Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Washington Archive

Washington

Inside Washington (04/16/2010)

 Permanent link
* WASHINGTON (4/19/10)--The U.S. Securities and Exchange Commission (SEC) broke new ground Friday when it filed suit against Goldman Sachs, charging that the bank devised a mortgage investment--called Abacus 2007-AC1--that was created to fail. The SEC accused Goldman Sachs of securities fraud in a civil suit. It charges that Abacus 2007-AC1 was among a number of deals created to allow the bank and special clients to profit by betting against the housing market. (The New York Times April 16) The case represents the first time a regulator has taken action against a deal that enabled investors to cash in on the housing market collapse, a collapse that sent shock waves through much of the U.S. economy … * WASHINGTON (4/19/10)--The Government Accountability Office (GAO) is questioning regulators’ use of a systemic risk exception as a reason to create government programs to help big banks during the financial crisis. The exception could weaken market participants’ desire to properly manage risk if they rely on emergency action in the future, said GAO (American Banker April 16). Legislation that would allow the government to wind down a large financial company could solve the problem, the GAO said in a report released Thursday. The exception--which needs to be approved by the Federal Deposit Insurance Corp.--was used five times during the financial crisis ... * WASHINGTON (4/19/10)--Sen. Carl Levin (D-Mich.) released a report charging that the Office of Thrift Supervision (OTS) was more focused on blocking the Federal Deposit Insurance Corp. (FDIC) from taking over Washington Mutual than it was regulating the bank (American Banker April 19). The report argues that the agency ignored examiners’ findings about Wamu’s risk-taking. Another report from the inspectors general of the FDIC and Treasury concluded that the FDIC and OTS could have done more to help Wamu. Levin said OTS did not allow the FDIC to access documents and rebuffed the agency’s critical view of the bank’s condition. Instead, the OTS fought a “turf war,” Levin said. The FDIC is less to blame for the poor oversight, but could have acted more “vigorously,” he added...

SBA gets 80M for 7a 504 program enhancements

 Permanent link
WASHINGTON (4/19/10)--President Barack Obama signed legislation late last week authorizing $80 million “to continue enhancements” to two of the U.S. Small Business Administration’s key loan programs. The enhancements, first made available under the American Recovery and Reinvestment Act, include a higher guarantee on some SBA-backed loans and small business fee relief. In a release, the SBA estimated the $80 million will support about $2.8 billion in small business lending under its 7(a) and 504 programs. “The increased guarantees and reduced fees on SBA loans have generated more than $25 billion in new loans to small business owners and brought more than 1,200 lenders back to SBA loan programs,” SBA Administrator Karen Mills said.

CUNA FOM changes could discourage some CUs

 Permanent link
WASHINGTON (4/19/10)--In comments submitted to the National Credit Union Administration (NCUA) on April 15, the Credit Union National Association (CUNA) said that a number of credit unions are “asking whether or not” the NCUA’s proposed field-of-membership changes could “discourage credit unions from seeking community charters” or expanding their service areas. The recommendations in the comment letter were developed by CUNA’s FOM working group, which is headed by Truliant FCU CEO Marc Schaefer. The comment period for the field-of-membership rules ended last week. The NCUA's FOM proposal would set objective and quantifiable criteria to determine the existence of a well-defined local community for areas that encompass multiple group areas. A new, objective definition for rural districts has also been proposed. While CUNA “appreciates NCUA’s efforts to insulate the agency and credit unions from further legal challenges that result from the agency’s field of membership policies and procedures,” CUNA recommended that the NCUA provide more leeway for applications involving multiple political jurisdictions and rural districts. Specifically, CUNA urged the NCUA to “consider whether a statistical area definition for rural district is appropriate or necessary” and asked the NCUA to “reconsider” its proposed specific statistical criteria for multiple political jurisdictions to be considered a community. CUNA also strongly opposed FOM changes that would prevent credit unions from demonstrating a community is present through the use of narrative information, as this change would “impose a burden on the FOM charter process that the FCU Act does not require or intend and would result in fewer applications for community charters or expansions, including for areas that need credit union services.” CUNA is also concerned by new emergency merger definitions that would give NCUA additional latitude to require a credit union that is at or near 4% net worth to be merged, “regardless of whether there are other safety and soundness considerations or whether such a credit union that is not experiencing other supervisory issues wants to remain a separate entity.” CUNA in the letter spoke in support of the NCUA’s treatment of single political jurisdictions, saying that that treatment was “reasonable” and “consistent with NCUA’s authority under the Federal Credit Union Act. CUNA also backed the NCUA’s “grandfathering approach” that would allow future credit union applications “to be approved based on areas NCUA has already permitted.” “This should be allowed for rural and undeserved areas as well as for urban areas,” the letter drafted by CUNA Deputy General Counsel Mary Dunn added.

Reg reform up for Senate vote this week

 Permanent link
WASHINGTON (4/19/10)—The Senate early this week is expected to begin debate on Chris Dodd’s (D-Conn.) financial regulatory reform package, and the Credit Union National Association continues to watch for any developments that may affect credit unions and seek improvements to portions of the bill that would affect credit union business practices. Dodd’s bill, as currently written, would allow the National Credit Union Administration (NCUA) to retain its role as the independent federal safety and soundness regulator for credit unions. The legislation would also create a Bureau of Consumer Financial Protection that would establish consumer protection rules for all providers of financial services. While the BCFP’s rules would apply to all credit unions, the Bureau’s examination authority over credit unions would be limited to credit unions with more than $10 billion in total assets. CUNA has urged Dodd and the Senate to increase the $10 billion threshold or include language in the bill, similar to language in the House-passed version of this legislation, that would permit the Bureau to delegate examination of very large credit unions to the NCUA. CUNA has also held recent discussions with the Committee regarding the remittance and data collection provisions of the bill. While public statements on the bill have been fiercely partisan, it is believed that Dodd and Ranking Republican Richard Shelby (R-Ala.) continue to discuss key issues behind closed doors. When the Senate returns this week, Senators will consider a procedural motion to proceed to consider the regulatory restructuring bill. If that motion passes, debate will begin on the legislation. However, it is unclear what path the bill will take if the procedural motion fails.

New FinCEN brochure pushes BSA e-filing

 Permanent link
VIENNA, Va. (4/19/10)—The Financial Crimes Enforcement Network (FinCEN) is circulating a new brochure as part of its ongoing effort to encourage credit unions and other financial institutions to electronically file Bank Secrecy Act (BSA) reports. The new brochure, with the catchy-sounding title, “How FinCEN’s E-Filing System Can Help Your Organization,” is a two-page pamphlet that highlights such things as the benefits of e-filing over paper filing and recent enhancements FinCEN has executed for its e-filing system. The BSA, the basis of which is the 1970 law known as The Financial Recordkeeping and Reporting of Currency and Foreign Transactions Act, is actually a combination of various statutes that require credit unions and others to record, retain and report certain questionably illegal financial transactions to the federal government. BSA E-Filing, first developed in 2002, is a free, web-based system that is user-ID and password protected. Financial institutions subject to BSA reporting requirements use the system to electronically file a variety of BSA forms, either individually or in batches, through a FinCEN secure network. The following forms are currently available for BSA E-Filing:
* Currency Transaction Reports (CTRs); * Designations of Exempt Persons (DEPs); and * Suspicious Activity Reports (SARs).
Use the resource link below to acces the new brochure.

NFIP extended until May 31

 Permanent link
WASHINGTON (4/19/10)--H.R. 4851, the Continuing Extension Act of 2010, was signed into law by President Barack Obama on Thursday, and, as a result, the authorization for the National Flood Insurance Program (NFIP) has been extended until May 31. The legislation also continues federal subsidies to COBRA health insurance recipients through April 30 and extends federal unemployment insurance until May 5. NFIP is important to credit unions because the mortgages they write for properties in a floodplain are required to have flood insurance. Since flood insurance is unavailable in many parts of the country, the NFIP is an important resource to credit unions and other lenders. The NFIP, COBRA and unemployment insurance have been lapsed since March 29. The NFIP cannot issue new flood insurance policies, increase coverage on existing policies, or issue renewal policies until the Congress restores NFIP authority. The Congress is currently working on an extenders bill that would extend some tax programs and other programs through the end of the year.