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Utah Central CU closed members now served by Chartway FCU

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ALEXANDRIA, Va. (5/2/11)—The National Credit Union Administration said it was Utah Central CU’s declining financial condition that led to its liquidation, announced Friday by the agency. The Salt Lake City, Utah credit union’s assets, liabilities and members were purchased or assumed immediately by Chartway FCU, of Virginia Beach, Va. Utah Central was established in 1940 to serve employees, directors and committee members of other credit unions in Utah. The credit union had approximately $157 million in assets when closed, and served 22,000 members. Chartway FCU is a full-service credit union and its members will have access to a broad array of financial services offered throughout the United States. With approximately $1.8 billion in assets, Chartway has branches in Arkansas, Florida, Georgia, New Jersey, North Carolina, Ohio, Rhode Island, Texas, Utah, and Virginia. It serves around 207,000 members. This is the seventh federally insured credit union liquidation in 2011.

Breach argues for interchange delay CUNA says

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WASHINGTON (5/2/11)--Days after a widespread data breach occurred, the Credit Union National Association (CUNA) noted that the Federal Reserve’s interchange fee cap regulations would give merchants a profit windfall while leaving credit unions to “cover even more of the costs of merchant data breaches." The data breach in question happened when credit card numbers and other personal information of 77 million users of Sony’s online gaming platform PlayStation Network was compromised and potentially stolen last week by hackers. Credit unions are reissuing credit and debit cards to their impacted members just in case information has been compromised, and CUNA President/CEO Bill Cheney in the letter noted that “the expense for taking this action is not reimbursed by Sony; rather, credit unions rely on interchange revenue to cover the cost of debit program administration, including in these circumstances, reacting to a merchant data breach.” The CUNA letter encouraged Sens. Jon Tester (D-Mont.) and Bob Corker (R-Tenn.) to continue to fight for an interchange delay. A Senate bill introduced by the legislators would delay implementation of the interchange legislation by two years and would order federal regulators to study the impact that the interchange changes could have on consumers, financial institutions, and others. The bill, S. 575, has 16 co-sponsors. The proposed interchange rule would lower the maximum fee charged per debit card transaction to 12 cents, or lower. The statute, as enacted, would exempt credit unions and other small institutions with assets of $10 billion and under from the terms of the regulations. The effectiveness of the proposed exemption has been hotly debated, and many analysts agree that the statutory exemption will not work as intended. Without meaningful protections in the regulation ensuring that a planned exemption for credit unions and other financial institutions with $10 billion or less in assets is workable, the Fed’s proposed rule “will affect all debit-card issuing credit unions,” Cheney wrote. “Data breaches like the one we learned about this week will only exacerbate the problem for credit unions because the proposal would not allow these costs to be taken into consideration.” For the full letter, use the resource link.

Credit gap MBL cap lift fight continue CUNA

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WASHINGTON (5/2/11)--“Increasing the member business lending cap remains a top priority, especially in light of the country's continuing need for new sources of credit for small businesses,” Credit Union National Association (CUNA) Vice President of Legislative Affairs Ryan Donovan said. Credit union lending is growing, and could grow even faster if legislation that could lift the MBL cap to 27.5% of total assets is approved by Congress. CUNA Senior Economist Mike Schenk told Northwestern University’s Medill Reports that banks continue to pull back from lending to small businesses, “but in contrast, credit union portfolios are growing fairly strongly.” H.R. 1418, which would lift the MBL cap to 27.5%, was introduced by Reps. Ed Royce (R-Calif.), Carolyn McCarthy (D-N.Y.), Russ Carnahan (D-Mo.), Hank Johnson (D-Ga.) and Gary Peters (D-Mich.). The bill had 12 cosponsors as of Friday. Similar legislation (S. 509) was introduced by Sens. Mark Udall (D-Colo.) and Olympia Snowe (R-Maine) in March. That bill had 18 cosponsors as of Friday. Schenk said that lifting the cap from the current 12.25% of total assets to 27.5% of assets “could land up to $13 billion in additional loans and 140,000 jobs throughout the nation in the first year after the cap is raised.” Schenk added that credit unions’ high quality loan portfolios put them “in a better position to lend.” The Washington Post has also noted the scarcity of funds that are currently available to small businesses, and reported last week on banks reluctance to lend to small business. For both stories, use the resource links.

CUNA to Fed Expand definitions in new TILA proposal

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WASHINGTON (5/2/11)--The Credit Union National Association (CUNA) has urged the Federal Reserve to adopt more expansive definitions of “underserved” and “rural” that include areas that have been determined to be “underserved” or “rural” by other federal agencies as the Fed implements new Truth in Lending Act (TILA) mortgage escrow account requirements. The Fed has proposed regulations that would change the requirements for when financial institutions must establish mortgage escrow accounts for higher-priced mortgage loans and also change mortgage escrow account disclosure requirements. Creditors that mainly operate in underserved and rural areas, make 100 or fewer mortgages, and do not resell those mortgages on the open market would not be subject to these proposed escrow requirements. CUNA in a Friday comment letter said that limiting the definitions of “underserved” and “rural” to only the most underserved and the most rural counties will limit access to mortgage credit in many underserved areas. Expanding the definitions of these terms to encompass National Credit Union Administration (NCUA) and other federal agency definitions of “underserved” and “rural” would help financial institutions that operate in underserved and rural areas “continue to provide needed mortgage credit to their communities without incurring additional regulatory burden,” the letter adds. CUNA did note, however, that many aspects of the proposal—including portions of the proposal that define “higher-priced” mortgages and many of the proposed disclosure requirements—are expressly required by the Dodd-Frank Act and leave the Board with limited discretion in implementing these statutory provisions. In addition to requesting several additional clarifications and technical changes, the CUNA comment letter also asked the Fed to delay compliance with the rule for a six month to one year period after the agency issues the final version of the regulation so that credit unions and their third-party vendors have sufficient time to comply with the new requirements.

Inside Washington (04/29/2011)

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* ALEXANDRIA, Va. (5/2/11)--The National Credit Union Administration has added discussion of a second supervisory matter to the agenda of its planned May 4 closed board meeting. The meeting will take place at 2 P.M. ET in Alexandria, Va. The board held a pair of closed board meetings earlier this month, with an April 5 meeting being held in San Diego, Calif. The agency's customary monthly open board meeting is still scheduled for May 19...