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Inside Washington (04/11/2011)

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* WASHINGTON (4/12/11)--Federal Home Loan Banks and their members are asking the Federal Housing Finance Agency (FHFA) to drop a proposal that increases the requirements to be a part of the the cooperative bank system (American Banker April 11). The banks argue the plan is too limiting and would threaten the future of the Home Loan Bank System. William White, chairman and president of the $262.1 million asset Dearborn Federal Savings Bank in Michigan., said the new requirements, laid on top of changes brought about by the Dodd-Frank Act could bring the economy to a “screeching halt.” The proposal would require members to permanently hold at least 10% of their assets in mortgages, create long-term mortgage lending requirements, and stick to an explicit home financing policy. Failure to adhere to any of these requirements would end a bank's membership in the Home Loan Bank System. Currently, institutions must meet certain qualifications, such as the 10% threshold for mortgage assets, but do not have to maintain them … * WASHINGTON (4/12/11)--Proposed restrictions to the Small Business Lending Fund (SBLF) may lead some banks to forego the program. The bill, proposed by U.S. Sen. Olympia J. Snowe (R-Maine) would require banks to repay SBLF distributions within 10 years and prohibit institutions that received Troubled Asset Relief Program funds from participating (American Banker April 11). The fund would sunset after 15 years under the proposal. Snowe said she believes the program would be costly to taxpayers and encourage high-risk lending. “While I would prefer to terminate this fund altogether, it is unlikely based on the current political environment, which is why we must work to protect taxpayers from some of its most egregious provisions,” Snowe said in a press release announcing the bill. Kip Weissman, a partner at the law firm of Luse Gorman Pomerenk & Schick, said the contingencies could prevent the SBLF from meeting its objectives …

CFPB state AGs announce coordination framework

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WASHINGTON (4/12/11)--The Consumer Financial Protection Bureau (CFPB) and the Presidential Initiative Working Group of the National Association of Attorneys General (NAAG) announced a Joint Statement of Principles Monday, saying it is the first step in “forging a new partnership between federal and state officials to protect consumers of financial products and services.” Elizabeth Warren, Special Advisor to the President on CFPB, said she anticipated the cooperative agreement will have a profound effect on the consumer financial markets. She made her remarks at the NAAG Presidential Initiative Summit in Charlotte, NC. Warren’s prepared remarks to summit participants noted: “Together, we can pose a greater deterrent to unscrupulous financial services providers. We can protect more consumers, and we can ensure that more institutions follow the rules.” The joint principles were developed to advance three goals shared by the CFPB and state attorneys general to intended to ensure protections for consumers of financial products and services:
* Protect consumers of financial products or services from unlawful acts or practices; * Provide clear rules that improve the marketplace for consumers and remove unfair competition for the benefit of law-abiding businesses; and * Find ways to promote understanding and address concerns raised by consumers about financial products or services as efficiently and effectively as possible.
Use the resource link below for more details.

CFPB to launch study on TILA-RESPA form design

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WASHINGTON (4/12/11)--The U.S. Treasury Department is preparing to launch a study to see what direction its Consumer Financial Protection Bureau (CFPB) should take when it begins to design a combined form for Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) disclosures. The nascent CFPB is charged under the Dodd-Frank Wall Street Reform Act to integrate the various TILA and RESPA disclosures into a single document comprehensible by consumers. Last week the CFPB transition team published a notice in the Federal Register intended to get the go-ahead from the Office of Management and Budget to execute an information collection regarding the combined TILA-RESPA form. Based on that submission, CFPB is proposing “one-on-one cognitive interviews” with both consumers and lenders to “inform the design” of the new disclosures. The CFPB submission asks for expedited approval for the study, noting that Dodd-Frank requires a proposed rule be issued by July 21. The study needs to be initiated, therefore, by May, the request says. The Credit Union National Association (CUNA) obtained the full submission to OMB from the Treasury Department last week. CUNA Senior Assistant General Counsel Michael Edwards reviewed the submission and called it a positive step that CFPB is planning to gain the perspectives of all relevant stakeholders --lenders, brokers, as well as consumers.

From NCUA How to write a good comment letter

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ALEXANDRIA, Va. (4/12/11)--When National Credit Union Administration (NCUA) Chairman Debbie Matz assured credit unions in the agency’s monthly newsletter that the NCUA does in fact read--and sometimes heed--comments on regulatory proposals, she also shared tips on what makes a good comment letter. Matz said the NCUA’s attention to comment letters will be in evidence at its April 21 open meeting, where “potentially significant changes" will be unveiled for the agency’s proposed rule on corporate credit unions that was issued in November (News Now April 8). She said the draft changes are being based on a review of the 227 letters sent to the agency by interested parties. And, for future comment letter writing, the chairman provided four tips:
* Do Your Research: Visit to find information about each NCUA proposed rule and the deadline for comments. Use the agency website to view already submitted comment letters written by other stakeholders. * Consider Unintended Consequences: Read the preamble of each proposed rule to understand NCUA’s intent. Inform the NCUA about changes that credit unions might have to implement in order to comply with the proposal, and also about any unintended consequences the proposal might generate. * State Your Position Clearly: While a credit union might support or oppose some proposals in their entireties, letter writers are also encouraged to go on record when they support certain provisions and oppose others. * Suggest Alternatives: When opposing a proposed rule in whole or in part, let the agency know why. Matz says the most effective comment letters propose reasonable alternatives. “I assure you: NCUA is open-minded about workable solutions consistent with sound public policy,” she assured.
Matz described the federal rulemaking process as one that seeks to strike “the fairest possible balance” between requirements of applicable law, the agency’s mission to protect safety and soundness, and its effort to minimize any adverse impact on credit unions. “We look forward to reading your comment letters!” Matz concluded in her newsletter column. The Texas Credit Union League has arranged with Matz to appear in a Web video offering of the letter-writing guidance. It’s part of the league’s training initiative intended to increase the number of comment letters written from credit unions to regulators--and recognition that writing comment letters can be intimidating for some credit union leaders. Texas league members can access the video using the link below.

CU grassroots push on interchange needed in recess

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WASHINGTON (4/12/11)--Credit union and credit union member grassroots action on interchange is critically important during an upcoming two-week District Work Session for the House and Senate, the Credit Union National Association (CUNA) reminded Monday. CUNA has announced a National Credit Union Briefing on Interchange, which will be held on Wednesday, April 13, to update credit unions on the latest developments on the interchange issue. It also will provide guidance on how to mobilize credit union members on the issue. The 30-minute teleconference is scheduled for 3 p.m. (ET). Federal lawmakers’ attention last week and this has been all but usurped by federal budget issues--and the threat and resolution of a possible government shutdown. The House returns to session today and is expected this week to consider, among other things, a continuing resolution to fund the government for the remainder of the fiscal year. On Thursday and Friday, the House will consider the budget resolution for fiscal year 2012 and various alternative budget proposals. The Senate will then take up the long-term continuing resolution that the House is expected to pass. Additional action on the small business bill, which has been on the Senate floor for several weeks, is also possible. All this budget work has left little room for work on other issues--including measures of key interest to credit unions, such as pending bills that would delay the looming July deadline for the Federal Reserve to issue a rule to cap debit card interchange fees. CUNA Senior Vice President of Political Affairs Richard Gose said Monday that credit unions and their members have executed a total of 85,000 grassroots contacts on interchange since CUNA launched its action alert last month. He said it is critical that the level of effort continue, and that credit unions contact lawmakers on the issue while they are in their home districts beginning the week of April 18. (Use the resource link below to access CUNA Action Alert.) Also of interest this week in Congress:
* The Senate Banking Committee has scheduled a hearing for today on “Building the New Derivatives Regulatory Framework: Oversight of Title VII of the Dodd-Frank Act." Also today, the committee is expected to consider the nominations of Katharine Abraham to be a member of the Council of Economic Advisers; Carl Shapiro to be a member of the Council of Economic Advisers; and Eric Hirschhorn to be undersecretary of commerce for export administration; * On Wednesday, the House Ways and Means committee will conduct a hearing on “How the Tax Code’s burdens on Individuals and Families Demonstrate the Need for Comprehensive Tax Reform”; and * On Thursday’s calendar, the House Financial Services Committee has noted a hearing on “Oversight of the Financial Stability Oversight Council.” The panel’s subcommittee on capital markets and government-sponsored enterprises has scheduled a hearing on “Understanding the Implications and Consequences of the Proposed Rule on Risk Retention.”