of depository institutions, include two substantive changes as well as certain clarifications. They do not address the Fed’s statutory authority, beginning in 2011, to reduce reserve requirements on transaction accounts to zero. However, CUNA pushed the agency to begin now to work with the financial institution sector to transition to zero reserve requirements as soon as possible. The Fed was granted that authority under the Financial Services Regulatory Relief Act of 2006. That law achieved “a very positive outcome given the fact that Regulation D reserves are not important for monetary policy purposes,” wrote Assistant General Counsel Lilly Thomas in CUNA’s letter. Regarding the Fed’s Reg D plan, CUNA made the following observations:
* The Fed should provide additional clarification that, when more than one partial early withdrawal is made from a time deposit account and an additional penalty is not charged, the deposits could still be classified as a savings deposit not subject to reserve requirements: * Amendments to the definition of savings deposit would make the withdrawal limitations less confusing for consumers and would facilitate the broader use of developing electronic payment technologies: and * The Fed should additionally specify in its definition of savings deposit that permitting no more than six “convenient” withdrawals per month would not subject the account to reserve requirements.
Regarding CUNA’s comments on withdrawal limitations, the letter noted that change would make the transfer and withdrawal limitations on savings accounts somewhat easier to understand and less confusing for consumers, as well as less burdensome for financial institutions. “Credit unions have responded to ongoing member inquiries regarding the inability to complete certain transfers or withdrawals. “A simpler ‘six withdrawals per month’ rule for all types of transfers and withdrawals would enable credit unions to clarify the limits set on their members’ savings accounts,” CUNA said. For more a detailed view of the letter, use the resource link below.

Congressman apprehensive about Treasurys CU plan

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WASHINGTON (4/2/08)—U.S. Rep. Paul Kanjorski (D-Pa.) raised strong concerns this week about the U.S. Treasury Department’s long-term plan to consolidate regulation of credit unions with other financial institutions. “There is a need to put credit unions on a level playing field with other financial institutions in areas like capital standards and business lending,” said Kanjorski, who chairs the House Financial Services Capital Markets, Insurance, and Government Sponsored Enterprises Subcommittee. “But it should not come at the expense of eliminating the current regulatory system, which has worked well and serves the financial needs of more than 90 million Americans.” Kanjorski was responding to the Treasury’s financial regulatory overhaul announced this week, which would consolidate federal credit unions, national banks and federal thrifts into a single "federally insured depository institution" charter. Treasury’s long-term recommendations ultimately would phase out the National Credit Union Administration and place banks and credit unions under one regulator's oversight. “We must preserve and protect the unique cooperative nature of the American credit union system,” said Kanjorski, who is sponsor of two credit union bills now pending before the House of Representatives—the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537) and the Credit Union Regulatory Relief Act of 2008 (CURRA, H.R. 5519). Kanjorski did express support for some of Treasury’s proposals, including the creation of a federal insurance regulator and an optional federal charter for insurers, which he said would “respond to the global competitive pressures of the insurance marketplace.” The congressman also welcomed a proposed commission to establish uniform minimum licensing qualification standards for mortgage originators. Use the links below to review Treasury's Regulatory Blueprint and access related stories.

Inside Washington (04/01/2008)

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* WASHINGTON (4/2/08)--Senate Majority Leader Harry Reid (D-Nev.) plans to move ahead with a foreclosure bill after he and Sen. Mitch McConnell (R-Ky.) Tuesday mitigated a Republican filibuster threat that stalled Reid’s bill in the Senate in February (Associated Press April 1). Reid’s plan would provide $200 million for housing counselors to help families facing foreclosure, raise mortgage bond revenue caps, require improved disclosures, and allow Community Development Block Grants to be applied to foreclosed properties (News Now Feb. 29). The plan also includes language modeled from Senate Majority Whip Richard Durbin’s (D-Ill.) bill, which would allow bankruptcy judges to forgive mortgage debts. In a conference call Tuesday, Sen. Christopher Dodd (D-Conn.) said he would continue pushing a plan he developed with House Financial Services Committee Chairman Barney Frank (D-Mass.) that would widen the powers of the Federal Housing Administration (American Banker April 1). Sen. Hillary Clinton (D-N.Y.) last week supported Dodd and Frank’s legislation ... * WASHINGTON (4/2/08)--The Federal Reserve Board will finish changing the infrastructure of check-processing centers in early 2010 instead of 2011. The Fed released a revised schedule Monday. Philadelphia, Cleveland, Atlanta and Dallas will serve as regional sites. Other sites will be scaled down. “The transition in consumer and business preferences from paper checks to electronic payments is moving at a very brisk pace,” said Gary Stern, chairman of the Reserve Banks’ Financial Services Policy Committee and president of the Federal Reserve Bank of Minneapolis. The revision “also supports our business strategy to use the authority provided by Check 21 to collect more checks electronically, reducing the reliance on the physical transportation of checks," he added ... * WASHINGTON (4/2/08)--The Securities and Exchange Commission (SEC) sent a letter last week to public companies regarding the deployment of SFAS 157, a new fair value accounting standard. The letter identifies disclosure issues companies should consider when preparing Management’s Discussion and Analysis for quarterly reports on Form 10-Q ...

Nationwide press report plans impact on CUs members

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WASHINGTON (4/2/08)--When Credit Union National Association (CUNA) President/CEO Dan Mica asserted to U.S. Treasury Secretary Henry Paulson on Monday that Treasury’s reform plan would harm credit unions and more than 90 million Americans, the media were taking notes. Monday and Tuesday’s overwhelming press coverage amplified the trade association’s objections to the plan and seemingly reinforced the point that credit unions look out for the interests of average Americans. The Wall Street Journal yesterday recounted Mica’s exchange with Paulson in the Treasury’s historic Cash Room. The New York Times reported Mica was “astonished and angered” by the plan, which he said would “add up to more choices for Wall Street and less for consumers--and turn credit unions into banks.” In an interview with the PBS Television’s Nightly Business Report, the CUNA leader said placing credit unions under a bank regulator “would be a lot like putting the chickens under the guardianship of the fox.” An Associated Press story noted CUNA’s objection to Treasury’s plan, which Mica said would “abolish a separate federal regulator for credit unions” and "essentially turn credit unions into banks." That story was published by nearly 100 outlets, including The Boston Globe, Forbes, and the Philadelphia Inquirer. Other national and Capitol Hill media covering Mica's comments included The Washington Post, Politico and Congress Daily. Mica is scheduled to appear live on Bloomberg Television today between 2:15 and 2:45 p.m. ET to discuss the Treasury’s Blueprint for Regulatory Reform. The broadcast is expected to originate from the Senate Russell Office Building Rotunda, and can be streamed live via the Internet.