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Inside Washington (04/20/2011)

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* WASHINGTON (4/21/11)--The Department of Housing and Urban Development (HUD)on April 15 warned lenders of pending guidelines that will tighten the rules regarding when its name, initials or logo may be attached to websites and other marketing materials (American Banker April 20). The department will impose penalties and fines on lenders or third-party loan originators that seem to exaggerate their ties to HUD or make their websites or publications appear to be tied to the U.S. government … * WASHINGTON (4/21/11)--The Federal Trade Commission (FTC) this week filed contempt charges against Sam Tarad Sky, Allrepco LLC, Credit Restoration Brokers LLC and Debt Negotiations Associates LLC, alleging that deceptive promotional practices by the credit/debt relief providers violate a previous federal court order. The FTC alleges that the trio of defendants charged initialization fees for credit repair services and did not provide adequate disclosure of their debt relief services. The defendants also encouraged customers to lie about their economic situation to illegally qualify for government-provided food stamps, and charged consumers for their credit, debt relief and food stamp “products.” The FTC legal action was field on April 12 ...

NCUA tells CUs to evaluate corp. CU membership

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ALEXANDRIA, Va. (4/21/11)--The National Credit Union Administration (NCUA) has encouraged credit unions to “explore their options and understand the pros and cons to continuing with current practices” or transitioning to new corporate credit union service providers. NCUA Office of Corporate Credit Unions Director Scott Hunt added that credit unions that wish to remain or become members of a corporate should review the corporate’s capital plan and capital offering circular, and “attend informational sessions or speak with their assigned representatives to learn more about the future of the corporate.” Hunt co-signed the NCUA letter, which was addressed to Members United Bridge Corporate FCU, Southwest Bridge Corporate FCU, and Western Bridge Corporate FCU. Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn said that “because credit unions will be providing the capital corporate credit unions need to meet regulatory requirements, credit unions should weigh their options for payment, settlement and other support services very carefully. “Reviewing the capitalization plan of their current corporate credit union, once NCUA has approved the plan, is a good place to start,” Dunn added. Undercapitalized corporate credit unions earlier this year submitted their recapitalization plans to the NCUA, and those plans are currently under agency review. The NCUA’s new capitalization rules, which will, among other things, require corporates to maintain escrow accounts for accumulated capital, come into effect on Oct. 20. Corporate and bridge corporate credit unions that have submitted plans to the NCUA must share those plans with their member credit unions by May 31, and Hunt said that the agency is “expeditiously reviewing the submitted capitalization plans” in anticipation of this May deadline. Dunn said that with the NCUA’s late October deadline rapidly approaching, credit unions should “develop their plans now for how they will assess their options and decide what choices are best for them.” For the full NCUA release, use the resource link.

April 21 State of the interchange rule

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WASHINGTON (4/21/11)--Today was the original statutory deadline for the Federal Reserve's final interchange fee cap proposal, but, as the agency announced last month, the day will come and go without a final plan being unveiled. CUNA and credit unions continue to advocate for a delay of the pending Fed rule, which is still set to go into effect on July 21. CUNA is concerned that the Fed's delay of the April 21 launch date may not give credit unions and other financial institutions the time needed to evaluate and respond to a final proposal before it goes into effect. The interchange provisions could lower the maximum fee charged per debit card transaction to 12 cents. The legislation, as currently written, would exempt credit unions and other small institutions with assets of $10 billion and under from the terms of the regulations. However, there is much debate over whether this proposed exemption would work as planned. The legislation is being challenged on several fronts. One such front is the halls of Congress, where legislation that would delay implementation is pending. The bills also would order a study of the impact a debit card interchange fee cap would have on consumers, financial institutions, and merchants. In the House, Rep. Shelley Moore Capito’s (R-W.V.) H.R. 1081 has 84 cosponsors. The Senate version of interchange delay legislation (S. 575), introduced by Sen. Jon Tester (D-Mont.) and Bob Corker (R-Tenn.), has 16 co-sponsors. The effort to add additional sponsors to these two pieces of legislation has moved to legislators’ home districts this week. CUNA, state credit union leagues, and credit unions nationwide are collaborating on a grassroots "Call on Congress" campaign, and other outreach and education efforts are being made in an effort to convince Congress and the Fed to "stop, study and start" over on interchange. CUNA and the leagues' own legislative advocacy actions so far have helped credit unions generate nearly 150,000 contacts to Congress nationwide, and more contacts are expected. Interchange legislation has also been challenged in the courts, with TCF National Bank bringing its own suit against the Federal Reserve. TCF’s suit, which was filed last October, states that the government cannot write laws that would arbitrarily prevent a given business from recovering its costs sufficiently to avoid losses on its various business operations. It also alleges that portions of the Dodd-Frank Act that would require the Federal Reserve to set restrictions on debit card interchange fees are unconstitutional, and argues that the Fed's implementation plan restricts a financial institution's ability to recover costs associated with providing the debit card service. For more on CUNA's interchange delay efforts, use the resource link.

NCUA to consider corporate CU rule today

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ALEXANDRIA, Va. (4/21/11)--The National Credit Union Administration's (NCUA) is scheduled to consider a final corporate credit union rule at its meeting this morning. The agency’s chairman already noted earlier this month that staffers were "working diligently" on "potentially significant changes" to its corporate proposal. The agency has reviewed 227 comment letters on the proposal, which was published for comments in November. That plan would alter some internal control and reporting requirements. It also proposed to limit credit union membership in corporates generally to one corporate at a time. It would also set up a process under which all entities that use a corporate credit union would make a “voluntary” payment into the Corporate Stabilization Fund or face negative consequences. Credit Union National Association's (CUNA) Deputy General Counsel Mary Dunn has noted significant concerns regarding the proposal, including the provision to limit credit union membership to a single corporate credit union. Another issue involves the provision that would essentially require all entities using corporate credit unions to pay into the Corporate Stabilization Fund, a plan for which CUNA does not believe the NCUA has legal authority. The NCUA's monthly report on the status of its insurance funds will also be delivered during the meeting. Watch News Now LiveWire for live updates from the meeting, which starts at 10 a.m. (ET).