Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Washington Archive

Washington

Inside Washington (04/30/2008)

 Permanent link
* WASHINGTON (5/1/08)--Financial institutions will be able to file notices, applications, and other materials to the Federal Reserve Board through an electronic system expected to be in place by the year’s end (American Banker April 30). The system is voluntary and would be available in the second quarter of 2008, with 20 participants. The Fed expects the system to be finalized during the fourth quarter and could be implemented next year ... * WASHINGTON (5/1/08)--The Federal Reserve Board’s efforts to curb abusive and deceptive credit card practices are not enough to protect consumers, Democrats said Tuesday. Sen. Robert Menendez (D-N.J.) and Rep. Carolyn Maloney (D-N.Y.) both issued statements on their websites reacting to the Fed’s proposed rules to curb double-cycle billing and universal default. “We can’t wait to act,” Maloney said in her statement. “It’s nice that the Fed has finally decided that something needs to be done,” but “by the time the Fed gets around to finalizing these credit card proposals, they will likely be watered down and come too little too late for consumers who need relief now,” she said. Maloney is the creator of the Credit Cardholders’ Bill of Rights. Menendez, who authored the Credit Card Reform Act, expressed his frustrations that federal regulators “never seem to be ahead of the curve and instead wait until the verge of a crisis or the onset of a crisis to take action.” The Fed plans to release its credit card proposal Friday ... * WASHINGTON (5/1/08)--Economic stimulus payments directly deposited into Individual Retirement Accounts (IRAs) and other tax-favored accounts may be withdrawn tax- and penalty-free, the Internal Revenue Service announced yesterday. The relief aims to help taxpayers who may not have known that by choosing direct deposit for their regular tax refund, they also were choosing to have their stimulus payment direct deposited. To qualify, funds must be taken out by April 15 ...

Dodd adds bill to credit card mix

 Permanent link
WASHINGTON (5/1/08)—Senate Banking Committee Chairman Christopher Dodd (D-Conn.) introduced broad credit card reforms Wednesday, just days before the Federal Reserve Board is expected to address abusive practices and consumer protections through regulation. Dodd’s bill would ban practices such as universal default, double-cycle billing, and charging interest on fees. It would also require card issuers to apply cardholder payments to balances with higher interest rates first and to give a 45-days notice prior to any rate increases. The bill also attempts to address consumer complaints regarding the proliferation of card solicitations many young people receive just after their eighteenth birthday, a marketing practice that some claim could threaten to lead young consumers into dangerous levels of debt. The bill would, for instance, limit prescreened offers of credit to young consumers under the age of 21. It would also require issuers soliciting to those under 21 to obtain an application that contains: the signature of a parent, guardian, or other individual who will take responsibility for the debt; proof that the applicant has an independent means of repaying any credit extended; or proof that the applicant has completed a certified financial literacy course. The bill also intends to strengthen credit card industry regulation and supervision by:
* Requiring banking regulators to evaluate the policies and procedures of card issuers to ensure compliance with card requirements and prohibitions; *Improving data collection related to rates, fees, and profits; and * Provides each federal financial regulator with the authority to prescribe regulations governing unfair or deceptive practices by banks and savings and loan institutions.
In related news, the Fed, along with the Office of Thrift Supervision, is expected to issue a proposal Friday that would define unfair and deceptive card practices. (American Banker April 30). The joint plan is expected to address many of the same issues as the Dodd bill, including prohibiting card companies from increasing interest rates on existing debt for reasons unrelated to the cardholder's behavior on that account. On the House side, Rep. Carolyn Maloney (D-N.Y.), who chairs the House Financial Services subcommittee on financial institutions, introduced a package of credit card reforms in February called the Credit Cardholder's Bill of Rights (H.R. 5244). The bill was introduced with 40 co-sponsors and also is intended to curb abusive credit card practices, such as some interest-rate increases and late fees. It features 45-day notice requirement for consumers before an interest rate could be executed. Cardholders would then have the right to cancel their card and pay off their existing balance at the existing rate and repayment schedule. H.R. 5244 would also prohibit the practice, known as "double-cycle billing," in which card companies charge interest on payments made on time during a grace period. It would also ban arbitrary changes in the credit card contract.

CUs need Hill action to help ease credit crunch

 Permanent link
WASHINGTON (5/1/08)—A Credit Union National Association (CUNA) witness testifying Wednesday on the effect of the credit crunch on small business access to capital said credit unions stand ready to support small businesses with more capital, but Congress needs to remove arbitrary legislative barriers. CUNA
Click to view larger imageCarl Sorgatz, president of Hawthorne CU, Naperville, Ill. and testifying on behalf of CUNA, urges lawmakers to remove barriers preventing credit unions from being of even greater help during the country's current credit crunch. (CUNA photo)
witness Carl Sorgatz,

testifying before a House Small Business subcommittee, said that despite the apparent “credit crunch” with respect to small business and other lending, the chief obstacle for credit union business lending is not the availability of capital. “Credit unions are in general very well capitalized. Rather, the chief obstacle for credit unions is the arbitrary statutory lending limits imposed by Congress in 1998 and the burdens associated with many of the SBA (Small Business Administration) lending programs,” he told the subcommittee on finance and tax. Sorgatz is president of Hawthorne CU, Naperville, Ill. The CUNA witness acknowledged that federal lawmakers “hear a lot of rhetoric surrounding credit union member business lending.” He then went on to provide accurate information regarding credit union member business lending (MBL) activity. He noted:
* Credit union MBLs are relatively small loans; in 2007, the average credit union MBL originated was $180,710; * Nationally, credit union business lending represents less than one percent of the depository institution business lending market; credit unions have about $28 billion in outstanding business loans, compared to $3.1 trillion for banking institutions; and * In general, credit unions do not finance skyscrapers or sports arenas; they make loans to credit union members who own and operate small businesses.
Under current law, credit unions are restricted from member business lending in excess of 12.25% of their total assets. “This arbitrary cap has no basis in either actual credit union business lending or safety and soundness considerations,” said Sorgatz. He noted a subsequent report by the U.S. Treasury Department, which found that business lending credit unions were more regulated than other financial institutions, and that delinquencies and charge-offs for credit union business loans were “much lower” than that for either banks or thrift institutions. “This cap is overly restrictive and undermines public policy to support America’s small businesses. It severely restricts the ability of credit unions to provide loans to small businesses at a time when small businesses are finding it increasingly difficult to obtain credit from other types of financial institutions, especially larger banks,” he added. Sorgatz urged the panel members to support legislation with provisions that would restore more MBL authority for credit unions, including:
* The Credit Union Regulatory Improvements Act (H.R. 1537), which would increase the current MBL limit from 12.25% to 20% of total assets, and permit the National Credit Union Administration to increase the threshold for defining a MBL from $50,000 to $100,000; * The Credit Union Regulatory Relief Act (H.R. 5519), which contains several provisions that would permit credit unions to make more small business loans available, although it does not address the overall cap; and * The Credit Union Small Business Lending Act (H.R. 1849), which recognizes the need to enhance credit union business lending through SBA programs.
The CUNA witness also reiterated CUNA’s strong support of SBA’s 7(a) loan program, which provides America’s 26 million small business owners with the capital and technical assistance needed to start and expand their businesses. Sorgatz reminded the House subpanel that several important factors, including the statutory MBL cap and SBA policies that, until 2003, limited credit union eligibility to participate in the 7(a) program, have discouraged many credit unions from participating. Other witnesses at the Wednesday hearing included representatives from the National Association of Home Builders, the Independent Community Bankers Association, and the U.S. Women’s Chamber of Commerce.

Changes needed to Home Valuation Code

 Permanent link
WASHINGTON (5/1/08)—The Credit Union National Association (CUNA) is seeking changes to a proposal by Fannie Mae and Freddie Mac to implement the New Home Valuation Protection Code (Code), new standards designed to ensure independent and reliable appraisals. In March, the Office of Federal Housing Enterprise Oversight (OFHEO), the New York Attorney General, Fannie Mae, and Freddie Mac entered into agreements that require Fannie and Freddie to buy loans only from financial institutions that meet the new standards set out by the code. However, in an April 30 comment letter, CUNA opposed a requirement that financial institutions establish and maintain a telephone hotline and email address to receive complaints regarding possible improper influencing of the appraisal process. CUNA wrote that this provision is duplicative of similar requirements that will be imposed on the Independent Valuation Protection Institute (Institute), an entity that would be funded by both Freddie Mac and Fannie Mae. CUNA also recommended that Freddie and Fannie should delay the effective date of the Code so that it applies to loans originated after January 1, 2010 The implementation issues surrounding the new CODE, CUNA said, as well as other provisions, such as a requirement to perform quality tests of a randomly selected percentage of appraisals, will require new procedures and additional staff training which will take time to address. Use the resource link below to read the complete CUNA comment letter.

House passes CUNA-backed financial literacy statement

 Permanent link
WASHINGTON (5/1/08)—The House late Tuesday passed a resolution in support of the goals of Financial Literacy Month, a resolution backed by the Credit Union National Association (CUNA). Earlier this month, CUNA submitted a statement for the record of a House hearing urging approval of the resolution touting the ideal of Financial Literacy Month. In the statement, CUNA noted that credit unions have traditionally made financial education a part of their mission, providing financial information and training to members on a one-to-one basis. Along with noting the important financial literacy initiatives supported by credit unions, CUNA noted: "For credit unions, financial literacy is not just something we do in April – financial education is a service we provide our members each day of the year."

CUNA opposes government meddling with interchange fees

 Permanent link
WASHINGTON (5/1/08)—The Credit Union National Association (CUNA) this week warned federal lawmakers that government regulation of credit card interchange fees would be a bane to consumers by reducing their payment options. CUNA also noted that government interference with the fees, as proposed by H.R. 5546, the Credit Card Fair Fee Act, could dampen both competition among card companies and technological innovation. The House bill proposes to establish governmental tribunal that would be authorized to “make determinations of access rates and terms calculated to most closely represent the rates and terms that would be negotiated in a hypothetical perfectly competitive marketplace for access to an electronic payment system between a willing buyer with no market power and a willing seller with no market power.” CUNA said that such a tribunal would be costly and would serve to impose government decisions on a system that is more appropriately governed by the market. “Government-imposed price controls on interchange fees are more likely to increase credit and debit cards costs that consumers bear. The uncertainty surrounding this legislation makes it unlikely that consumers will see any benefit,” CUNA said in a letter that went to each House member. H.R. 5546 is currently pending action before the House Judiciary Committee and is expected to be vetted through the hearing process in mid-May.

Leagues voice concerns about NCUA outreach plan

 Permanent link
ALEXANDRIA, Va. (5/1/08)--State credit union league representatives this week raised objections with National Credit Union Administration (NCUA) Chairman JoAnn Johnson over key provisions in the agency's Outreach Task Force Report and the recent Advance Notice of Proposed Rulemaking (ANPR) on corporate governance issues. "We raised a number of concerns about the report, particularly as they relate to the recommendations to report senior executive compensation information to members, which AACUL and the Credit Union National Association (CUNA) strongly oppose," said AACUL Chairman Roshara Holub. Holub is president/CEO of the Missouri Credit Union Association. New York State Credit Union League President/CEO William Mellin and Kentucky Credit Union League President/CEO Wendell Lyons also participated in the Monday meeting at NCUA headquarters in Alexandria, Va. Among the group’s concerns:
* The agency’s use of information it collects on membership profiles, services and compensation; * The report’s timing and potential implementation during a period of economic distress; * The agency's ability to protect information it collects; and * Virtually no abuses within the credit union system exist related to compensation.
Regarding the ANPR, the group emphasized that new regulations are not needed at this time but would be willing to discuss guidance on a few key issues, such as the definition of credit union officials' "fiduciary duties." The comment period on the ANPR closes today. "We have coordinated closely with CUNA on the report and ANPR will continue to do so going forward," said Holub. "We believe that Chairman Johnson in good faith will fully consider our concerns." CUNA Deputy General Counsel Mary Dunn also attended the meeting. Along with Chairman Johnson, Director of Public and Congressional Affairs John McKechnie, Deputy Director Larry Fazio and Special Assistant to the Chairman Peter Barrett also participated. Use the resource link below for more information.

Treasury launches plan for unbanked

 Permanent link
WASHINGTON (4/30/08)—The U.S. Treasury Department Tuesday launched an initiative to improve financial education efforts and increase access to credit union and bank accounts for Americans “currently outside of the financial mainstream.” The Community Financial Access Pilot will provide low- and moderate-income people in selected communities with needed access to financial services. The initiative was recommended by the President's Advisory Council on Financial Literacy. "Through this pilot, Treasury will work with banks, credit unions, community leaders, and educational providers to target the nearly 10% of American households estimated to fall outside the financial mainstream," said Dan Iannicola, Jr., Treasury deputy assistant secretary for financial education. Iannicola announced the initiative in Jacksonville, Fla., one of eight communities participating in the new pilot program. The other participating communities include Brownsville, Texas; Cowlitz County, Wash.; Eastern Kentucky; Mississippi Delta, Miss.; Fresno, Calif.; Philadelphia, Pa.; and St. Louis, Mo. "Having a bank account is a critical part of being able to participate in our vibrant economic system," said Charles Schwab, chairman of the President's Advisory Council on Financial Literacy. "This pilot will target the low-income families who need access to basic financial services, so they can stop paying outrageous fees just to cash a check or pay a bill. It will also give low-income families access to basic financial education so that they can begin to build a better future." The number of families using alternative financial service providers is estimated to be as high as 50 million, according to Treasury. The Credit Union National Association (CUNA), leagues and credit unions also support financial literacy efforts for all Americans. CUNA earlier this week announced new features to its financial literacy clearinghouse: cunapfi.org. The clearinghouse provides information for anyone in the credit union movement looking for statistics, methods, and materials to improve the ability of members and potential members to manage their money wisely using credit union services. Among the most recent additions to cunapfi.org:
* Evidence and ideology in assessing the effectiveness of financial literacy education. (Research analysis from Lauren E. Willis, University of Pennsylvania Law School.); * A look at the financial state of Gen X and Gen Y." (A new study from the American Savings Education Council and AARP.) * A 2008 parents and money survey.(The views, behavior, and knowledge of spending, saving, borrowing, and earning money of American teenagers between the ages of 13-18, as seen through the eyes of their parents, from the Charles Schwab Corp.) * "Here's your chance to tell the government what to do;" an online soapbox for comments for the President's Advisory Council on Financial Literacy—requires free registration/login. * Federal Deposit Insurance Corp. statement on financial literacy and education. (Congressional testimony from the FDIC's Robert W. Mooney.)
"We hope that financial literacy advocates throughout the credit union movement will use cunapfi.org as a jumping-off point for their efforts to help people of all ages and economic means make better use of their income and build wealth," Mark Condon, senior vice president of CUNA's Research & Advisory Services, said recently.

CUNA Thursday Webinar Economics issues for CUs

 Permanent link
WASHINGTON (4/30/08)—The Credit Union National Association (CUNA) is offering a May 1 webinar on current economic issues facing credit unions. CUNA senior economists, along with National Credit Union Administration (NCUA) board member Gigi Hyland and NCUA Director of the Office of Examination and Insurance Dave Marquis, will address the current downturn in the U.S. economy and its impact on credit unions from a regulatory compliance standpoint. The Webinar will address such areas as:
* Forecasted economic growth rate for 2008 and 2009; * The profile of the average current consumer; * Effects the current economy is having on credit unions ; and * Suggested responses credit unions should take.
Participants will have an opportunity to ask questions and raise concerns with the panelists. Use the resource link below for more information or to register for the session.

Fights not over for CU relief

 Permanent link
WASHINGTON (4/30/08)—The Credit Union National Association (CUNA) said Tuesday that the fight on Capitol Hill for credit unions and their members will continue, despite banker attempts to derail the Credit Union Regulatory Relief Act (CURRA, H.R. 5519) this week. "This is not over. We will continue to push for passage of CURRA,” CUNA President/CEO Dan Mica said Tuesday. CUNA’s lobbying team was on Capitol Hill early Tuesday morning after learning that a much-anticipated action on CURRA was pulled from the day’s House voting schedule. CURRA's noncontroversial status changed when the bankers disregarded House leadership wishes and objected to the credit union bill. House leaders had planned to pair the credit union measure with a regulatory relief bill for banks. “From our perspective, the bankers thumbed their noses at House and committee leadership by violating an agreement for each of our industries to get relatively modest regulatory relief legislation now and work on broader elements later,” Mica said, adding that he had talked to the bill’s key sponsors, Reps. Paul Kanjorski (D-Penn.) and Ed Royce (R-Calif.). “They are determined to bring CURRA back to the House floor for a vote as soon as possible either on suspension or under regular order,” Mica said. He noted that in coming days, CUNA will be holding private discussions with the two congressmen, as well as with Chairman Barney Frank (D-Mass.) of the House Financial Services Committee, to assess strategy and options. Mica also said that had the bankers stuck by the agreement and not interfered with credit union legislation, the bill likely would have been approved easily in the House. “By our whip count, we had at least 80% of the House with us yesterday had a vote been allowed to proceed. So we feel we go into these discussions in a strong position," Mica told credit unions. CURRA proposes, among other things, to permit federal credit unions to add service to underserved areas regardless of original field of membership. It would also omit member business loans to underserved areas from counting toward the current cap. CUNA and the leagues support CURRA, but emphasize that credit unions need additional regulatory relief measures that are included in the provisions of the broader credit union bill, the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537). CURIA would address the overall member business lending cap and approve a risk-based capital system for credit unions.

Inside Washington (04/29/2008)

 Permanent link
* WASHINGTON (4/30/08)--A Federal Reserve Board proposal, expected to be released Friday, would protect credit cardholders with existing debt from having their interest rates raised for any reason other than a default on the account, the Fed said this week (American Banker April 29). Credit card companies are fighting the plan, saying they would have to raise fees to regain revenue. Scott Talbott, Financial Services Roundtable lobbyist, said the plan would eliminate credit or make it more costly. The plan also could spark higher interest rates and annual fees, said Ken Clayton, director of the American Bankers Association’s Card Policy Council ... * WASHINGTON (4/30/08)--The Federal Reserve Board plans to hold a meeting today to discuss the interest rates on reserves that the Fed financial institutions to deposit. The Financial Services Regulatory Relief Act, passed in 2006, contained a provision that allows but does not require the Fed to pay financial institutions interest on the reserves. When the act was passed, the provision was identified by the Credit Union National Association as one of several that affected credit unions the most (News Now Oct. 9, 2006) ... * WASHINGTON (4/30/08)--Some taxpayers saw their economic stimulus payments deposited into their accounts as early as yesterday, the Internal Revenue Service stated in a release. The payments, $600 for individuals and $1,200 for married couples, will be distributed this spring and throughout the summer. Those who chose to receive their tax refunds via direct deposit will receive their stimulus payments faster. The payment schedule is determined by the last two digits of an individual’s Social Security number ... * ARVADA, Colo. (4/30/08)--The Credit Union Association of Colorado (CUAC) has endorsed Jeff Crank as a Republican candidate for Congress in the Fifth Congressional District. The endorsement was announced at a CUAC event in Colorado Springs. Crank also was endorsed by CUAC in 2006 ...

Groundbreaking for second Home for veterans

 Permanent link
WASHINGTON (4/29/08)—April began and ended with groundbreaking ceremonies marking the launch of homes for wounded veterans of the Iraq war, in which the Credit Union National Association (CUNA) and state credit union representatives participated. The effort is part of the "Homes for Our Troops" initiative and a project of both the Democratic National Convention Committee (DNCC) ,in Denver, Co., and the Republican National Convention (RNC), in St. Paul, Minn. The National Journal is also a program partner. The plan is to provide specially adapted homes for two severely wounded members of the American armed forces and their families under the auspices of the non-partisan non-profit group, Home for Our Troops. CUNA and league representatives were on hand Monday to start a home for Sgt. Marcus Kuboy. Kuboy was injured in an explosion while patrolling the outskirts of Fallujah. The completed home will be presented to Kuboy in September during the RNC meeting to name the Republican candidate for the 2008b presidential election. Earlier this month, the partner groups started the home that is to presented to wounded Iraq war veteran SSG Travis Strong and family around the 2008 DNCC. Sgt Strong lost both legs as a result of a rocket-propelled grenade attack on his Stryker vehicle.

Sorgatz to testify on CU business lending

 Permanent link
WASHINGTON (4/29/08)—Carl Sorgatz, president/CEO of Hawthorne CU, Naperville, Ill., is scheduled to testify on behalf of the Credit Union National Association (CUNA) Wednesday on “The Effect of the Credit Crunch on Small Business Access to Capital." Sorgatz is expected to review for the House Small Business Committee the important role credit unions play through member business loans in stimulating the expansion of small businesses in their communities. Sorgatz also will likely outline the beneficial effect that has generally on the U.S. economy. The hearing is a second in a series being held by Chairman Nydia Velasquez’s (D-N.Y.) small business panel.

Inside Washington (04/28/2008)

 Permanent link
* WASHINGTON (4/29/09)--From left, CUNA Communication Specialist Marta Trinkl; Paula Moreno, marketing manager, U.S. Senate FCU; and Greta Brown, member service officer, also with Senate FCU share a booth during Financial Literacy Day on Capitol Hill. The event was spearheaded by the Jumpstart Coalition for Financial Literacy and was held to educate members of Congress and their staff about the financial literacy efforts of the participating government, nonprofit and corporate organizations. CUNA also partners with National Endowment for Financial Education to provide free financial education materials to high schools and is a member of the Jumpstart board... * WASHINGTON (4/29/08)--The Financial Crimes Enforcement Network (FinCEN) and the Office of the Comptroller of the Currency (OCC) announced that they have fined the New York Branch of United Bank for Africa $15 million each for violating the Bank Secrecy Act (BSA). The branch has agreed to pay $15 million of the total amount without admitting or denying the violation. The OCC issued the branch a cease-and-desist order in January 2007. During a November 2007 examination, the agency found that the branch failed to comply with the order’s term, so a second cease-and-desist order was issued Feb. 29 ... * WASHINGTON (4/29/08)--Mortgage lenders are fighting against rules proposed by the Federal Reserve Board to curb lending abuses and prevent more problems in the housing market (The New York Times April 28). Some industry representatives complain the rules would be expensive because they could create more paperwork and make lenders more susceptible to lawsuits. During a comment period this month, the Fed received more than 5,000 comments from lenders who said the rules could be problematic for loans unaffected by the housing crisis. The Mortgage Bankers Association, Community Bankers of America and the American Bankers Association also have criticized the plan. Smaller financial institutions that did not contribute to the mortgage mess have encouraged the Fed to limit the rules to prevent a chilling effect, and Fed Gov. Randall Kroszner said in a speech that the Fed is considering narrowing the scope ... * WASHINGTON (4/29/08)--The Federal Reserve is scheduled Friday to release a proposal that defines unfair and deceptive credit card practices (American Banker April 28). The Fed also is working on Regulation Z revisions for credit card disclosure practices, and a second Regulation Z proposal that coordinates with the deceptive practices proposal could be released ...

House wont vote today on CU bill

 Permanent link
WASHINGTON (4/29/08)—The Credit Union National Association’s (CUNA) lobbying team will be on Capitol Hill early Tuesday morning to focus on next steps after learning that a much anticipated Credit Union Regulatory Relief Act (CURRA, H.R. 5519) was pulled from Tuesday’s House voting schedule. Reasons for the House leadership decision to pull the bill were not yet clear, according to CUNA President/CEO Dan Mica. However, he pointed out that the suspension calendar is reserved for noncontroversial measures. CURRA's noncontroversial status changed when the bankers disregarded House leadership wishes and objected to the credit union bill. House leaders had planned to pair the credit union measure with a regulatory relief bill for banks. CUNA and the leagues late Friday and Monday urgently requested that credit unions contact their members of Congress in advance of the expected House vote. “The bankers will sacrifice their own regulatory relief measure simply to ensure credit unions get absolutely nothing from Congress,” said Mica. “This behavior ultimately squeezes working Americans, who now more than ever should benefit from affordable financial services provided by credit unions.” CURRA proposes, among other things, to permit federal credit unions to add service to underserved areas regardless of original field of membership. It would also omit member business loans to underserved areas from counting toward the current cap. However, only the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537) would address the overall MBL cap and approve a risk-based capital system for credit unions. “We will do our utmost to get CURRA back on the House schedule under regular order, if at all possible,” said Mica. The CUNA leader thanked state leagues and credit unions for their tremendous grassroots efforts in recent days. “Our preliminary reports indicated we would have had a solid victory if this had come to a vote,” he added.

Compliance Check out new foreign payments rule

 Permanent link
WASHINGTON (4/28/08)—Credit unions are reminded that NACHA wants all financial institutions to begin studying a new ACH international payments rule scheduled to become effective March 20 of next year. It requires these payments be identified as “international ACH Transactions” using a new Standard Entry Class Code: IAT. “NACHA urges all institutions to familiarize themselves with the new rule and begin assessing its impact on operations well in advance of the mandatory compliance date next fall,” the Credit Union National Association (CUNA) compliance staff points out in the April Compliance Challenge. The rule is intended to help institutions comply with the Office of Foreign Assets Control (OFAC) regulations by enabling them to easily identify all international payments flowing through the ACH network, and all parties involved in these transactions. Among other things, the new rule will require that IAT payments include specific data elements, now mandatory for wire transfers under the Bank Secrecy Act’s “Travel Rule.” These are:
* Originator name, address, account number; * Originator’s depository institution name, and payment amount; and * Receiver name, address, account number, and 4. the receivers financial institution.
Use the resource links below for detailed information on the new rule available on the NACHA website and for more compliance gems from CUNA.

June 24 set for NCUA FOIA rule comments

 Permanent link
WASHINGTON (4/28/08)—Credit unions have until June 24 to comment on a recent National Credit Union Administration (NCUA) proposal to streamline its system for complying with freedom of information and privacy laws. The proposed changes were largely prompted by recent amendments to the Freedom of Information Act (FOIA) addressing several procedural issues concerning fee practices, time limits for complying with requests, and new reporting requirements. The NCUA’s own revision plan embraces both housekeeping changes and other more substantive ones:
* Regarding FOIA, the NCUA would amend regulations to identify more precisely the agency's Information Centers and addresses, and describe required content for request letters; * On the privacy issue, the agency proposal would abolish present language that permits persons to submit telephone requests because of difficulties in enforcing the regulation's identification requirements.
The proposal was approved for comment at an NCUA April 17 open board meeting. At that time the agency indicated that contemplated housekeeping changes in the privacy area include correcting cross-references, grammar and punctuation; a change in nomenclature and additional definitions to improve understanding of rights and requirements, and more exact definitions for "system manager" and "working day." The NCUA also said the proposed language on privacy would clarify that requests must be submitted in writing to the appropriate system manager or to other staff as specified. For more on the agency plan, use the resource link below.

NEW House set to vote Tuesday on CURRA

 Permanent link
WASHINGTON (2/25/08, UPDATED 9:00 a.m. ET)--The House has scheduled a vote next Tuesday on the Credit Union Regulatory Relief Act (CURRA), H.R. 5519. The measure is expected to be paired with a regulatory relief bill for banks. CURRA was introduced in March by Reps. Paul Kanjorski (D-Pa.) and Ed Royce (R-Calif.) The CURRA bill would offer regulatory relief in 12 areas, though does not go as far as the Credit Union Regulatory Improvements Act (CURIA), H.R. 1537. CURRA does propose to permit federal credit unions to add service to underserved areas regardless of original field of membership. It does not contain language to increase the credit union member business lending ceiling or transform prompt corrective action into a more risk-based system. It would, however, omit MBLs to underserved areas from counting toward the current cap. “We will continue to work for CURIA longer term, but we will also seize this opportunity to gain some meaningful regulatory relief for credit unions in the near term with House passage of CURRA,” said John Magill, CUNA senior vice president-legislative affairs. The CURRA bill is expected to come up on the House suspension calendar, a procedure designed to expedite passage by allowing for a voice vote with no amendments or a two-thirds favorable recorded vote. The CURRA bill would:
* Permit the purchase of investment grade securities by federal credit unions; * Permit federal credit unions offer payday loan alternatives to nonmembers in their fields of membership; * Increase the investment limit in credit union service organizations; * Exclude from the member business lending cap any loans to nonprofit religious organizations; * Allow the National Credit Union Administration (NCUA) to establish longer maturities for certain credit union loans; * Give the NCUA greater flexibility in responding to market conditions; * Permit, under certain circumstances, a federal credit union converting to a community charter to continue to serve groups outside the community; * Enable credit union participation in the Small Business Administration's 504 programs; * Permit federal credit unions to provide for short-term payday loan alternatives for nonmembers within a the credit union’s field of membership; * Permit a federal credit union to expel a member for cause, and to institute term limits for board members if it so chooses; * Encourage small business development in underserved urban and rural communities by providing for the exclusion of member business loans made in underserved areas from the business lending cap; and * Provide an exemption from pre-merger notification of the Clayton Act.

House set for CURRA vote tomorrow

 Permanent link
WASHINGTON (4/28/08)—The House is scheduled to take up the Credit Union Regulatory Relief Act (CURRA), H.R. 5519 for a vote tomorrow. The measure is expected to be paired with a regulatory relief bill for banks. CURRA was introduced in March by Reps. Paul Kanjorski (D-PA) and Ed Royce (R-CA) The CURRA bill would offer regulatory relief in 12 areas, though does not go as far as the Credit Union Regulatory Improvements Act (CURIA), H.R. 1537. The Credit Union National Association (CUNA) and the leagues ask credit unions to voice their support of the CURRA package to their federal lawmakers before it comes to the House Floor for a suspension vote. (See related story, CUNA, leagues urges grassroots action on CURRA.) John Magill, CUNA senior vice president of legislative affairs, said Friday, “We hope Congress will hear from a significant number of credit unions before they cast their votes.” CURRA does propose to permit federal credit unions to add service to underserved areas regardless of original field of membership. It does not contain language to increase the credit union member business lending ceiling or transform prompt corrective action into a more risk-based system. It would, however, omit MBLs to underserved areas from counting toward the current cap. "We will continue to work for CURIA longer term, but we will also seize this opportunity to gain some meaningful regulatory relief for credit unions in the near term with House passage of CURRA," said John Magill, CUNA senior vice president-legislative affairs. The CURRA bill is expected to come up on the House suspension calendar, a procedure designed to expedite passage by allowing for a voice vote with no amendments or a two-thirds favorable recorded vote. The CURRA bill would:
* Permit the purchase of investment grade securities by federal credit unions; Permit federal credit unions offer payday loan alternatives to nonmembers in their fields of membership; * Increase the investment limit in credit union service organizations; * Exclude from the member business lending cap any loans to nonprofit religious organizations; * Allow the National Credit Union Administration (NCUA) to establish longer maturities for certain credit union loans; * Give the NCUA greater flexibility in responding to market conditions; Permit, under certain circumstances, a federal credit union converting to a community charter to continue to serve groups outside the community; *Enable credit union participation in the Small Business Administration's 504 programs; Permit federal credit unions to provide for short-term payday loan alternatives for nonmembers within a the credit union's field of membership; *Permit a federal credit union to expel a member for cause, and to institute term limits for board members if it so chooses; * Encourage small business development in underserved urban and rural communities by providing for the exclusion of member business loans made in underserved areas from the business lending cap; and * Provide an exemption from pre-merger notification of the Clayton Act.

Immediate CU grassroots action urged for CURRA

 Permanent link
WASHINGTON (4/28/08)—On the cusp of an important House vote on credit union regulatory relief legislation, the Credit Union National Association (CUNA) and the leagues are urging credit unions to push back banker opposition and help clear the way for H.R. 5519, the Credit Union Regulatory Relief Act (CURRA). The House is scheduled to consider the bill Tuesday (see related story : House set for CURRA vote tomorrow) and the credit union groups urged their members to contact House lawmakers in support of CURRA. “Unfortunately, the bill is facing opposition by the American Bankers Association and other anti-credit union interests. We need your help to secure CURRA’s passage in the House of Representatives,” CUNA and the leagues said in their Friday Action Alert. It added: “The bankers have declared that credit unions can have nothing, not now or ever. We need this win to show them otherwise! “ Credit unions were asked to call or email Congress immediately with the following messages:
* H.R. 5519 should be non-controversial – most of the provisions of bill have already passed the House in 2004 and 2006. The only new provisions within CURRA are targeted to allow credit unions to serve underserved people and areas and were very recently discussed at a hearing before the House Financial Services Committee on March 6. * This is the first major piece of credit union specific legislation to be considered in the House of Representatives since 1998. * CURRA would help credit unions serve people and areas that do not have access to mainstream financial service providers. This is common sense. It is part of the core mission of credit unions to serve consumers, but only multiple group credit unions are eligible to serve the underserved under current law. CURRA makes all federally chartered credit unions eligible to serve the underserved areas. * VOTE YES on H.R. 5519. This is important legislation that will help credit unions serve their members well in the 21st century.
CUNA and the leagues support CURRA, but emphasize that credit unions need additional regulatory relief that are included the provisions in the broader credit union bill, the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537). Use the resource links below for more information.

CUNA Tips on third-party due diligence

 Permanent link
WASHINGTON (4/28/08)—The Credit Union National Association (CUNA) is offering a May 13 audio conference to help credit unions with issues surrounding one of federal examiners’ key 2008 priorities--due diligence requirements for third party vendor relationships. The National Credit Union Administration (NCUA) has noted it will direct examiners to look at credit union efforts to assess, monitor, and manage risks associated with outsourced services at all stages of the relationship. The “Due Diligence With Third Party Vendors – Getting It Right” audio conference is intended to help credit unions with oversight and the adoption of careful monitoring and reporting practices. It will examine the requirements and offers solutions and approaches from practitioners that are working for credit unions. CUNA recently created a new task force to help credit unions meet their due diligence responsibilities with third-party vendors and to do so without unnecessary duplication of effort. Also upcoming, credit union professionals will be able to get answers to their pressing compliance questions during a May 29 “Pressing CU Compliance Issues” audio conferences. The second audio session will address some of the most popular hot-topic compliance issues, as determined by comments received from credit unions. Participants may help build the agenda by e-mailing their questions to cucomply@cuna.coop before the conference. Use the resource link below for more information or to register.

Inside Washington (04/25/2008)

 Permanent link
* WASHINGTON (4/28/08)--The Office of the Comptroller of the Currency (OCC) has settled with Wachovia Bank, the agency announced Friday. The bank will make restitution to consumers harmed by its relationships with several telemarketers and third-party payment processors. The estimated maximum amount of potential claims is $125 million. Wachovia also will pay $8.9 million to consumer education programs for the elderly and a $10 million civil money penalty to the U.S. Treasury. Friday’s settlement was reached when the OCC concluded that Wachovia engaged in unsafe practices with payment processors and telemarketers that affected thousands of consumers, many of whom were elderly. Wachovia profited from the activities because it collected fees and balances maintained at the bank by the processors and telemarketers. The OCC also has updated its guidance for national banks regarding the need for effective due diligence, underwriting and monitoring of entities ... * WASHINGTON (4/28/08)--Lenders need to come up with a solution to fix the housing market, Treasury Secretary Henry Paulson said Wednesday during a private meeting with lenders and servicers (American Banker April 25). Congress is working to create a plan to help borrowers nearing foreclosure, but the legislative process is slow, Paulson said. It’s also hard to know how many lenders have been successful with loan modifications, he added. Attendees of Paulson’s meeting were: Robert Steel, Treasury undersecretary of domestic finance, and executives representing Citigroup, Washington Mutual, JPMorgan Chase and Co., Bank of America, Ocwen Financial Corp., Wells Fargo, Indymac Bancorp and Residential Capital ...

CUNA to NCUA No new regulatory burdens

 Permanent link
WASHINGTON (4/25/08)—The Credit Union National Association (CUNA) said it does not support any new regulations suggested by a National Credit Union Administration (NCUA) on credit union corporate governance issues. The NCUA has requested comments on whether new regulations are needed on a range of issues such as mergers, conversions, private insurance and related topics. "This is one of the most significant comment letters CUNA will file this year," said CUNA Deputy General Counsel Mary Dunn. "Comments are not due until April 30 and we encouraged leagues and credit unions to weigh in with NCUA to oppose new regulations as we have done." In January, the NCUA approved an advanced noticed of proposed rulemaking (ANPR) with proposals to amend its rules to more clearly define a credit union board's fiduciary duties in the face of major decisions, such as mergers or conversions to mutual thrifts. In an April 18 comment letter to the agency, CUNA said it feels “very strongly” that credit unions need more regulatory relief, not additional constraints and that agency action on mergers and conversions is unwarranted at this time. CUNA said the proposals would “needlessly intrude in the operations of credit union boards.” Instead, CUNA recommended the NCUA consider “carefully crafted and circumscribed guidance on a very limited number of issues,” such as communications with the members of a target credit union in a “hostile” takeover situation. “We urge NCUA to work with CUNA and the credit union system in the development of such guidelines,” the letter said, adding that CUNA would also like a role in future discussions on whether an appropriate standard could be developed on the scope of fiduciary duties of federal credit union board members. The CUNA letter acknowledged efforts by the NCUA to provide some regulatory relief through its annual review of its regulations and initiatives, and urged the regulator to also review how the examination process could be improved. “Federally insured credit unions are feeling besieged under the regulatory encumbrances they face daily,” CUNA wrote. While not all of the burden is the result of NCUA-driven regulations—Bank Secrecy Act requirements play a huge role—CUNA noted that the NCUA has, in fact, adopted or proposed a number of initiatives in recent months. “Further, credit unions across the country are increasingly raising concern about over-zealous examiners on a number of issues.” CUNA also warned that BSA compliance and negative examiner responses to reasonable efforts to assist members with mortgage workout plans are among the escalating concerns of credit unions. For the complete CUNA comment letter, use the resource link below.

New Hampshire CU exec gets Presidents award

 Permanent link
ALEXANDRIA, Va. (4/25/08)--Gordon Simmons, president/CEO of Service CU, Portsmouth, N.H., received the President’s Volunteer Service Award from National Credit Union Administration Chairman JoAnn Johnson this week. The award was presented to Simmons during Johnson’s remarks to the 36th Annual Defense Credit Union Council’s (DCUC) Overseas Subcouncil Meeting in Edinburgh, Scotland. Johnson also used the forum to commend credit unions for dedicated service to the nation’s military personnel and their families, and highlighted their efforts to enhance financial literacy. Those efforts, the chairman said, help prevent predatory lending. In that framework, Johnson recognized the volunteer efforts of Simmons, particularly those targeted at improving financial literacy among military personnel and students. “Whether it's by the development and leadership of the ‘CU Reality Fair’ through his service as chairman of the board of America’s CU Museum, which provides young consumers with financial education tools and resources to make better choices for the rest of their lives, to his tireless devotion to national financial education initiatives that foster better decisions on the part of military servicemembers, Gordon sets a daily example for credit union leaders across the country,” Johnson said. Service CU has more than 108,000 members and serves the residents of New Hampshire and Massachusetts as well as U.S. military personnel and their families around the world. In 2003, President George W. Bush created the President's Volunteer Service Award Program to thank and honor Americans who, by their demonstrated commitment and example, inspire others to engage in volunteer service.

Inside Washington (04/24/2008)

 Permanent link
* WASHINGTON (4/25/08)--Despite a White House veto threat, the House Financial Services Committee continues to work on the markup of a mortgage relief bill that would refinance new guarantees up to $300 billion for subprime loans (CongressDaily PM April 24). Under the bill, lenders would write down mortgages so borrowers could afford them. The lender would then be compensated by a Federal Housing Administration (FHA) loan, without exposing the borrower to any more credit. The markup will continue next week. The bill is expected to be on the House floor during the first full week of May, according to Credit Union National Association Senior Legislative Representative John Hildreth ... * WASHINGTON (4/25/08)--Mainstream capital markets and community development financial institutions (CDFIs) should work together to improve community development loan offerings, Federal Reserve Board Gov. Randall Kroszner said Monday(Market News International April 25). Information about loan products should be improved, and risk and pricing models should be developed. Contracts also should be standardized, he added. CDFIs will have to locate new funding because of tight budgets--but the Community Reinvestment Fund could help, as it has helped create a market for community loans ... * WASHINGTON (4/25/08)--The Office of the Comptroller of the Currency (OCC) published a final rule yesterday to reduce unnecessary regulatory burden, and revise and update various OCC regulations. The rule includes measures that update and revise the qualifying standards and after-the-fact notice procedures that apply to national bank operating subsidiaries. It also expands the list of operating subsidiary activities that are permissible upon filing an after-the-fact notice ...

With 149 co-sponsors CUNA urges CURIA advocacy

 Permanent link
WASHINGTON (4/25/08)—Rep. Todd Akin, a Republican from Missouri, signed on this week as the 149th official supporter of the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537). Aiken has stood in the corner of credit unions before, perhaps most notably during the 2005 House Ways and Means hearing on the tax-exempt status of credit unions. Aiken wrote to then-Chairman Bill Thomas (R-Calif.): “Taxing credit unions would be a tax on consumers.” He said additional taxes would put the existence of many credit unions “in severe jeopardy,” which in turn would harm “families and consumers” depending on them for financial services. Ryan Donovan, vice president of legislative affairs for the Credit Union National Association (CUNA), Thursday welcomed the addition of Akin’s name to the CURIA co-sponsor list and urged credit unions to continue and increase their work to garner lawmakers’ support for both CURIA and the Credit Union Regulatory Relief Act (CURRA, H.R. 5519). Donovan said it is a critical time for both pieces of legislation with Congress more than halfway through its longest in-session period for the year. "Credit union advocacy for regulatory improvements has to remain constant and at a high level until we accomplish the changes that are necessary to better serve credit union members," Donovan said. “There is no silver bullet—no magic number of co-sponsors—that will ease credit union regulatory improvements into existence. It is an important fight, but a tough fight, and credit unions must keep up their contacts with lawmakers at this critical juncture,” Donovan said. Among changes proposed by CURIA:
* Clarify the 1998 Credit Union Membership Access Act to allow all credit unions, regardless of charter type, to serve those in underserved areas. The bill would also update the definition of an underserved area, incorporating definitions from the Community Development Financial Institutions Act and the New Markets Tax Credit; * Increase the current cap on loans to members for business purposes (MBLs) from 12.25% to 20% of assets, allowing credit unions to assist more members start and expand small businesses and to promote economic growth. The bill would also exempt loans under $100,000 and those to nonprofit religious organizations from the MBL calculation; Establish additional consumer safeguards in the event of a credit union conversion to another form of financial institution; and * Reform the National Credit Union Administration's original prompt corrective action system to a risk-based approach more closely resembling the current Federal Deposit Insurance Corp. capital standard for banks.
CURRA is a more narrowly drafted bill, which features three significant provisions that would: allow all federal credit unions to apply to serve underserved areas, exempt member business loans made in underserved areas, and permit federal credit unions to offer payday loans to non-members within their field of membership. CUNA supports the more recently introduced CURRA, but emphasizes that credit unions need additional regulatory relief that includes the provisions in the broader CURIA bill.

CUNA thanks Rep. Clarke for pro-CU comments

 Permanent link
WASHINGTON (4/24/08)—Credit Union National Association (CUNA) President/CEO Dan Mica Wednesday thanked Rep. Yvette Clarke (D-N.Y.) for her strong statement of broad praise of credit unions submitted for the April 22 Congressional Record. Clarke, a credit union member herself, made her statement to “recognize the importance of credit unions” to their communities. “I am a true believer that people should help people," which, Clarke said, is the mission of credit unions. "Members know that during the economic downturn that we are currently facing right now, credit unions will always be there to serve their members to the best of their ability,” Clarke said. Clarke noted that as the nation suffers through the current mortgage crisis, credit unions have displayed an “outstanding record of service to both minority and low- to moderate-income mortgage applicants and have a long history of responsible mortgage lending.” “What is impressive to me…is that in 2006, credit unions approved an overwhelming 71% of applications from low- to moderate-income mortgage applicants,” she added. Clarke also lauded credit unions for their generally higher interest rates on deposits and lower interest rates charged for loans and other services than those charged by banks. “(C)redit unions are extremely vital to my hometown, New York City. Credit unions serve more New Yorkers living in low-income and underserved areas that are continually being abandoned by big corporate banks,” Clarke said. She also called lawmakers’ attention to the following figure: She said that more than one-third of credit union CEOs nationwide are women. In a letter to Clarke, CUNA’s leader noted credit unions’ appreciation of the congresswoman’s remarks for the official record of Congress. He commended her for her understanding of the credit union difference. “Credit unions do indeed seek to fill the vacuum created in many communities as banks and other types of financial institutions leave to serve more lucrative markets. The credit union movement was founded to serve people who had little or no access to mainstream financial services.” Mica wrote. He also noted that House Financial Services Committee Chairman Barney Frank (D-Mass.) made similar favorable comments about the responsible mortgage lending practices adhered to by credit unions.

Mass. CU-bank merger plan needs revote

 Permanent link
WASHINGTON (4/24/08)—Members of Northeast Community CU, Haverhill, Mass., will have to recast their votes regarding their credit union’s plan to merge into Haverhill (Mass.) Bank, according ot Mary Dunn, deputy general counsel of the Credit Union National Association (CUNA). Dunn said the National Credit Union Administration (NCUA) last week deferred a decision on the merger until a membership vote is taken which meets the requirements of the agency’s rules for converting a credit union to a mutual savings bank. The decision, in effect, negates a 77-1 membership vote cast last September in which Northeast Community members approved the move. Sixty-seven depositors at Haverhill Bank had voted unanimously the week before to approve the bank's proposed merger. In 2006, the NCUA unanimously approved a new rule governing conversions from credit union to mutual savings bank charter form, The rule was intended, in part, to make it clear that the agency supports and encourages communications to members and between members. The final rule revised disclosure and voting procedures, as well as procedures to facilitate communications among members and for members to provide their comments to directors before their credit union board votes on a conversion plan. It also specifically requires directors adopting a conversion proposal to determine that the conversion is in the best interest of the members. It mandates that directors sign a document certifying that they have fulfilled their fiduciary duty to members in their pursuit of a conversion proposal. Also under the rule, boxed disclosures to members prior to a vote must clarify:
* Specifically what a "yes" vote or a "no" vote means in terms of the wording on the ballots; and * The effect of a conversion on the credit union member in terms of the loss of beneficial savings and loan rates and charges for services when average credit union products and services are compared with those of other financial institutions.
If the merger is ultimately approved, the resulting bank would have combined assets of roughly $260 million, deposits totaling $220 million and capital totaling $30 million. It would have the second-largest market share in Haverhill. David Cotney, COO of the Massachusetts Division of Banking, confirmed Wednesday that the merger application is still pending action by the state regulator. He added that his agency does not comment on matters pending action. Haverhill Bank CEO Thomas Faulkner was unavailable for comment Wednesday. The NCUA declined to comment.

Inside Washington (04/23/2008)

 Permanent link
* WASHINGTON (4/24/08)--The number of borrowers helped by loan modifications has increased, but the number of delinquent loans also has increased, causing the modifications to fall short, the State Foreclosure Prevention Working Group said Tuesday. The group issued “Analysis of Subprime Mortgage Servicing Performance”, which was based on data collected from servicers October 2007 through January. Major findings: Seven out of 10 delinquent borrowers do not have alternatives to foreclosure, and two-thirds of all efforts to identify alternatives to foreclosure are not completed in the month after they are started ... * WASHINGTON (4/24/08)--The Internal Revenue Service (IRS) is reminding retirees, disabled veterans and others who do not normally file a tax return that there is still time to submit a 2007 form to receive an economic stimulus payment. People must file by Oct. 15 to receive a payment ... * WASHINGTON (4/24/08)--Taxpayers who have filed their returns can use the Internal Revenue Service’s “Where’s My Refund?” online tool to check the status of their refunds. Taxpayers will need their Social Security number, filing status and exact refund amount ... * WASHINGTON (4/24/08)--The Internal Revenue Service launched a campaign to help educate new self-employed small-business owners about federal tax responsibilities. The campaign coincides with the Small Business Administration’s annual Small Business Week, which ends Friday. The campaign will provide a new Schedule C, Profit or Loss from Business, filers with improved and updated educational materials, small business workshops and other outreach events. Schedule C is filed by sole proprietors as an attachment to their 1040 individual income tax form ...

FinCen plans to simplify CTR exemptions

 Permanent link
WASHINGTON (4/24/08)--The Financial Crimes Enforcement Network (FinCEN) Wednesday announced a plan intended to simplify current requirements for credit unions and other depository institutions to exempt their eligible customers from currency transaction reporting. CTRs are mandated by the Bank Secrecy Act, are required of credit unions, banks and thrifts each time more than $10,000 in cash comes into or moves out of the financial institution, but there are exceptions. For instance, current rules allow financial institutions to exempt large transactions made by other depository institutions, government agencies, and public companies that are listed on a major exchange referenced in the FinCEN rule. However, to qualify for the exemption, the financial institution must file and renew annually an exemption form. Under some of the proposed changes, depository institutions would:
* No longer be required to file exemption forms for, or to annually review, customers that are depository institutions, government agencies, or entities acting with governmental authority; * No longer be required to biennially renew a designation of exempt person filing for otherwise eligible Phase II customers; * No longer be required to wait 12 months before designating otherwise eligible Phase II customers for exemption. Instead, depository institutions would be able to institute a risk-based approach to determine how much time to maintain an account before an initial Phase II exemption could be provided to the customer. FinCEN is considering an alternative proposal which would set a length of time to consider Phase II entities, but reduce it to two months; and * Require institutions to notify FinCEN when a customer's exempt status has been revoked.
According to the document FinCEN has submitted for publication in the Federal Register, much of its proposal is based on recommendations from a Government Accountability Office report released in February. GAO requested input from CUNA prior to releasing its recommendations. That report concluded CTRs were useful to law enforcement agencies and should not be significantly curtailed, which backs up what FinCEN has argued. However, the report also said changes to the exemption system could help lighten the burden faced by credit unions, banks and thrifts responsible for filing the information.

SBA extends date for SOP changes

 Permanent link
WASHINGTON (4/24/08)—Credit union participants in U.S. Small Business Administration (SBA) guaranteed loan programs should note a 45-day effective date extension for the agency’s revised Standard Operating Procedure form for lender and development company loan programs, said Jeff Bloch, senior assistant general counsel of the Credit Union National Association (CUNA). The revised document, SOP 50 10, incorporates substantial structural changes, according to the SBA, but only limited policy changes or clarifications. The revisions resulted in a 600-page cut in the original 1,000-page text. The new SOP was made available to the public on March 20 to permit lenders and certified development companies (CDCs) an opportunity to become familiar with and implement the revised document. The SBA said staff from the its offices of general counsel and financial assistance met with lenders and CDCs in sessions across the country to discuss clarifications and changes to the SOP and to hear concerns. The result of those meeting, the agency said, was technical changes to the SOP that should be made before the SOP takes effect and the agency is extending the effective date from May 1 to June 15. The provisions under SOP 50 10(5) will apply to all applications received by SBA on or after the June 15effective date. Interested parties can e-mail questions or comments to SOP50-10Modernization@sba.gov. Use the resource link below to access the revised SOP.

CUNA applauds lawmakers Fin. Lit. commitment

 Permanent link
WASHINGTON (4/23/08)—Dan Mica, president/CEO of the Credit Union National Association (CUNA), applauded Reps. Rubén Hinojosa (D-Texas) and Judy Biggert (R-Ill.) for introducing a resolution endorsing the goals of April’s Financial Literacy Month. Mica cited CUNA’s youth celebration this week as one example of the credit union movement’s commitment to providing financial education to young people. "CUNA believes in the importance of financial literacy for all Americans and thanks Reps. Hinojosa and Biggert for their leadership in introducing H. Res. 1079,” Mica said in a statement. “Credit unions have traditionally made financial education a part of their mission, providing financial information and training to all members, and young people in particular. And during Financial Literacy Month, credit unions will demonstrate our commitment to educating youth as we hold National Credit Union Youth Week from April 20-26, 2008,” he added. Through the week’s National Youth Saving Challenge, participating credit unions will work to motivate children, teenagers, and their parents to become more active users of credit union services. This year, 517 credit unions from 49 states and the District of Columbia have registered to participate in the saving challenge. Their combined goal is to have more than 83,000 youths deposit $7.6 million in their accounts during the weeklong celebration. Recent experience suggests that they may do better than they expect. In 2007, for example, credit unions registered the Saving Challenge goal of $7.9 million and by the end of the week had reported youth deposits totaling more than $10.1 million. “Given the uncertainty in today’s financial markets, the subprime lending crisis and other economic factors, financial literacy is more important than ever for all Americans,” Mica concluded. “A knowledge of personal financial management, including savings, investment, and debt, is essential to ensuring that individuals are empowered to make informed decisions about their finances. Financial literacy is vital to the well-being of American families and the overall economic health and prosperity of our nation.” The Hinojosa-Biggert resolution, which carries 41 additional co-sponsors, urges President George W. Bush to officially proclaim endorsement of activities that teach people money management skills.

NCUA opines on third party other issues

 Permanent link
ALEXANDRIA, Va. (4/23/08)—The National Credit Union Administration (NCUA) Tuesday released three legal opinion letters: one addresses third-party relationships, another clarifies that a federal credit union cannot pay for its CUSO’s employees’ benefits, and the last spells out that credit unions meet the definition for “depository institutions.” The letter clarifying earlier information on third-party arrangements specifies that a credit union’s in-house counsel may perform the legal review recommended by the NCUA for a credit union’s third-party arrangements and contracts. The answer is intended to eliminate any confusion that could have been caused by the agency’s December 2007 Letter to Credit Unions, “Evaluating Third Party Relationships,” No. 07-13 (07-CU-13). That guidance included a discussion of due diligence considerations for third-party relationships and, among other recommendations, suggested credit unions have “qualified external legal counsel review prospective third-party arrangements and contracts.” In the new NCUA General Counsel Opinion 08-0218, the agency states, “We have consulted with NCUA’s Office of Examination and Insurance and have confirmed that the reference to external legal counsel was intended to recommend that legal counsel reviewing these relationships should be independent of the third party. “The guidance, by referring to ‘external’ counsel, was not intended to suggest that in-house counsel should not perform the recommended legal review.” Regarding benefits for CUSO employees, NCUA’s Legal Opinion No. 08-0218 said that a federal credit union may obtain and administer benefits to the employees of a CUSO that is wholly-owned or majority-owned by the FCU, but only the CUSO may pay for them. However, the letter notes, a joint arrangement is subject to certain conditions. For instance, it must be “accomplished in a manner that will not affect the legal separateness of the FCU and CUSO, preserving the corporate veil; the CUSO pays in advance for its share of the cost of the benefits attributable to its employees or reimburses the FCU within a reasonable time after the fact; and the CUSO complies with state insurance and other applicable law.” The final legal opinion letter made public by the agency, No. 08-0232, declares that a section of Federal Reserve Act includes in the definition of “depository institution” any insured credit union as defined in section 101 of the Federal Credit Union Act. That, the letter says, includes all federal credit unions and state-chartered credit unions insured by NCUA, or any credit union which is eligible to apply to become an insured credit union under section 201 of the FCU Act. 12 U.S.C. 461(b)(1)(A)(iv), 12 U.S.C. 1752(7), 12 U.S.C. 1781.

Inside Washington (04/22/2008)

 Permanent link
* WASHINGTON (4/23/08)--The ranking Republican member of the House Financial Services Committee, Rep. Spencer Bachus of Alabama, has introduced what he referred to as Republican legislation to address the recent instability in the housing market. It is co-sponsored by two other GOP members of that committee, Reps. Shelley Moore Capito of West Virginia and Judy Biggert of Illinois, and a list of other Republican House members. The goal of the bill, according to its sponsors, is to complement current public and private efforts to help struggling homeowners who face foreclosures on their homes. It intends to protect homebuyers from predatory lending practices and prevent future problems, and safeguard the interests of taxpayers from losses in federally insured programs … * WASHINGTON (4/23/08)--The President's Advisory Council on Financial Literacy will convene its second meeting on Monday, May 5. The teleconference meeting will be open to the public. Those interested in listening to the meeting should call 202-622-5770 or e-mail FinancialLiteracyCouncil@do.treas.gov to obtain the conference call number. The public is also invited to submit written statements with the advisory council. The same email address may be used to submit electronic statements. Paper statements in triplicate may be sent to President's Advisory Council on Financial Literacy, Office of Financial Education, Room 1332, Department of the Treasury, 1500 Pennsylvania Avenue, N.W., Washington, D.C. 20220… * WASHINGTON (4/23/08)--The Federal Reserve Board could release two proposals next week designed to curb abusive credit card practices. The proposals will likely be open for 60 days’ comment (American Banker April 22). The Fed also could propose a change to Regulation Z to align it with the new credit card practices proposal. The Fed plans to focus on universal default and double-cycle billing, said Sandra Braunstein, director of consumer and community affairs, in testimony last week ... * WASHINGTON (4/23/08)--The Senate Banking Committee is scheduled to vote on two financial services bills May 6 (American Banker April 22). One bill, by Chairman Christopher Dodd (D-Conn.), will focus on helping borrowers who can’t pay their bills with financing through a less expensive loan backed by the Federal Housing Administration. The other bill involves government sponsored enterprise reform. A discussion draft on the bill is not yet available ... * WASHINGTON (4/23/08)--The Office of Federal Housing Enterprise Oversight (OFHEO) issued guidance regarding fair value yesterday. The guidance outlines standards for OFHEO examiners to apply when overseeing and evaluating the use of the fair value option already adopted by Fannie Mae and Freddie Mac. It sets forth OFHEO’s expectations for practices that will: promote sound risk management and controls, support the integrity of regulatory capital measure and foster transparent and consistent financial reports by the government-sponsored enterprises ... * WASHINGTON (4/23/08)--Sen. Christopher Dodd (D-Conn.) said in a release Monday he plans to introduce a bill that would ensure students and parents can qualify for Federal PLUS loans even if they have had trouble making their mortgage payments. The loans are available to help students and parents pay college tuition. Borrowers can qualify for the loans regardless of financial need, but are ineligible if they have been delinquent on a mortgage payment for 90 days or have gone through a foreclosure within the last five years. The bill would prevent borrowers from being disqualified from the loan based on their mortgage situation. Dodd is being joined by Sens. Edward Kennedy (D-Mass.), Hillary Clinton (D-N.Y.), Sherrod Brown (D-Ohio), Bernard Sanders (I-Vt.) and Patty Murray (D-Wash). ...

Lawmakers urge halt to Internet Gambling rulemaking

 Permanent link
WASHINGTON (4/23/08)—Some congressional heavy hitters urged the Federal Reserve Board and U.S. Treasury Department to set aside their endless and toilsome efforts to implement the Unlawful Internet Gambling Enforcement Act (UIGEA). House Financial Services Committee Chairman Barney Frank (D-Mass), and three other of the panel’s members, sent an April 21 letter to Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke regarding what they termed “the unworkable regulations” of UIGEA. Treasury and the Fed are charged by the law to issue rules to implement its provisions. The letter noted an April 2 House Financial Services subcommittee hearing on the internet gambling law, at which representatives from both the implementing agencies, as well as financial services industry, testified. Through that hearing “the Federal Reserve, the Treasury and the industry made clear that regulations from the UIGEA are vague, confusing, burdensome, and generally unworkable,” the letter said. The hearing resulted in the introduction of a bill, H.R. 5767, which would prohibit the implementation of UIGEA regulations. The bill is sponsored by Frank and Rep. Ron Paul (R-Texas), who is also a House Financial Services Committee member. “The regulations, like the underlying legislation, fail to define the term ‘unlawful internet gambling,’ leaving it to each financial institution to reconcile conflicting state and federal laws, court decisions and inconsistent Department of Justice interpretations, when determining whether to process a transaction. “Furthermore, some of the information needed to make this determination would likely be unavailable to banks, because customers or financial institutions in foreign jurisdictions will likely be unwilling or unable to provide it,” the letter noted. It went on to say that given the implementation difficulties, other national priorities that demand the agency’s attention, such as the mortgage crisis, and the pending legislation that would prohibit implementation of the law, “(W)e believe it would be imprudent for you to devote additional agency resources to this Sisyphean task.” Sisyphus is the sinner in Greek mythology condemned to the endless toil of rolling a boulder uphill then watching it roll back down again--for eternity. The letter was signed by Frank, Rep. Luis Gutierrez (D-Ill.), who heads the House subcommittee on domestic and international monetary policy, Paul, who is ranking member of that subcommittee, and Rep. Peter King (R-N.Y.), who is former chairman of the House Homeland Security Committee. The Credit Union National Association (CUNA) was among the witnesses at the UIGEA hearing. CUNA board member Harriet May, CEO of GECU, El Paso, Texas,, testified on the compliance burden for credit unions that would be associated with UIGEA. She urged the subcommittee to halt current efforts to implement the law.

iAmerican Bankeri notes banker doublethink

 Permanent link
WASHINGTON (4/22/08)—The ability of the leader of the American Bankers Association to hold two contradictory beliefs simultaneously—at least where credit unions are concerned—was questioned in the April 21 issue of American Banker. Confused yet? asked a subhead in the publication’s “Washington People” section. The short article pondered whether ABA President Ed Yingling has been “flipping through the pages of George Orwell's '1984,' which defined ‘doublethink’ as the power to hold two contradictory beliefs simultaneously.” The article noted that after the Treasury Department outlined its blueprint for financial regulatory reform, Yingling issued a statement that said, "We are no more ready to abandon the thrift charter than we are to abandon the American family dream of living in a house that you own." That release was closely followed, the article said, by an ABA letter of praise for the Treasury plan, which suggested merging the credit union and bank charters, by saying the two types of institutions are very similar and should be treated as such. “The letter raised eyebrows among some observers, since, generally speaking, the bank and thrift charters are considerably more alike than the bank and credit union ones. “For example, credit unions are cooperatively owned not-for-profits, as opposed to banks, which are for-profit institutions owned by shareholders. In contrast, both bank and thrifts are for-profit organizations,” American Banker noted. The article said the ABA “rejected the claim that the ideas are contradictory.”

NCUA says CUs give important small biz help

 Permanent link
ALEXANDRIA, Va. (4/22/08)—Monday began National Small Business Week and National Credit Union Administration (NCUA) Chairman JoAnn Johnson kicked it off by encouraging credit unions to provide prudent member business lending products. “I encourage credit unions to continue providing prudent and responsible member business lending products that help member-owners establish viable businesses, create jobs and sustain local communities,” Johnson said in a statement. The Small Business Administration dedicated April 21-25 to the nation’s small businesses. Johnson noted, “Small businesses play a crucial role in sustaining our nation’s economic vitality. In fact, they have generated 60% to 80% of net new jobs annually over the last decade and they employ about half of all private sector employees.” She added that the NCUA strives to promote a credit union environment that fosters the “entrepreneurial spirit for credit union members while maintaining a safe and sound credit union system.” “One example of this commitment is found in NCUA facilitation of webinar programs with the SBA. These sessions provide information regarding business lending services and programs administered by the SBA, including SBA 7a Guaranteed Loans, which help qualified small businesses obtain financing,” Johnson pointed out. “In addition, credit unions themselves have demonstrated a strong commitment to the small business community. Through diverse approaches such as promotion of Individual Development Accounts targeted at small businesses, business development seminars and micro-enterprise lending, credit unions are aiding the creation of community asset building and enhancing the investment environment,” she concluded. Every year since 1963, the President of the United States has declared an official week to recognize the role of America’s small business community in the nation’s economy. For more information, use the resource link below.

Tucoemas FCU must pay punitive damages

 Permanent link
WASHINGTON (4/22/08)—Tucoemas FCU, of Visalia, Calif., must pay punitive damages equaling more than $1.5 million to a former executive who claimed she was pushed out of her job after being diagnosed with cancer and undergoing its incumbent treatments. The U.S. Supreme Court this week decline to hear an appeal of a lower court’s damages award, thereby exhausting the credit union’s options to challenge the award granted to Kim McGee, a former Tucoemas vice president. Tucoemas FCU had argued that under federal case law, a federal credit union is defined as a”federal instrumentality” and is therefore exempt from paying punitive damages in civil cases. The California's 5th District Court of Appeal had ruled that the”federal instrumentality designation” only covers a federal credit union in tax and bankruptcy matters and is not relevant to other areas of law. The Supreme Court's decision to not hear the case means that the California Court of Appeal's decision stands. It has been reported that the punitive damages will be paid in addition to about $1.8 million in compensatory damages, including lawyers' fees and lost wages. McGee's appeal-related expenses alone were about $600,000.

CUNA acknowledges Prestons exec skills

 Permanent link
WASHINGTON (4/22/08)—The Credit Union National Association (CUNA) said Monday that President George W. Bush’s choice of Steven Preston to be the new leader at the U.S. Department of Housing and Urban Development could bring some key problem solving skills to the agency. Preston, who for two years has been at the head of the U.S. Small Business Administration (SBA), might be able to put those talents to use to help HUD through a troubled time, according to CUNA. The White House last week announced its decision to place Preston in the spot being vacated by Alphonso Jackson. Jackson, whose resignation as HUD secretary was effective Friday, is under criminal investigation because of allegations that he favored friends with contracts at public housing authorities controlled by HUD. CUNA Deputy General Counsel Mary Dunn acknowledged that Preston's background does not include housing issues but commended his fairness and concern for effectiveness while he has been at the SBA. “From all reports, HUD is in need of management skills and we are hopeful he will combine his concern for efficiency with compassion for those who, in this time of mortgage crisis, need housing assistance and related services,” Dunn added.

Inside Washington (04/21/2008)

 Permanent link
* WASHINGTON (4/22/08)--Regulators are stepping up their scrutiny of loans, so much that the old term “performing nonperforming loans” has begun to creep up again. Performing nonperforming loans, or loans whose payments are made on time but could be troublesome in the future, are being flagged by banking regulators (American Banker April 21). Due to troubled market conditions, regulators--especially the Federal Deposit Insurance Corp. (FDIC)--are encouraging banks to be more proactive in accounting for their loans. Boston Private Financial Holdings Inc., which reported fourth-quarter losses, was required by the FDIC to build up reserves by $16 million. Lenders are not expected to be “lulled to sleep” just because they have interest reserves, noted Steve Fritts, FDIC associate director for risk management policy ... * WASHINGTON (4/22/08)--Several states continue to work on foreclosure prevention legislation--heightening financial institutions’ uncertainties regarding which laws they are required to follow. Generally, foreclosure and real estate laws are not pre-empted, unless the law affects a financial institution’s ability to receive payment on a debt (American Banker April 21). Maryland passed a foreclosure prevention measure requiring a five-month moratorium. It is unclear if Maryland’s law could be pre-empted by federal laws. Other states, such as New Jersey and Connecticut, are working on similar but tougher pending bills. Passage of state foreclosure laws will continue until federal legislation is passed, according to Gil Schwartz, a former Federal Reserve Board attorney. The Office of the Comptroller of the Currency and the Office of Thrift Supervision did not comment on the matter, but said in 2004 that they would preempt foreclosure laws if their provisions are hidden ... * WASHINGTON (4/22/08)--The Federal Bureau of Investigation (FBI) expects to see more mortgage fraud cases in the months to come, said Robert Mueller, FBI director in a speech Thursday. The FBI is investigating more than 1,300 individual fraud matters, and has identified 19 corporate fraud matters related to the subprime lending crisis. “We are targeting accounting fraud, insider trading and deceptive sales practices,” Mueller said. “These investigations may lead to other instances of fraud, from investment banks and private equity firms to hedge funds” ...

CUNA chairman attacks new breed of CUs misnomer

 Permanent link
WASHINGTON (4/21/08)--Credit Union National Association (CUNA) Chairman Tom Dorety isn’t happy about the Treasury’s blueprint to revise the financial system--and most of all, he’s “tired of this idea that there’s a new breed of credit unions.” The “new breed” of credit unions refers to a label that bankers use to describe some of the nation’s larger credit unions. At a hearing March 6, American Bankers Association Chairman Bradley Rock said expanding the credit union charter, while keeping the tax waiver, would help the “new breed of credit unions” (American Banker April 18). Rock’s testimony made Dorety’s blood boil, Dorety told the newspaper. Bankers argue larger credit unions have abandoned their original mission. But the larger size makes them “no less of a credit union,” Dorety told the newspaper. Dorety is CEO of Suncoast Schools FCU, Tampa, Fla., which has $6 billion in assets, making it the seventh-largest in the U.S. Suncoast has grown because it’s successfully provided services to its members, and if credit unions don’t grow, “we’re going to die,” he added. Dorety’s credit union was created by teachers as a non-profit collaborative with a few thousand dollars in assets and a volunteer board of directors. Today, though the credit union’s assets have grown, the collaborative status and volunteer board has not changed, Dorety said. But credit unions “can’t just serve people of modest means.” While Suncoast has members in low-income areas, it also has branches in wealthier ones, he told the newspaper. Small credit unions cannot be separated from larger credit unions because they depend on them for help. Requiring them to pay taxes would eliminate the credit union industry, Dorety said. Credit unions also do a better job than banks lending during a crisis. They are in a position to keep lending, he told the newspaper. CUNA has lobbied against the Treasury blueprint since it was released March 31. CUNA CEO Dan Mica has spoken against the plan, with his comments appearing in major media outlets such as The New York Times, Associated Press, The Wall Street Journal, The Washington Post and others. CUNA’s Credit Union Magazine also filed an open records request under the Freedom of Information Act to disclose bankers’ attempts to affect the Treasury plan in ways intended to put credit unions out of business (News Now April 4). For more information, use the links.

Inside Washington (04/18/2008)

 Permanent link
* WASHINGTON (4/21/08)--House Democrats are not waiting any longer for regulators to curb abusive credit card practices. Waiting for the Federal Reserve Board to act during the subprime mortgage crisis was a mistake, said House Financial Services Committee Chairman Barney Frank (D-Mass.) during a Thursday hearing (American Banker April 18). Frank indicated that it is appropriate for Democrats to take action, although Rep. Judy Biggert (R-Ill.) argued Congress needs to wait for the Fed and the Office of Thrift Supervision to define abusive practices. Frank and Rep. Carolyn Maloney (D-N.Y.) have proposed a bill that would create a cardholder’s “bill of rights” and ban double-cycle billing and universal default. The Fed is working on a proposal that would ban deceptive card practices and that could be released next month, said Sandra Braunstein, Fed director of consumer and community affairs ... * WASHINGTON (4/21/08)--A bill that would provide more liquidity for student loans passed through the House Thursday (American Banker April 18). Lenders are seeking other reforms, but they support the bill. The bill would allow the Education Department to buy Federal Family Education loans as a backup ... * WASHINGTON (4/21/08)--Three former Fannie Mae top executives agreed Friday to pay $31 million in a settlement to remedy claims that they boosted their bonuses by manipulating earnings. Regulators originally sought $200 million from the three (MarketWatch April 18). Former chief financial officer Timothy Howard will pay $6.4 million, former controller Leanne Spencer will pay $275,000 and former CEO Franklin Raines will pay $24.7 million ... * WASHINGTON (4/21/08)--National Small Business Week launches with a webcast, “Healthcare: Cost and Coverage” Tuesday at 9:30 a.m. EDT, according to the Small Business Administration. The week features national awards and issue forums. For more information, visit the website ...

Two housing-rescue bills readied for House committee vote

 Permanent link
WASHINGTON (4/18/08)--The House Financial Services Committee introduced two measures Thursday, each intended to combat the country’s current unprecedented rise in foreclosures, and the associated impact on cities and states. According to an announcement by the committee’s chairman, Rep. Barney Frank (D-Mass.), the FHA Housing and Homeowner Retention Act (H.R. 5830) and the Neighborhood Stabilization Act (H.R. 5818) will be voted on April 23 and 24. H.R. 5830, first announced by Frank in March, proposes to expand the Department of Housing and Urban Development’s FHA program to help refinance at-risk borrowers into viable mortgages. The bill would also require the Federal Reserve Board to conduct a study on the need for an auction or bulk refinancing mechanism. The second measure, H.R. 5818, introduced by Chairwoman Maxine Waters (D-Calif.) of the House Financial Services subcommittee on housing and community opportunity, would provide loans and grants to states and cities to deal with problems associated with large numbers of foreclosures in neighborhoods across the country.

FOIA rules would streamline under NCUA plan

 Permanent link
WASHINGTON (4/18/08)—A proposed a rule intended to streamline the National Credit Union Administration's (NCUA's) system for complying with freedom of information and privacy laws was approved for comment Thursday. Some of the revisions were housekeeping changes; others were more substantive. “The proposed rule incorporates recent amendments to the Freedom of Information Act, adds definitions, and revises and clarifies provisions implementing the Privacy Act,” the board said in a statement. The proposal calls for a 60-day comment period. Regarding the FOI, the NCUA would amend regulations to identify more precisely the agency’s Information Centers and addresses, and describe required content for request letters. “The changes are intended to minimize delays caused by requests being sent to an inappropriate office, or lacking necessary and sufficient information,” the agency's statement said. On the privacy issue, the proposal would abolish present language that permits persons to submit telephone requests. The NCUA Board is concerned that it is too difficult to enforce the regulation’s identification requirements. The board said that contemplated housekeeping changes in the privacy area include correcting cross-references, grammar and punctuation; a change in nomenclature and additional definitions to improve understanding of rights and requirements, and more exact definitions for “system manager” and “working day.” NCUA also said the proposed language on privacy would clarify that requests must be submitted in writing to the appropriate system manager or to other staff as specified. NCUA staff attorney Linda Dent, presenting the proposal at the agency's open board meeting, said NCUA received about 200 FOI requests in 2007. The average time spent by NCUA in completing a "simple request" for information is 16 days, she said. For "more complex requests," Dent said the agency averages a 32-day response time. Dent added that NCUA grants either partial or full information for 96% of information inquiries. Use the resource link below to access the NCUA plan.

NCUSIF report shows steady equity ratio

 Permanent link
ALEXANDRIA, Va. (4/18/08)—The National Credit Union Share Insurance
Click to view larger image Click for larger view
Fund (NCUSIF) equity ratio is projected for the end of the year at 1.29% of insured shares, which is exactly where it began the year. That wouldn’t be high enough to prompt a dividend payment for all federally insured credit unions, but it would be far above the level at which a premium would need to be charged. The figures were contained in the National Credit Union Administration‘s (NCUA’s) quarterly NCUSIF report released at its Thursday open board meeting. For the first quarter of the year, the fund’s net income of $61.3 million is $21.2 million ahead of budget. Credit Union National Association Chief Economist Bill Hampel said the NCUA’s projection of an unchanged equity ratio by the end of the year “is good news considering the stresses credit unions are facing from a major housing market correction and a recession.” The NCUSIF report also showed that while the number of problem
Click to view larger image Click for larger view
credit unions, ranked at CAMEL Code 4/5, has increased by only 20 since year-end 2007, the amount of insured shares at those credit unions has jumped by $3 billion. The report said there were 229 CAMEL 4/5 credit unions as of the end of the first quarter, up from 211 in December. However, the percentage of CAMEL Code 4/5 shares-to-total-insured-shares hit 1.59% by March 31. That figure was 1.04% three months earlier. The NCUSIF quarterly report, presented to the board by NCUA Chief Financial Officer Mary Ann Woodson, also projected a 2008 net income of $159.3 million. For the past 10 years, that figure has ranged from a low in 2003 of $28.9 million to a high in 2000 of $204.2 million.

Low-income standard would be broadened under plan

 Permanent link
WASHINGTON (4/18/08)—The National Credit Union Administration (NCUA) proposed broadening its low-income designation to consider different income patterns in metropolitan areas. The designation is important in determining whether a credit union qualifies for assistance to help low-income members. “The proposed rule will eliminate the confusion associated with adjusting median household income in metropolitan areas with higher costs of living,” the board said. It set a 60-day public comment period on the recommendation. The 2006 Member Service Assessment Pilot Program (MSAP) recommended that the formula for determining whether a federal credit union qualifies as low-income be reassessed. The NCUA Outreach Task Force agreed with the MSAP that the standard for low-income designation be changed to be consistent with the position of other federal agencies. The board in a statement pointed out that presently agency regulations describe a low-income family as members whose annual household income falls at or below 80% of the national Median Family Income, but that the rule does provide a differential for certain geographic areas with higher costs of living. The NCUA change would “revise the definition of 'low-income members' to base the determination on an income standard that relies on Median Family Income or the alternative of median earnings,” according to the board statement. It added: “For metropolitan areas, the proposal defines low-income members as those living in an area, within the metropolitan area, where the standard is at or below 80% of either the standard for the entire metropolitan area, or the national standard, whichever is greater." In addition to eliminating the confusion associated with adjusting the national Median Family Income for metropolitan areas with higher costs of living, it will better align the criteria for low-income designation with that now used to determine field of membership and other credit union classifications, NCUA said. The low-income designation is considered especially important to credit unions because it determines whether they qualify for subsidies from the Community Development Revolving Loan Fund.

New services proposed for CUSOs

 Permanent link
WASHINGTON (4/18/08)—Credit Union National Association (CUNA) President/CEO Dan Mica said Thursday that CUNA has concerns about proposed provisions to extend federal regulators’ access to the books and records of federally insured state credit union CUSOs, and to allow state regulators to inspect the books and records of a federal credit union's CUSO if a state chartered credit union also participates in that CUSO. “However, at the same time, we commend the agency's effort in proposing expanded authority for CUSOs. We look forward to working with NCUA to enhance the ability of credit unions to participate with CUSOs,” Mica said following a National Credit Union Administration (NCUA) open board meeting. At that meeting, the agency also proposed an expansion of services for (CUSOs) to conform with broader powers granted to credit unions by the 2006 Financial Institutions Regulatory Relief Act. The agency's plan also would add credit card loan origination and payroll processing to the CUSO list. The agency noted that the legislative history of the 2006 relief provisions indicates Congress intended to allow federal credit unions to sell to eligible members negotiable checks, money orders, and similar transfer instruments, including international and domestic electronic fund transfers. "The Board believes enactment of that law warrants a parallel expansion in the CUSO rule," NCUA said, "since a federal credit union may elect to provide some or all of these types of services through the vehicle of a CUSO." The same proposal also would permit CUSOs to originate and hold credit card loans as a principal on their own behalf or on behalf of credit unions. NCUA pointed out that generally it has permitted CUSOs to engage in loan origination "where a degree of expertise is required to be successful." It cited as examples business, student and real estate lending. "NCUA believes credit card origination also requires a degree of specialization and expertise to succeed, and the proposal will allow credit unions to collaborate and pool resources by working with a CUSO," the agency said. As for payroll processing, NCUA said the agency's general counsel has concluded that a federal credit union may provide this service for members as an exercise of its incidental powers, and that a CUSO may assist it. The proposal also would clarify that CUSOs may buy and sell loan participations that they are currently authorized to originate. HOwever, the NCUA also proposed to extend its authority to inspect a CUSO's books and records to federally insured, state-chartered credit unions involved in CUSOs. Reciprocally, state regulators also would have the authority to inspect the books and records of these CUSOs, including ones owned by a federal credit union if a state credit union also participates in the CUSO. The agency would also restrict the ability of federal credit unions to recapitalize CUSOs if the credit union is less than adequately capitalized under Prompt Corrective Action. CUNA said it will be scrutinizing the provisions on access to books and records, along with its Governmental Affairs Committee subcommittees.

Mass. CU-bank merger on closed agenda

 Permanent link
WASHINGTON (4/18/08)—Aspects of a merger plan between Northeast Community CU and Haverhill Bank, under the name Haverhill Bank, were expected to be addressed Thursday during a closed meeting of the National Credit Union Administration (NCUA) Board, but the agency declined to comment on the session. It is NCUA’s general policy not to discuss items on the agenda or action it takes during a closed meeting of the agency’s three board members. However, NCUA may issue a statement in the coming days about the status of the merger. The Massachusetts Division of Banks has accepted public comment on the proposed merger of the $100 million asset credit union and $130 million asset bank. The merger partners have said the move is designed to expand and improve on financial services for area residents.

FinCEN releases foreign corruption SAR guidance

 Permanent link
WASHINGTON (4/18/08)--The Financial Crimes Enforcement Network (FinCEN) yesterday released new guidance for financial institutions that aims to help law enforcement target foreign corruption and money laundering. The guidance requests that financial institutions include the term “foreign corruption” in the narrative portions of their Suspicious Activity Reports (SARs). It also clarifies the definition of “senior foreign political figure.” “FinCEN guidance seeks to focus financial industry efforts to provide law enforcement authorities with indications of suspicious activity in a way that promotes faster and more targeted identification and investigation,” said FinCEN Director James Freis Jr. “More consistent flagging of the specific term ‘foreign corruption’ will facilitate law enforcement efforts focused on this high priority area.” The change in guidance is a “way of streamlining the reports,” according to Nichole Seabron, Credit Union National Association (CUNA) federal compliance counsel. “They’re trying to set a precise standard. It’s more informational,” she said. CUNA has continued to meet with the Treasury Department and has discussed FinCEN’s efforts to prevent the financial system from being abused by money launderers, terrorists and other criminals. CUNA’s Bank Secrecy Act (BSA) Task Force also has gathered information on how to improve the BSA process (News Now June 25, 2007). For more information, use the link.

Inside Washington (04/17/2008)

 Permanent link
* WASHINGTON (4/18/08)--The gap between Sen. Richard Shelby (R-Ala.) and Sen. Christopher Dodd (D-Conn.) on how to fix the housing market has widened (American Banker April 17). Shelby questioned the Senate Banking Committe chairman’s plan at a Wednesday hearing, saying it would do nothing more than aid “reckless lenders” and help “undeserving borrowers.” He said--and Dodd agreed--that the committee needs to find the cause of the mortgage market problems. But Dodd urged the committee to make foreclosure prevention a top priority. Shelby has argued that the government should not step in to help the housing market, and that the market will have to correct itself. Dodd has said he wants to get his bill through the Senate by Memorial Day. No more hearings have been scheduled for it ... * WASHINGTON (4/18/08)--Banks aren’t moving quickly enough on their losses--especially those involving commercial real estate credits, said Comptroller of the Currency John Dugan (American Banker April 17). He said bankers should reward loan officers for letting management know about problems early. Dugan noted his agency would encourage banks to refresh their appraisals and give managers a “reasonable” amount of time for review. Regulatory expectations must be clearly communicated--banks can’t be expected to deal with problems that have been downplayed, he said ... * WASHINGTON (4/18/08)--Policymakers failed to settle on a compromise for tightening regulation for Fannie Mae and Freddie Mac at a meeting Tuesday (American Banker April 17). Senate Banking Committee Chairman Christopher Dodd (D-Conn.) said reform is important, but foreclosures are a priority. Dodd met with Henry Paulson, Treasury secretary; David Nason, Treasury assistant secretary for financial institutions; Sen. Richard Shelby (R-Ala).; Daniel Mudd, Fannie Mae CEO; Richard Syron, Freddie Mac CEO; and Robert Steel, undersecretary for domestic finance ...

CUNA seeks comment on NCUA honesty standard

 Permanent link
WASHINGTON (4/17/08)—-The Credit Union National Association (CUNA) is asking credit unions to comment on a federal regulatory proposal designed to clarify a law that bans dishonest persons from working at credit unions. It requested comments by May 22. The proposed rule by the National Credit Union Administration (NCUA) seeks to explain more precisely the meaning of a section of the Federal Credit Union Act intended to accomplish that objective The relevant section now prohibits from participating in the affairs of a credit union, persons convicted of a criminal offense involving dishonesty, or breach of trust, or who have entered into a pretrial diversion or similar program, unless given a special waiver by the board. The NCUA’s clarification, in the form of an Interpretive Ruling and Policy Statement, would exclude certain minor offenses, juvenile offenses, and expunged convictions, while also prohibiting NCUA from providing consent to those individuals who have engaged in certain other criminal offenses. The proposed policy statement was adopted on March 20. The board requested comments by June 3. NCUA’s interpretation would establish specific procedures credit unions must follow in order to achieve NCUA consent to waive the prohibitions in the law for an individual. These include:
* The credit union must explain the circumstances surrounding the conviction or pre-trial diversion program, and evidence of rehabilitation; * It must demonstrate that the individual is fit to participate in the credit union affairs without posing a safety and soundness risk; and * If the NCUA consent is denied, the credit union may appeal the decision within 30 days.

Federal state CU regulators hold annual meeting

 Permanent link
WASHINGTON (4/17/08)—The economic outlook for credit unions, along with compliance and examination standards, were among the hot topics when federal and state regulators convened April 13-15 in Tampa. Representatives from 38 state agencies and the National Credit Union Administration NCUA) were among the conferees during the annual regulatory meeting sponsored by leaders of the NCUA and National Association of State CU Supervisors (NASCUS). NCUA board member and NASCUS liaison Gigi Hyland said the conference was especially valuable because of the opportunities for state and federal regulators “to share concerns and perspectives.”

Plastic card processor reporting requirement delayed

 Permanent link
WASHINGTON 94/17/08)—A House and Senate conference committee on a farm reauthorization bill agreed to drop a controversial plan to require credit and debit card payment processors to report to the Internal Revenue Service (IRS) the aggregate annual payments made to merchants. The Credit Union National Association (CUNA) lobbied vigorously to get the provision removed because of the detrimental effect it could have on credit unions. The provision was slated to be used as a revenue raising measure to offset increased spending in the omnibus legislation reauthorizing federal farm programs for five years. Billed as a means to close the "tax gap”--the difference between the amount of taxes owed the federal government and the amount actually collected—this provision originated in the President's FY 2009 budget outline. The proposal would have required merchant acquiring banks and credit unions, those institutions that make card payment reimbursements to merchants, to report to the IRS total merchant payments on an annual basis. In a letter to the House and Senate farm bill conferees, CUNA President/CEO Dan Mica wrote,”CUNA recognizes that the intent of the reporting provision is to close the “tax gap” and to collect taxes that are legitimately owed to the Internal Revenue Service. However, this objective can be met through the IRS’s traditional auditing process, with fraud and underreporting subject to stiff IRS fines and criminal penalties." Mica continued, "For affected institutions, this provision (would) add to the substantive compliance burden they already face. Credit unions make every effort to minimize loan rates and fees to consumers, and federal credit unions operate under a loan rate ceiling under the Federal Credit Union Act. As a result, this proposal will place a disproportionate burden on credit unions covered by its provisions." CUNA lobbyists have been informed that this card reporting proposal will be resurrected again and possibly attached to any number of pieces of future legislation. However, based on Mica's letters and an intense lobbying effort, CUNA has been invited to congressional tax staff discussions on the provision. These tax staffers have indicated a willingness to mitigate the proposal's effect on credit unions. CUNA lobbyists will continue to work with congressional tax writers to remove credit unions from the application of the reporting proposal. Mica also urged that the Congressional tax writing committees hold hearings to discuss the cost/benefit analysis of the proposal, as well as any unintended consequences the plan might generate.

Inside Washington (04/16/2008)

 Permanent link
* WASHINGTON (4/17/08)--Policymakers are moving ahead with plans to help the student loan market (American Banker April 16). A proposal by the Senate and House Education Committees, which would require the Education Department to loan money to students in the secondary market by buying Federal Family Education Loan Program loans, is set for a vote today. Sen. John McCain (R-Ariz.) said this week that the department should work with state governors to back loans. On Wednesday, Sen. Christopher Dodd (D-Conn.) called on the Treasury Department and the Federal Reserve Board to add liquidity to the market ... * WASHINGTON (4/17/08)--The Treasury Department has released its best practices for hedge fund participants. The best practices for asset managers call on hedge funds to adopt comprehensive best practices in all aspects of business--including critical areas of disclosure, valuation of assets, risk management, business operations, compliance and conflicts of interest. The best practices for investors include a Fiduciary’s Guide and an Investor’s guide. The Fiduciary’s Guide provides recommendations to individuals charged with evaluating the appropriateness of hedge funds as a component of an investment portfolio. The Investor’s Guide provides recommendations to those who execute and administer a hedge fund program once it is added to the investment portfolio. Both will be open for 60-day comment periods ... * WASHINGTON (4/17/08)--The Federal Deposit Insurance Corp. (FDIC) is aiming to increase the use of covered bonds by providing investors with access to assets from a failed financial institution within 10 days in some situations. Although covered bonds are widely used internationally, a U.S. law requires a 90-day delay before creditors can collect assets from failed institutions--which keeps away some investors (American Banker April 16). The FDIC’s action is immediate, but it is open to a 60-day comment period. Covered bonds applicable for the waiver can not be more than 4% of an institution’s liabilities ... * WASHINGTON (4/17/08)--Though they’ve made improvements, government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac are still a supervisory concern, the Office of Federal Housing Enterprise Oversight (OFHEO) said Tuesday. The enterprises worry OFHEO because of increased mortgage market and credit risk, the agency said. However, OFHEO commended the two for making improvements and filing their 2007 annual statements on time. OFHEO Director James Lockhart said Fannie and Freddie committed to work on GSE reform legislation, and “the time to act on the legislation is now” ... * WASHINGTON (4/17/08)--States cannot tax the money businesses earn from investments in other states, the Supreme Court ruled Tuesday. The ruling reversed a decision made by the Appellate Court of Illinois, which upheld that the state could tax money Ohio-based MeadWestVaco Corp. made from Illinois-based Lexis-Nexis. MeadWestVaco argued that the state did not have the right to tax its earnings, and sued for a refund of the $4 million it paid in taxes. Justices referenced a 1992 opinion that led some states to conclude they could tax liabilities “generated by assets that served an operational rather than an investment function” (The New York Times April 16). The opinion, however, was not intended to give states new grounds to tax businesses, said Justice Samuel A. Alito Jr. ... * WASHINGTON (4/17/08)--The Financial Crimes Enforcement Network’s Annual Report for 2007 has been released ...

Court clarifies RESPA role on excessive fees

 Permanent link
WASHINGTON (4/16/08)—The Eleventh Circuit Court of Appeals has ruled that the Real Estate Settlement Procedures Act” (RESPA’s) Section 8 (b) does not govern excessive fees because it is not a price control provision, according to the Credit Union National Association (CUNA). The relevant section bans fees “other than for services actually performed.” The ruling was in Friedman v. Market Street Mortgage Corp. Plaintiffs in the case had accused the defendant lender of charging a fee that was excessive in relation to services actually rendered. Plaintiffs argued their position was supported by a statement of policy issued by the Department of Housing and Urban Development (HUD) in 2001. But the court rejected the plaintiff’s argument and the HUD policy statement. It ruled that Section 8 (b) prohibits only charges for services that are not performed, and does not allow courts or others to divide permissible charges into what may deemed reasonable and unreasonable. The court cited previous cases, and the statutory language in RESPA. It said the law was clear and not ambiguous, and that it does not allow The Department of Housing and Urban Development to impose its own interpretation. The court also said the section was aimed at banning abusive practices, not as a means of creating broad price controls.

Inside Washington (04/15/2008)

 Permanent link
* WASHINGTON (4/16/08)--The Federal Deposit Insurance Corp. (FDIC) board of directors was set to meet yesterday on capital reforms for community banks. Basel II, which implements international capital reform, was adopted in December but none of the 12 Federal Home Loan banks have yet adopted it (American Banker April 15). The board also was expected to increase the use of covered bonds, which some say could help the credit crisis. Currently, the bonds require a 90-day delay on reclaiming assets from a failed institution ... * WASHINGTON (4/16/08)--Senate Banking Committee Chairman Christopher Dodd (D-Conn.) yesterday asked the Federal Reserve and the Treasury Department to help prevent the student loan aid market from collapsing (CNNMoney.com April 15). Dodd said he would write the Fed and the Treasury with his request soon. Dodd said he would like them to provide liquidity to the industry or tap the Federal Financing Bank. If the two do not succeed in helping the market, the senator said he would prepare for legislation. A number of student lenders have said they may not lend to students given the credit crunch, which depletes the number of loans available to those enrolling at colleges and universities in the fall ... * WASHINGTON (4/16/08)--Several free policy forums will be webcast for small business owners nationwide next week during National Small Business Week. The webcasts begin Tuesday with an address by former Speaker of the House of Representatives Newt Gingrich at 10:30 a.m. EST. Following his remarks, discussions on “Cost and Coverage: Healthcare Chicken and Egg” will begin, followed by “Going Global: Accessing New Markets” ... * WASHINGTON (4/16/08)--The witness list for Wednesday’s hearing of the House Subcommittee on the Foreclosure Prevention and Sound Mortgage Servicing Act has been announced. Witnesses include Faith Schwartz, executive director, HOPE NOW Alliance; Julia Gordon, policy counsel, Center for Responsible Lending; Laura Maggiano, deputy director of the Office of Single Family Asset Management, Department of Housing and Urban Development; David Kittle, chairman-elect of the Mortgage Bankers Association; Tom Deutsch, American Securitization Forum; and Steve Bailey, senior managing director, Countrywide Financial ...

House passes tax measure with HSA burden

 Permanent link
WASHINGTON (4/16/08)—The House voted late Tuesday to approve H.R. 5719, the Taxpayer Assistance and Simplification Act, which included a provision that the Credit Union National Association (CUNA) has said could threaten credit union participation in Health Savings Accounts (HSAs). The House voted 238 to 179 to include language in the bill that would require HSA providers to take on the role of verifying that each distribution is used for a qualified medical expense. John Hildreth, CUNA senior legislative representative, termed the policing provision “very detrimental to HSAs” explaining that it would drive many credit unions out of the HSA market. He said the bill would ultimately be bad for consumers because it would likely restrict the general availability of HSAs. Last week, the House Ways and Means Committee passed the tax package, including the HSA provision, 24 to 17. Rep. Paul Ryan (R-Wisc.) had offered an amendment to strike the substantiation clause, but lost that effort in a 25 to 15 vote. CUNA launched a significant lobbying effort against the HSA substantiation provisions prior to the committee's vote and won a two-year delay in the implementation of the provision.

NMTC program honored by Treasury

 Permanent link
WASHINGTON (4/16/08)—The Treasury Department cited as one of the top 50 government projects a program favored by credit unions that provides tax credits for investment in low-income communities. The citation recognized the innovation and effectiveness of the tax incentive option--formally known as the New Markets Tax Credit Program. Making the top 50 means the NMTC is eligible to advance to the final stage of competition for the prestigious 2008 Innovations in American Government Award. The NMTC program was chosen from approximately 1,000 government programs across the nation that had applied for the award. The NMTC Program permits taxpayers to receive a credit against federal income taxes for making qualified equity investments in designated Community Development Entities (CDEs). Substantially all of the qualified equity investment must in turn be used by the CDE to provide investments in low-income communities.

Johnson cites financial literacy gains says more needed

 Permanent link
WASHINGTON (4/16/08)—National Credit Union Administration (NCUA) Chairman JoAnn Johnson yesterday told Congress that her agency and credit unions have made great strides in promoting financial literacy. But Johnson said the consumer needs more than just education to get ahead in the marketplace. She said even great strides in financial awareness do not mitigate the need for solid consumer protection laws. “We do not have any illusions about financial literacy being a panacea,” she said in testimony before the House Financial Services Committee. “While there are benefits to greater levels of financial awareness, NCUA does not view financial literacy as a substitute for strong and comprehensive consumer protection.” She praised President George W. Bush, Congress, and credit unions for their contributions and dedication to the education that the consumer needs to make intelligent financial decisions. “For credit unions,” she said, “equipping members with the knowledge and information to make sound decisions has always been a priority.” The NCUA chairman said credit unions have always viewed financial education “as a natural outgrowth of their service-oriented philosophy.” Additional data on credit union efforts in this field also was submitted to Congress by Chairman John Faries of the National Youth Involvement Board. He said the NYIB tracking system reveals that since July 1, 2000, 1,511 credit union professionals have made 47,729 financial education presentations, reaching a total of 1,437,510 young people. Faries forwarded the material to Rep. Ruben Hinojosa (D-Texas), a committee member. CUNA also submitted a statement on credit union financial education efforts (see April 15 News Now), “CU fin lit efforts spotlighted in CUNA statement”) which was included in the hearing record. Joining Johnson on the first panel of witnesses were:
* Anna Escobedo Cabral, Treasurer of the United States; * Dean Martin, Treasurer, State of Arizona; * Sandra Braunstein, director of the division of consumer and community affairs, Federal Reserve Board; * Robert Mooney, deputy director for consumer protection and community affairs, Federal Deposit Insurance Corp.; * Cassansra McConnell, director, consumer and community affairs, Office of Thrift Supervision; and * Barry Wides deputy comtroller for community affairs, Office of the Comptroller of the Currency.
The committee also heard from representatives of community and consumer groups.

Financial legislation as Congress heads to crunch time

 Permanent link
WASHINGTON (4/15/08)---Legislation dealing with a variety of financial issues, ranging from mortgage lending to financial literacy, are on the agenda as Congress heads into what many believe is the crucial part of the session. Caught amid distractions by the Presidential campaigns and rising concerns about the national economy, Congress is in the middle of an eight-week period that is expected to be its best chance this year of working toward agreements on difficult issues. The timeline is tight and pressures increase as recess breaks and the summer political conventions near, limiting the time for further deliberations. Credit unions have an important stake in this week’s agenda, which will include floor votes on legislation dealing with student loans and health savings accounts. Meantime, committee hearings are set for legislation relating to the credit markets, financial literacy, emergency mortgage loans, impact of the credit squeeze on small business, and foreclosure prevention and other mortgage servicing issues. Among the concerns for credit unions is the Taxpayer Assistance and Simplification Act of 2008 scheduled for House consideration. It would require financial institutions offering health savings accounts to substantiate the amounts paid or dispersed out of these accounts, similar to the process required in flex spending accounts. The Credit Union National Association (CUNA) objects to this requirement and will continue its efforts to oppose it as the bill makes its way to the House floor for a vote. There currently is no similar bill introduced in the Senate. Among the hearings is one on Financial Literacy scheduled today by the House Financial Services Committee, at which National Credit Union Administration Chairman Joann Johnson will testify. Purpose of the discussion is to consider the effectiveness of public and private efforts to improve understanding of financial decisions and options. CUNA submitted a statement for the hearing record. (See related story: CU fin lit efforts spotlighted in CUNA statement)

CUNA and Treasury meet on CU issues

 Permanent link
WASHINGTON (4/15/08)—Credit Union National Association (CUNA) representatives met Monday with U.S. Treasury Assistant Secretary for Financial Institutions David Nason and other Treasury official to further discuss CUNA’s opposition to certain provisions of the agency’s regulatory reform ideas. The CUNA team also discussed prompt corrective action reform proposals, the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537), which contains a PCA reform provision, and the Credit Union Regulatory Relief Act (CURRA, H.R. 5519) with Nason, his deputy assistant secretary, Jeremiah Norton and other Treasury representatives. The CUNA contingent included President/CEO Dan Mica, Senior VP of Legislative Affairs John Magill, General Counsel Eric Richard, and Deputy General Counsel Mary Dunn.

Inside Washington (04/14/2008)

 Permanent link
* WASHINGTON (4/15/08)--The Basel Committee on Banking Supervision plans to focus on capital requirements and managing liquidity risk in its proposals this year, according to a report released Friday by the Financial Stability Forum. The committee plans to issue proposals this year that will raise Basel II capital requirements for certain complex structured credit products, introduce additional capital charges for default and event risk in the trading books of banks and securities firms, and strengthen the capital treatment of liquidity facilities to off-balance sheet conduits. The committee also plans to issue supervisory guidance by July for managing liquidity risks. Basel II went into effect April 1 but none of the 12 Federal Home Loan Banks are required to adopt the rule yet (News Now Feb. 5) ... * WASHINGTON (4/15/08)-- Disclosure practices can be improved, but not through disclosure requirement changes, said a report released Friday by U.S. and foreign bank regulators (American Banker April 14). Rather, individual firms can make changes at their discretion. The regulators analyzed disclosures of 20 international financial firms, including Citigroup, Bear Stearns Co., Wachovia Corp., Bank of America and JPMorgan Chase and Co. The report was conducted by the Federal Bank of New York, the Office of the Comptroller of the Currency, the Securities and Exchange Commission, the Federal Reserve Board and regulators from the United Kingdom, France, Switzerland and Germany ... * WASHINGTON (4/15/08)--Credit cards used by government agencies are being abused, according to a Government Accountability Office (GAO) report released last month. From July 1, 2005 to June 30, 2006, the GAO estimated, 41% of the transactions failed to meet basic internal control standards. Breakdowns such as authorization and independent receipt and acceptance resulted in fraudulent, improper and abusive purchases, the agency said. Cardholders had used the cards to purchase Internet dating services, video iPods for personal use and “lavish dinners.” The GAO also was unable to locate 458 items of the 1,058 pilferable items totaling more than $2.7 million that it selected for testing ... * WASHINGTON (4/15/08)--A rule change in the Farm Credit System could re-ignite a banker battle after regulators Thursday approved giving more flexibility to a rule that has prevented lenders “from retaining processors as customers” (American Banker April 14). Banking industry representatives argue that the rule deviates from the system’s mission of farm lending and could remove banks from lending to rural ethanol plants. The rule could take effect next month, and banks are asking their trade groups to study whether it abandons the lenders’ mission. The rule applies to agricultural marketing firms and was proposed in October 2006 by the Farm Credit Administration ...

Stimulus law could broaden MBL opportunities

 Permanent link
WASHINGTON (4/15/08)--New tax breaks for small business included in the recently enacted economic stimulus package could provide opportunities for credit unions interested in promoting member business lending, according to the Credit Union National Association (CUNA). The law raises the amount small businesses can deduct for new equipment to encourage such expenditures. It also liberalizes depreciation rules. The purpose of the legislation is to give a boost to the nation’s ailing economy. The statute is known formally as the Economic Stimulus Act of 2008 (H.R. 5140), and was signed into law on February 13 (P.L 110-185). The sections of the new law dealing with small business tax concessions are described in “Section 179 expensing,” and in a second provision, entitled “bonus depreciation.” The first section is an enhancement of current tax rules dealing with the deductibility of purchased equipment by small business firms. It rose to $250,000 from $128,000, the value of equipment that can be “expensed.” The phase-out window for the expensing tax break begins at equipment costing $800,000--up from $510,000. Equipment priced at $1,050,000 and over is ineligible. The second tax concession for small business is a liberalized “bonus depreciation,” where 50% of an investment, with an expected lifespan of less than 20 years, can be deducted in 2008--provided it is placed in service this year. Congress included the small business investment incentives in this much debated economic rescue package because of belief this sector has been crucial in rejuvenating the nation’s economy during past crises. The Credit Union National Association (CUNA) urges credit unions to check out the new law for new lending opportunities, but stresses that credit unions should consult first with tax advisors.

Third-party info distributed to CUs

 Permanent link
ALEXANDRIA, Va. (4/15/08)—A new questionnaire that National Credit Union Administration (NCUA) field staff will use to complete the evaluation of credit union third-party relationships has been distributed by the agency to federally insured credit unions. Examiners will evaluate third-party relationships based on the risk of each relationship and will use the questionnaire to document the review. The questionnaire names the following three elements of an effective program, as discussed earlier by the NCUA in an enclosure to a December 2007 letter (07-CU-13.) The three elements are:
* Risk Assessment and Planning; * Effective Due Diligence; and * Risk Measurement, Monitoring, and Control.
The NCUA communication added that questions or concerns should be directed to a credit union’s NCUA Regional Office or state supervisory authority. The Credit Union National Association’s Due Diligence Task Force currently is assembling resources for guidance to credit unions to address their concerns about the due diligence examination process. The resources include such things as sample vendor management policies and procedures. The Due Diligence Task Force's key objectives are to develop a core due diligence model that credit unions can use to evaluate third-party vendors, as well as develop a due diligence best practices guide that goes beyond the core due diligence model. Use the resource link below to access the NCUA questionnaires.

CU fin lit efforts spotlighted in CUNA statement

 Permanent link
WASHINGTON (4/15/08)--The Credit Union National Association (CUNA) Tuesday will urge approval of a House resolution endorsing the goals of Financial Literacy Month, during a House hearing on the proposal. “Credit unions have traditionally made financial education a part of their mission, providing financial information and training to members on a one-to-one basis,” the CUNA statement points out. It also notes that many credit unions actively sponsor community- and school-based educational programs. The statement, submitted for a House Financial Serivices Committee hearing record, says these programs include school-based courses and seminars that provide resources on such issues as how to maintain a checking account. CUNA’s statement highlights CUNA's Financial Literacy Summits, events that that bring together representatives from credit unions and partner organizations to discuss financial literacy challenges and set an educational agenda for the credit union movement. In January 2007, CUNA notes, it released its National Financial Literacy Summit report which highlighted recommendations for the financial services system, including:
* Committing to educating the undeserved; * Making a long-term commitment to financial education as part of the educational curricula in your community; * Supporting making personal financial education a high school graduation requirement; and * Measuring the effectiveness of these efforts.
CUNA also points out that the credit union system sponsors and participates in financial literacy programs such as:
* National Credit Union Youth Week; * The National Endowment for Financial Education’s (NEFE) High School Financial Planning Program, which has distributed materials to more than 1,200 schools and 500,000 students nationwide since 2000; * BizKid$ television series; * The “Thrive by Five” program, to teach preschoolers about spending and saving; * Desjardins Youth Financial Education Awards; * National Youth Involvement Board; * In-School credit union branches, which extends financial literacy to youth through in-school and youth center branches across the nation; * Personal Finance Camps: and * Credit union staff training programs.
The CUNA statement also says the congressional resolution to designate April as Financial Literacy Month will make an important contribution by bringing national attention to this issue. “For credit unions, financial literacy is not just something we do in April – financial education is a service we provide our members each day of the year,” CUNA concludes in its statement. National Credit Union Administration Chairman JoAnn Johnson, along with other financial services regulators and private sector representatives, is slated to testify at today's hearing on financial literacy initiatives.

Inside Washington (04/11/2008)

 Permanent link
* WASHINGTON (4/14/08)--The Federal Deposit Insurance Corp. (FDIC) will conduct its first national survey to assess banks’ efforts to reach out to the unbanked this spring. Questionnaires will be sent to a probability sample of FDIC-insured institutions during the second quarter. Questions will focus on banks’ financial education and outreach strategies; deposit, payment and credit products offered to entry-level consumers; and other related topics. The survey will identify challenges insured institutions face in serving the unbanked. Case studies highlighting specific institutions’ programs will be a part of the survey. The FDIC also will consider conducting a national household survey with the U.S. Census to collect data on the numbers and demographics of unbanked and underbanked households, and the obstacles they perceive when deciding how and where to conduct their finances ... * WASHINGTON (4/14/08)--Sen. John McCain (R-Ariz.) has changed his position on home loan aid after two weeks ago saying he objects to government bailouts (American Banker April 11). The senator Thursday proposed the “HOME” plan, which would ask the government to back delinquent subprime loans by allowing borrowers to trade in their subprime mortgages for 30-year, fixed-rate mortgages. Eligible borrowers are those who have subprime mortgages made after 2005 and who are delinquent on their payments or nearing an interest rate reset ... * WASHINGTON (4/14/08)--Republicans have objected to Sen. Christopher Dodd’s (D-Conn.) plan to help the housing crisis. On Thursday, Sens. Robert Bennett (R-Utah) and Richard Shelby (R-Ala.) said the Senate Banking Committee chairman’s plan would cost the government more money (American Banker April 11). Dodd’s plan would allow lenders to voluntarily write down mortgages. Dodd maintained at a press conference after the hearing that his plan would be successful, and said he hopes to bring it to the Senate by Memorial Day ... * WASHINGTON (4/14/08)--Less than 2% of loans set to reset in January and February received a five-year loan modification that would freeze interest rates, the Hope Now alliance said Thursday (American Banker April 11). The Treasury department originally said 600,000 loans would be eligible for the freeze. The Hope Now Alliance released a statement Thursday saying that since July 2007,mortgage servicers have provided loan workouts to borrowers that have helped 1.2 million homeowners prevent foreclosure ... * WASHINGTON (4/14/08)--The witness list for Rep. Paul Kanjorski’s (D-Pa.) Tuesday hearing on the Emergency Mortgage Loan Modification Act of 2008 has been released. Ralph DaLoisio, managing director, Natixis Structured Finance Group; Robert Story Jr., president, Seattle Financial Group, and vice chairman of the Mortgage Bankers Association; and Marlo Young, partner, Thacher Proffitt and Wood, will testify ...

Credit card reform gets April 17 spotlight

 Permanent link
WASHINGTON (4/14/08)—Rep. Carolyn Maloney has scheduled an April 17 hearing on her bill intended to reform abusive practices of the credit card industry and improve consumer protections. The New York Democrat, who chairs the House Financial Services subcommittee on financial institutions and consumer credit, said in her announcement that the American consumer is feeling dual pressures concerning their credit card use. As more consumers use their credit cards to “help pay bills, buy groceries, and make ends meet in a troubled economy,” they find the relationship between cardholder and car company has become “very one-sided in recent years” to the disadvantage of consumers, she said. Maloney introduced her package of credit card reforms, which is being billed as the Credit Cardholder's Bill of Rights (H.R. 5244), in February. It was introduced with 40 co-sponsors and is intended to curb abusive practices, such as some interest-rate increases and late fees and the subcommittee held its first hearing on it on March 13. In part, the bill would require card issuers to provide a 45-day notice period for consumers before an interest rate could be executed. Cardholders would then have the right to cancel their card and pay off their existing balance at the existing rate and repayment schedule. H.R. 5244 would also prohibit a practice known as "double-cycle billing," in which card companies charge interest on payments made on time during a grace period. It would also ban arbitrary changes in the credit card contract. A witness list has not yet been made public, but Maloney said the subcommittee will hear from consumers, regulators, and credit card industry representatives.

Wash. Post CUs blueprint opposition helps Main Street

 Permanent link
WASHINGTON (4/14/08)--The Washington Post Friday noted that the Credit Union National Association’s (CUNA) and credit unions’ opposition to the Treasury Department’s blueprint to revise the financial system will help Main Street--instead of Wall Street. Organizations lobbying against the Treasury’s plan have stated that it caters primarily to large businesses on Wall Street--instead of those that help local communities, such as credit unions. CUNA and other groups have talked about creating an opposition coalition to the Treasury plan, which would scrap the current financial regulation system, the newspaper said. The Post quoted Dan Mica, CUNA president/CEO, saying that the blueprint has little chance of moving ahead in Congress at this time. Mica told the Post that he has asked state associations and credit union directors to write the Treasury, expressing their concerns that they do not need a new regulator. CUNA’s members are outraged at the proposal. They ultimately fear that the blueprint would do away with credit unions, the paper said. CUNA also has filed a request under the Freedom of Information Act (FOIA) asking the Treasury to disclose bankers' attempts to influence the Treasury's plan in ways intended to put credit unions out of business. The request was submitted on behalf of Credit Union Magazine, which intends to publish a story based on its findings (News Now April 4).

New bill would stop anti-gambling rules

 Permanent link
WASHINGTON (4/11/08)—Reps. Barney Frank (D-Mass.) and Ron Paul (R-Texas) introduced a bill Friday that would call a halt to efforts to implement the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006. The legislation, H.R. 5767, would forbid the U.S. Treasury Department and the Federal Reserve Board from proposing, prescribing, or implementing any regulation that requires the financial services industry to identify and block internet gambling transactions. Those bodies are jointly charged under UIGEA with putting rules in place. The Fed has noted publicly that it is a challenge is to craft a role for financial institutions without having an adverse effect on the country's payment system. The UIGEA rules have not been finalized. A House Financial Services subcommittee conducted a hearing April 2 which, in part, served to highlight the burden the proposed regulations would place on financial institutions, as well as the problems regulators are facing in drafting implementation rules, a process that has been have been bogged down with complications and controversy. Credit Union National Association (CUNA) witness Harriet May,
Click to view larger image CUNA board member Harriet May, CEO of GECU, El Paso, Texas, greets House Financial Services Committee member, Rep. Luis Gutierrez (D-Ill.) before testifying at an April 2 subcommittee hearing on the Internet gambling law passed in 2006. CUNA Vice President of Legislative Affairs Ryan Donovan is far left in picture. (Photo provided by Bob Knudsen.)
president/CEO of GECU, El Paso, Tex as, reiterated CUNA's concerns that credit unions could be swamped by the compliance burden associated with UIGEA. She stated that the proposal as issued should not be adopted and sought action from Congress to block the rule. In announcing the introduction of H.R. 5767, Frank and Paul said they believe the ban on Internet gambling infringes upon two freedoms “important to many Americans: the ability to do with their money as they see fit, and the freedom from government interference with the Internet.” “The regulations and underlying bill also force financial institutions to act as law enforcement officers. This is another pernicious trend that has accelerated in the aftermath of the Patriot Act, the deputization of private businesses to perform intrusive enforcement and surveillance functions that the federal government is unwilling to perform on its own,” according to the two House lawmakers. Frank is chairman of the House Financial Services Committee and Paul is a senior Republican member. Use the resource link below for more information on the Frank-Paul bill.

GAO study sought on fair lending laws

 Permanent link
WASHINGTON(4/14/08)—Sixteen Democrats on the House Financial Services Committee, including Chairman Barney Frank of Massachusetts, sent a request to the Government Accountability Office seeking a study on fair lending laws. In their letter to GAO Acting Comptroller General Gene Dodaro, the House lawmakers specifically asked Congress’ investigative arm for a comprehensive review of the current state of the federal enforcement of the Equal Credit Opportunity Act (ECOA), the Home Mortgage Disclosure Act (HMDA) and the Fair Housing Act (FHA), and other related fair lending laws. The review is to assess the monitoring and enforcement efforts of the Federal Reserve, Federal Deposit Insurance Corporation, National Credit Union Administration, Office of the Comptroller of the Currency, Office of Thrift Supervision, Department of Justice, and Department of Housing and Urban Development. The House members also asked the GAO to review how shortcomings regarding the data collected under current law might be overcome. “We are troubled that HMDA data continue to reveal significant racial and ethnic disparities in mortgage lending, particularly in the incidence of higher-priced lending to minorities,” the congressmen wrote. However, they said that because current HMDA data lack key variables involved in the underwriting process--such as borrowers’ credit history, debt-to-income ratio, and loan-to-property value--HMDA data alone cannot be used to determine whether lenders are violating fair lending laws. For more details on the lawmakers’ request to GAO, use the resource link below.

CUNA-WOCCU urge high microenterprise funding

 Permanent link
WASHINGTON (4/14/08)—Two key members of a Senate Appropriations subcommittee were asked to support a high level of funding for the Office of Microenterprise Development and the Cooperative Development Program. The request came in a joint letter from the Credit Union National Association (CUNA) and the World Council of Credit Unions (WOCCU). In letters to Sen Patrick Leahy (D-Vt.), chairman of the subcommittee on state, foreign operations, and related programs, and Sen. Judd Gregg (R-N.H.), its ranking minority member, the credit union groups said they strongly support the two programs of the U.S. Agency for International Development (USAID). “CUNA, WOCCU and our members strongly support funding for microenterprise development by USAID in the FY2009 Foreign Operations Appropriations bill at the level of $500 million, with $30 million of that designated for the Microenterprise Development office,” said the letters signed by CUNA President/CEO Dan Mica and WOCCU President/CEO Pete Crear. The credit union leaders also voiced their support of the Senate’s approval of $12 million for the Cooperative Development Program for FY2008, and urged that the same funding level be maintained for FY2009. “Microenterprise development projects funded by USAID play a critical role in increasing access to safe and affordable financial services to people in developing countries who have none. “This access not only increases the financial well-being of microenterprise beneficiaries, but improves the living conditions and economic health of their communities,” wrote Mica and Crear. They added: “The Cooperative Development Program aids the work of credit unions and other cooperatives in developing countries by funding sustainable development assistance carried out by eight U.S.-based cooperative development organizations, including WOCCU. “The program results in economic growth, enhanced community-based democracy and improved stability in some of the world’s most impoverished countries.” The letter was sent in anticipation of the subcommittee’s April 9 hearing on FY2009 state and foreign operations appropriations. The subcommittee has jurisdiction over the State and Foreign Operations Appropriations bill, which is the vehicle through which WOCCU receives funding.

CUNA urges Bush to continue CU support

 Permanent link
WASHINGTON (4/14/08)—Credit Union National Association (CUNA) President/CEO Dan Mica went straight to the top and sent a letter to President George W. Bush about a credit union concern involving the U.S. Treasury Department’s plan to restructure the regulation of the financial sector. Mica noted that in its restructuring “blueprint,” Treasury seeks a presidential order to expand a Presidential Working Group (PWG) on financial markets policy to include all federal banking regulators, while excluding the National Credit Union Administration (NCUA). “While we feel it is important that all financial institutions, including credit unions, be represented on the PWG, it is particularly significant now as the Administration and other key policymakers seek ways to deal with the current economic concerns,” Mica said. He reiterated that CUNA and credit unions were “stunned and dismayed by the long-term recommendation of the report which would effectively eliminate credit unions and NCUA." Mica added that CUNA is concerned that excluding NCUA from the PWG now is a prelude to the pursuit of those recommendations, yet has been heartened by the statements of congressional support following the release of the report. “Throughout both your administrations, credit unions have been very grateful for your support of their tax exempt status, and we urge you to continue recognizing their role, as well as that of NCUA, in helping to offer financial alternatives. We urge you to include NCUA on the PWG,” Mica concluded.

Compliance CU boards role in 3rd-party relationships

 Permanent link
WASHINGTON (4/14/08)—A credit union board of directors has an important role in assuring third-party relationships further a credit union’s mission, and every director should be on top of the issues involved, advises a compliance article in the April issue of Credit Union Magazine. The article notes that the National Credit Union Administration (NCUA) has designated third-party relationship reviews a 2008 regulatory “hot topic,” backed by a 2007 supervisory letter on evaluating vendor relationships. It also highlights efforts by the Credit Union National Association’s (CUNA’s) Due Diligence Task Force, which is assembling resources, including sample vendor management policies and procedures, and addressing credit union concerns about the due diligence examinations process. The Due Diligence Task Force's key objectives are to develop a core due diligence model that credit unions can use to evaluate third-party vendors, as well as develop a due diligence best practices guide that goes beyond the core due diligence model. In “The Board’s Role in Vendor Due Diligence,” guest author David A. Reed, a Fairfax, Va. private practice attorney who advises credit unions, tells directors their vendor due diligence policies must incorporate the following five areas:
* Expectations for outsourcing: Outlining how vendor relationships enhance credit union services; * Planning; Make it clear before contracting with a vendor that your credit union will plan adequately, including assessing the need for and risks related to third-party support; * Due diligence: Conduct a background check of vendors, evaluate the company’s business model, perform cash-flow analyses between the parties involved, review a vendor’s affiliates’ financial conditions, and understand accounting and legal issues involved in the relationship; * Performance monitoring; Keep the relationship active by stating that the credit union will set up controls to monitor the vendor’s performance, including compliance with laws and regulations; and * Reports to the board: Define the content and frequency pf re[porting to the board on third-party relationships.
“NCUA and credit unions share the same goals: having vendors provide good value and faithfully perform according to their contracts,” Reed says, “There’s not question properly managed third-party relationships can be invaluable to credit unions and members by providing new services and cost savings.” CUNA is sponsoring a May 13 audioconference called “Due Diligence with Third Party Vendors – Getting it Right!” Use the resource link below for registration information.

Inside Washington (04/10/2008)

 Permanent link
* WASHINGTON (4/11/08)--Republicans appeared to be concerned about providing any more government bailouts to help the housing crisis at a hearing Wednesday. The hearing was intended to gather feedback on Rep. Barney Frank’s (D-Mass.) plan to write down mortgages for borrowers who can’t afford them, but the Federal Housing Administration (FHA) offered another idea--expanding FHA Secure (American Banker April 10). The plan would allow delinquent borrowers with adjustable-rate mortgages to qualify for assistance and would include a risk-based premium program subjecting borrowers with bad credit to higher rates. The higher rates would fund the program, and lenders could write down the principal with a range of 90% to 97%, said FHA Commissioner Brian Montgomery. A down payment assistance fund would also be dropped because it has drained the FHA’s fund. The administration’s plan was supported by some Republicans, and Frank pointed out its similarities with his own plan ... * WASHINGTON (4/11/08)--The House Financial Services subcommittee on capital markets, insurance, and government sponsored enterprises has scheduled its third in a series of hearings on insurance regulatory reform. On Wednesday, Rep. Paul Kanjorski’s (D-Pa.) subcommittee will hear from two panels of witnesses representing government and private entities. The hearing is intended to examine a variety of proposals to address insurance regulatory reform …

Housing stimulus OKd 84-12 by Senate

 Permanent link
WASHINGTON (4/11/08)—Voting 84 to 12, the Senate passed its housing stimulus package Thursday clearing the way for the House and Senate to begin working out differences between their two versions of similar legislation. The Senate bill, known as The Foreclosure Prevention Act of 2008, would provide $4 billion to cities for the purchase and rehabilitation of foreclosed properties and almost another $13 billion in targeted tax breaks to spur additional home buying and ease the troubles of the housing industry. It also would authorize $200 million for housing counselors to help families about to lose their homes to foreclosure. The Credit Union National Association supports a higher allocation for housing counseling and will be working to encourage the House to increase that level before the bill gets final approval by both houses of Congress. The package contains a limited FHA reform provision, but both Senate Banking Committee Chairman Christopher Dodd (D-Conn.) and House Financial Services Committee Chairman Barney Frank (D-Mass.) have indicated they want more. Dodd favors adding loan guarantees of up to $400 billion and Frank wants the FHA to be able to back mortgages worth more than the value of the home if the lender takes a substantial loss. While press reports just a day earlier declared that President George W. Bush might veto the housing stimulus package, Congressional Quarterly reported Thursday that the president had softened his stance and may be eager to receive a final version of the bill he can sign.

Tax measure could add HSA burden for CUs

 Permanent link
WASHINGTON (4/11/08)—The House Ways and Means Committee passed the Taxpayer Assistance and Simplification Act of 2008 this week, a measure could threaten credit union participation in Health Savings Accounts (HSAs), according to the Credit Union National Association (CUNA). Although the bulk of the measure is not cause for concern for credit unions, John Hildreth, CUNA senior legislative representative, said Thursday that it contains a provision that “would be very detrimental to HSAs and would drive many credit unions out of this market.” This legislation would require the account provider to take on the role of verifying that each distribution is used for a qualified medical expense. This, of course, would drive most credit unions and banks out of the HSA business and move it to plan administrators who are accustomed to substantiation from the services that they provide, like Flexible Spending Accounts (FSAs) and Health Reimbursement Accounts (HRAs). He said the increased compliance burden would be detrimental to consumers because it would likely restrict the general availability of HSAs. Also, Hildreth noted that if credit unions must track the validity of their members’ HSA expenses, they are place in the awkward position of disputing with their members as to whether expenses may or may not be qualified. The bill (H.R. 5719) passed the committee 24 to 17. CUNA launched a significant lobbying effort against the HSA substantiation provisions prior to the committee’s vote and won a two-year delay in the implementation of the provision. Rep. Paul Ryan (R-Wisc.) offered an amendment to strike the substantiation clause from the tax bill, but lost that effort in a 25 to 15 vote. He had urged his colleagues not to let anecdotal evidence of abuses sway them to include the burdensome provision. CUNA will continue its efforts to oppose the HSA provision as the bill makes its way to the House floor for a vote. There currently is no similar bill introduced in the Senate.

NCUA low-income definition on agenda

 Permanent link
ALEXANDRIA, Va. (4/11/08)—The National Credit Union Administration (NCUA) Thursday posted its agenda for its April 17 open board meeting, which includes a notice of proposed rulemaking on “The Low-Income Definition.” Low-Income Definition is one of the four categories into which the 12 recommendations of the NCUA Outreach Task Force were sorted. The task force was created in November 2006 to review recommendations from the Member Service Assessment Pilot Program (MSAP) on credit unions' mission. The NCUA task force recommendation seeks to make the NCUA’s definition of the term more in line with that of the other federal financial institution regulators. No other task force recommendations are slated for NCUA board consideration at this time. Other items on the agenda include a proposed rule addressing Part 740 of NCUA’s Rules and Regulations, which governs the official sign that all federally insured credit unions must display where deposits are received. Those signs appear such places as teller windows, Internet Web pages if online banking is officered, and they carry the official advertising statement: "This credit union is federally insured by the National Credit Union Administration" or "Federally insured by NCUA." Also scheduled for consideration is the agency’s Quarterly Insurance Fund Report, which is expected to reflect the costs to the National Credit Union Share Insurance Fund of the agency’s dealings with current conservator ships. The final items:
*Proposed Rule: Part 792 of NCUA’s Rules and Regulations, Revisions for the Freedom of Information Act and Privacy Act Regulations; and *Proposed Rule: Parts 712 and 741 of NCUA’s Rules and Regulations, Credit Union Service Organizations.

Johnson to testify on CU Fin. Ed. efforts

 Permanent link
WASHINGTON (4/10/08)--National Credit Union Administration Chairman JoAnn Johnson, along with other financial services regulators and private sector representatives, is slated to testify next Tuesday on financial literacy initiatives. The House Financial Services Committee scheduled the April 15 hearing to look at the effectiveness of both public and provide efforts to better educate the American public regarding financial options and decisions. “Learning to manage one’s spending is the most important thing an individual can do to ensure their family’s financial future. Unfortunately, too many Americans right now are struggling with unmanageable mortgage payments, credit card debt, and out-of-control spending habits,” said panel member Rep. Reuben Hinojosa in a committee release announcing the hearing. Hinojosa noted that the hearing is part of an on-going effort to discover what financial literacy programs work and to find ways to incorporate financial education into the classroom and into the day-to-day lives of consumers. “It will be a detriment to our nation’s economic future if so many Americans continue to mismanage their money, credit, and debt,” the Texas Democrat said. A full list of witnesses was not yet available.

Inside Washington (04/09/2008)

 Permanent link
* WASHINGTON (4/10/08)--Federal Deposit Insurance Corp. (FDIC) Chairman Sheila Bair supports some parts of the Treasury Department’s blueprint to revise the U.S. financial system (American Banker April 9). Bair said that the almost-collapse of Bear Stearns Co. brings oversight problems to light. She noted that investment firms need prompt corrective action. The blueprint does not account for prompt corrective action, but a measure is included in the Federal Reserve Board’s new powers--allowing it to place corrective action on institutions when the market is unstable. Though Bair said she supported competition, she also noted that it’s “problematic” to have uneven regulation ... * WASHINGTON (4/10/08)--The Federal Reserve Board Tuesday met with representatives from the credit card industry to define unfair and deceptive practices. The Fed did not identify the companies that participated (American Banker April 9). Fed Gov. Randall Kroszner cited the gathering as a discussion of current issues that will help the Fed improve disclosures and protect cardholders ... * WASHINGTON (4/10/08)--The new Term Securities Lending Facility may not be enough to help the troubled market, Federal Reserve Board fficials said at a March 11 meeting. According to minutes released by the bank, “during the discussion, participants expressed concerns that establishment of the facility could be viewed as setting a precedent and thus raise expectations of other actions in the future, and they also noted some uncertainty about how effective the facility would be in practice.” ...

New bill takes tax approach to foreclosure assistance

 Permanent link
WASHINGTON (4/10/08)—The leader of the House tax-writing panel has introduced another in the growing line of foreclosure assistance measures. The legislation drafted by House Ways and Means Chairman Charles Rangel (D-N.Y.) would provide tax credit for first-time homebuyers and work to improve access to low-income housing. Rangel’s committee voted 35 to 5 in favor of the bill Wednesday, and the chairman said he expects The Housing Assistance Tax Act of 2008 to reach the House floor for consideration in the coming weeks. "We need to provide relief to the buyers and families themselves, not just the banks and builders," said Rangel of his bill, which he said, “puts families first - offering a refundable tax credit to first-time homebuyers, essentially a zero-interest loan to help defray the cost of purchasing a house.” The bill will also expand a low-income housing tax credit, a move intended to put builders to work and to create affordable alternatives for families seeking new housing. The main provisions of the Rangel bill include:
* The first-time homebuyer tax credit to assist in making a down payment on a home, which would provide individuals and families with a refundable of 10% of the purchase price of their home, up to $7,500. Taxpayers would be required to repay any amount received under this provision to the government over 15 years in equal installments, making it in essence an interest-free loan. The credit would be phased out for taxpayers with adjusted gross income in excess of $70,000, or $110,000 in the case of a joint return; * An additional standard deduction for real property taxes to help homeowners who claim the standard deduction by allowing them to claim an additional standard deduction of up to $350 ($700 for joint filers) for State and local real property taxes. This provision applies for 2008; * A temporary increase in low-income housing tax credit and simplification of the credit. The bill would increase a current limit of the credit from $2.00 for each person residing in a state by an additional 20 cents per resident. The credit would also be simplified to improve its effectiveness; and * A temporary increase in mortgage revenue bonds to allow for the issuance of an additional $10 billion of tax-exempt bonds to refinance subprime loans, provide loans to first-time homebuyers and to finance the construction of low-income rental housing.

Bush administration offers new housing plan

 Permanent link
WASHINGTON (4/10/08)—The Bush administration Wednesday announced a new plan to help troubled subprime mortgage borrowers by easing rules for new mortgages that could be insured by the federal government. Under the effort, the Federal Housing Administration (FHA), a branch of the U.S. Department of Housing and Urban Development (HUD), would new flexibility to insure mortgages for borrowers who were late on a few payments and those who have received a voluntary mortgage principal write-down from their lender. FHA Commissioner Brian Montgomery announced the new proposal at a hearing of the House Financial Services Committee, convened to discuss the economic, mortgage and housing rescue plan its chairman, Rep. Barney Frank (D-Mass.), unveiled last week with Senate Banking Committee Chairman Christopher Dodd (D-Conn.) Montgomery said of the administration’s proposal, "Our plan will help hundreds of thousands of desperate families who have no place else to turn for safer, lower cost ways to keep their homes. We want to be able to help families who are in the right house, but the wrong mortgage." He estimated that the proposed expansion of the FHASecure program could help about 500,000 families, struggling with high-cost subprime loans, to refinance into prime-rate FHA-insured mortgages in total by the end of this year. While both the FHA plan and Frank’s plan seek to shore up the floundering housing market by shifting over-burdened subprime borrowers into the stability and affordability of more traditional 30-year, government-backed loans, The New York Times estimated Wednesday that Frank’s more expansive plan could help 1.5 million borrowers.

Mica Treasury plan lacks understanding of CU role

 Permanent link
WASHINGTON (4/10/08)—The U.S. Treasury Department’s recently unveiled “Blueprint for a Modernized Financial Regulatory Structure” disregards the Bush administration’s longstanding support for credit unions and shows a “complete misunderstanding and misrepresentation of our mission, purpose and function,” wrote Credit Union National Association (CUNA) President/CEO Dan Mica in a April 10 letter. In his letter to Treasury Secretary Henry Paulson, Mica said, “When I asked you during last week’s press conference if there was something credit unions had done to be treated in this manner – essentially put on track to be put out of business – your response was, ‘that is not our intent and that would not be the effect.’ “However, our review of the actual recommendations clearly reveals that the report does not support that comment.” Mica then outlined the ways in which the “blueprint” represents a change in posture toward credit unions by Treasury from positive to negative. Mica cited:
* A significant percentage of the nation’s larger credit unions would no longer be tax exempt and have little incentive to operate as cooperatives owned by their members; * Under the “Blueprint,” a mere 6% of the assets under supervision of the proposed Prudential Financial Regulator would be in not-for-profit, cooperative federally insured depository institutions (FIDIs), i.e., former credit unions. The types of regulation and supervision that a for-profit institution requires are very different from those that best apply to not-for-profit cooperatives; *Nothing in the report calls for the single regulator to have employees who specialize in regulating institutions other than banks; *Given the distribution of assets under supervision, almost all banks, it appears unlikely that the Prudential Financial Regulator would not expect all institutions to act like for-profit banks, and design its regulations and supervision to deal with for-profit institutions; and *A number of descriptions in the report regarding credit unions are very similar to the mischaracterizations that the banking industry routinely uses. Some of the most biased statements in the report are found on page 160, reflecting banker rhetoric that credit unions must only serve those of modest means and must remain small institutions.
“Given the Treasury’s lack of understanding about credit unions, it is no surprise that the 'Blueprint' would set in motion a plan that will result in their demise,” Mica wrote. “In the process, consumers would not be protected and an important alternative to for-profit banks would be eliminated from the financial marketplace in the name of efficiency." Use the resource link below for the full text of the CUNA letter to Treasury.

CUNA questions Fed high-priced threshold

 Permanent link
WASHINGTON (4/10/08)—The current Federal Reserve Board proposal to revise its Regulation Z would make significant changes to current mortgage loans rules, and that is particularly true in regard to the threshold for “high-priced” loans, the Credit Union National Association (CUNA) wrote in its comment letter. CUNA questioned the proposed threshold for determining whether a loan is "high-priced" and, therefore, subject to additional restrictions, and argued that under the current language the Fed could capture “significantly more loans than the Board intended.” “We also believe that the Treasury securities to be used should mirror the requirements under the Home Mortgage Disclosure Act,” wrote CUNA Senior Assistant General Counsel Jeffrey Bloch. CUNA endorsed other parts of the Fed plan and wrote in support of such provisions requiring:
* Lenders to consider a borrower’s ability to repay a loan’ * Escrow accounts, which CUNA noted are the “most appropriate means” in which to ensure that tax and insurance payments are made on a timely basis, and are “essential” for subprime loans. These accounts should not be canceled after a short period, such as twelve months as contemplated in the proposal, CUNA recommended; and * Restrictions on prepayment penalties, even ones that are more stringent than those currently proposed by the Board.
In its letter, CUNA also suggested that the required compliance date for the proposal be the same as the required compliance date for the final version of the additional closed-end lending changes that the Fed expects to propose later this year.

CUs warned of cell phone scam

 Permanent link
ALEXANDRIA, Va. (4/10/08)—A new fraud alert from the National Credit Union Administration (NCUA) warns of a scam that involves unsolicited text messages sent to cell phones. The message urges the recipient to call a number provided for information about account discrepancies and then seeks individual account information and pin numbers. “Cell phone users should be (wary) of unsolicited text messages. Such messages should be deleted and all deleted text messages should be removed, if possible, as the perpetrators have been known to use Spyware in conjunction with their text message solicitation,” the alert warns. In February, News Now reported that a cell phone text-message scam was targeted against Keesler FCU, of Biloxi, Mo. Text messages and faxes were broadcast to members and nonmembers in an attempt to get credit, debit or ATM card information. The messages appeared to come from the $1.5 billion credit union and requested that the recipient respond to the communication with the card number, personal identification number or other personal information.

NEW Frank underscores commitment to CUs

 Permanent link
WASHINGTON (4/8/08 UPDATED 1:50 p.m. ET)—House Financial Services Committee Chairman Barney Frank (D-Mass.) took pen to paper to reiterate his assurance to credit unions that the U.S. Congress appreciates the role they play in the country’s financial services system. In a letter to the Credit Union National Association (CUNA), Frank acknowledged CUNA’s concerns regarding the devastating affect the U.S. Treasury Department's proposal for financial institution regulatory restructuring could have on credit unions. Frank said that any proposal to do away with credit unions is a proposal that will go nowhere. The chairman first stated his reassurance to credit unions at last week’s hearing on the Internet Gambling law, at which CUNA witness Harriet May testified. May is CEO of GECU, El Paso, Texas. Frank said to May, "Please tell my good friend and former colleague Mr. Mica not to worry about the Treasury proposal to eliminate credit unions. We would never do that. So please tell him not to worry about that." In his April 3 letter, Frank expanded his thoughts: “(G)iven the appreciation Member of Congress have of the role that credit unions play, there is no chance of anything that would diminish that role going through. “Indeed, as you know, we have worked closely with you on legislation that will to some extent expand the ability of credit unions to serve consumers.” He said that, while Congress may not stand ready to give credit unions all they seek, “I can assure you that it is expansion and not contraction that will be on our agenda for credit unions in the future.” Use the resource link below to read the complete letter.

Comment sought on new home valuation code

 Permanent link
WASHINGTON (4/9/08)—The Credit Union National Association (CUNA) is seeking comment on a proposal by Fannie Mae and Freddie Mac to implement the New Home Valuation Protection Code (Code), new standards designed to ensure independent and reliable appraisals. Early last month, the Office of Federal Housing Enterprise Oversight (OFHEO), the New York Attorney General, Fannie Mae, and Freddie Mac entered into agreements that require Fannie Mae and Freddie Mac to buy loans only from financial institutions that meet the new standards set out by the code. The significant provisions of the Code include prohibitions against:
* Mortgage brokers selecting appraisers; * Lenders using “in-house” staff appraisers to conduct initial appraisals; and * Lenders using appraisal management companies that they own or control.
Freddie Mac and Fannie Mae are requesting comments on the implementation of the Code by April 30. CUNA seeks to have credit union comments by April 22. Use the resource link below to read the points address in CUNA’s Comment Call.

Lawmakers send assurances to CUs

 Permanent link
WASHINGTON (4/9/08)—The chairman of the House Financial Services Committee and a high-ranking Republican member of that panel have each sent credit unions their assurances that Congress values the unique role of financial services cooperatives. Chairman Barney Frank (D-Mass.), in a letter to the Credit Union National Association (CUNA), wrote that the U.S. Congress appreciates the role credit unions play in the country’s financial services system. Frank acknowledged CUNA’s concerns regarding the devastating affect the U.S. Treasury Department's proposal for financial institution regulatory restructuring could have on credit unions. He said that any proposal to do away with credit unions is a proposal that will go nowhere. The chairman first stated his reassurance to credit unions at last week’s hearing on the Internet Gambling law, at which CUNA witness Harriet May testified. May is CEO of GECU, El Paso, Texas. Frank said to May, "Please tell my good friend and former colleague Mr. Mica not to worry about the Treasury proposal to eliminate credit unions. We would never do that. So please tell him not to worry about that." In his April 3 letter, Frank expanded his thoughts: “(G)iven the appreciation Member of Congress have of the role that credit unions play, there is no chance of anything that would diminish that role going through. “Indeed, as you know, we have worked closely with you on legislation that will to some extent expand the ability of credit unions to serve consumers.” He said that, while Congress may not stand ready to give credit unions all they seek, “I can assure you that it is expansion and not contraction that will be on our agenda for credit unions in the future.” On April 7, Rep. Ron Paul of Texas, who is the ranking member on the House Financial Services subcommittee on domestic and international monetary policy, trade, and technology, wrote similar assurances to the Texas CU League. Paul wrote that he opposes a provision in the Treasury’s plan which would eliminate the credit union charter and the independent federal credit union regulator. “Eliminating separate charters for credit unions, banks, and thrifts could deny the benefits of credit union membership to million of Americans,” Paul wrote. He added that he would “do all I can to make sure this provision, or any other regulatory change detrimental to the interests of credit unions” is not contained in any regulatory legislation considered by the 110th Congress.

Mortgage bill moves in Senate

 Permanent link
WASHINGTON (4/9/08)—The Senate voted 92 to 6 Tuesday to proceed to a vote on final passage on a bill that would provide $4 billion to cities for the purchase and rehabilitation of foreclosed properties. The bill, known as The Foreclosure Prevention Act of 2008, would provide another approximately $13 billion in targeted tax breaks to spur additional home buying and ease the troubles of the housing industry. It also would authorize $200 million for housing counselors to help families about to lose their homes to foreclosure. The Credit Union National Association supports a higher allocation for housing counseling and will be working to encourage the House to increase that level before the bill gets final approval by both houses of Congress. Although the package contains a limited FHA reform provision, Senate Banking Committee Chairman Christopher Dodd (D-Conn.) has stated he wants more, such as adding loan guarantees of up to $400 billion. Dodd has scheduled a hearing on Thursday on foreclosure mitigation and liquidity in the mortgage markets. Also this week, the House Financial Services Committee on Wednesday and Thursday will hold hearings to address "Using FHA (Federal Housing Administration) for Housing Stabilization and Homeownership Retention."

Inside Washington (04/08/2008)

 Permanent link
* WASHINGTON (4/9/08)--Inner City Press/Fair Finance Watch, a lending advocacy group, Monday criticized JPMorgan Chase, saying the bank confined African-Americans to higher-cost loans 2.44 times more frequently than whites. The advocacy group made the statements after receiving a study of 2007 mortgage loans. The company’s disparity to Latinos was 1.60. The percentage of loans over the rate spread went up to 20.96% in 2007 from 19.28% in 2006, the group said ... * WASHINGTON (4/9/08)--The Senate Banking Committee met Monday in Philadelphia where Sen. Bob Casey (D-Pa.) and Chairman Christopher Dodd (D-Conn.) heard testimony regarding mortgage foreclosure (Life is a Highway April 8). Mike Nutter, Philadelphia mayor; Brian Hudson, CEO/executive director, Pennsylvania Housing Finance Agency; Community Legal Services; and a Philadelphia resident provided testimony. Dodd said the foreclosure bill the Senate is considering won’t stop foreclosures and more must be done to help the housing crisis. Dodd and Rep. Barney Frank (D-Mass.) are working on bills that would let the Federal Housing Administration guarantee $300 billion to $400 billion in refinancing to troubled borrowers. Dodd will have the first hearing for his bill tomorrow ...

FinCEN reports 44 jump in mortgage fraud reporting

 Permanent link
WASHINGTON (4/8/08)—The Financial Crimes Enforcement Network (FinCEN) reported a 44% increase in suspected mortgage fraud activity during the 12-month period framed in its latest review of such information. The most recent report garnered its information from Suspicious Activity Reports (SARs), filed under requirements of the Banker Secrecy Act (BSA), between March 2006 and March 2007. It updates a November 2006 FinCEN report that reflected information filed between April 1, 1996 and March 31, 2006. In an executive summary of its findings, FinCEN noted that in 2006, financial institutions filed 37.313 SARS citing suspected mortgage loans fraud. That 44% increase compared to 7% increase in overall SAR filings. “One reason for this increase may be that lenders are increasingly identifying suspected fraud prior to loan approval and reporting this activity. Suspected fraud was detected prior to loan disbursements in 31% of the mortgage loan fraud SARs filed between April 1, 2006 and March 31, 2007, compared to 21% during the preceding ten years,” FinCEN reported. That agency’s figures indicated that total SAR filings in 2006 on suspected mortgage loan fraud, when divided by the subject’s state address, showed the greatest increases in Illinois (75.80%), California (71.29%), Florida (53.04%), Michigan (51.50%), and Arizona (48.73%). FinCEN said the suspicious activity characterization Mortgage Loan Fraud was the third most prevalent type of suspicious activity reported, after Bank Secrecy Act/Structuring/Money Laundering and Check Fraud. Reports of suspected identity fraud and identity theft4 associated with mortgage loan fraud continued to increase for the period reviewed. Reports of suspected identity theft in conjunction with mortgage loan fraud increased a whopping 95.62% over the previous study. “Cases of suspected identity fraud were predominantly associated with fraud for housing. Victims of identity theft have had their properties encumbered with loans or property titles fraudulently transferred, effectively having their homes stolen,” according to FinCen. Filers specified that loans were subprime in 79 SARs (0.19%) for the reviewed period. Without this specification, it is not possible to determine whether mortgages described in the remaining SARs were subprime loans, the report noted. "FinCEN's analysis indicates that the financial community is becoming increasingly adept at spotting and reporting suspicious activities that may indicate mortgage fraud," said FinCEN Director James H. Freis, Jr. "This exemplifies how compliance with Bank Secrecy Act regulations is consistent with a financial institution's commercial concerns." Use the resource link below for more report details.

Inside Washington (04/07/2008)

 Permanent link
* HARRISBURG, Pa. (4/8/08)--Rep. Paul Kanjorski (D-Pa.) was commended in a letter written by Jeff DeBree, CEO of Penn East FCU, Scranton, Pa., for speaking out against the Treasury’s plan to revise the U.S. financial system (Life is a Highway April 7). The letter was printed in the Scranton Times.With the support of politicians like Kanjorski, consumers will continue to be served by credit unions, DeBree wrote ... * WASHINGTON (4/8/08)--Sen. Hillary Clinton (D-N.Y.) Friday introduced a bill, the Mortgage Enhancement and Modification Act, which seeks to protect lenders from litigation when they modify their borrowers’ mortgages. The bill is similar to legislation offered by Reps. Mike Castle (R-Del.) and Paul Kanjorski (D-Pa.). It would apply to mortgages for owners still in their homes (American Banker April 7). The legislation also would encourage waiving of prepayment penalties and freezing adjustable-rate mortgage rates ... * WASHINGTON (4/8/08)--Sen. Christopher Dodd (D-Conn.) said Friday that he had to compromise to get both parties to agree to housing stimulus bill, and thus did not add language to allow the Federal Housing Administration (FHA) to back loans worth more than home values (American BankerApril 7). If enacted, the bill may not keep homeowners from foreclosing, he said. The bill could go to a vote today. Dodd said he will work on a FHA rescue plan, with hearings scheduled for Wednesday and Thursday ... * WASHINGTON (4/8/08)--An appellate court Friday dismissed nearly $57 million in costs the Federal Deposit Insurance Corp. (FDIC) could have paid to real estate developer Charles Hurwitz in a 19-year-old case involving the agency and Hurwitz’s company, Maxxam Inc. The court will consider the remaining $15.3 million. Hurwitz called the case a “black eye for the government” (Houston Chronicle April 4). His appellate lawyer, David Beck, said the case indicates that the government should be subject to consequences when it uses powers wrongly. The case stems from a 1995 lawsuit the FDIC and the Office of Thrift Supervision (OTS) filed against Hurwitz when a thrift Maxxam controlled--the United Savings of Texas--collapsed in 1998. Hurwitz countersued, and the OTS case has since been settled ...

Frank schedules two hearings on mortgage rescue plan

 Permanent link
WASHINGTON (4/8/08)—House Financial Services Committee Chairman Barney Frank (D-Mass.) announced Monday that his panel will conduct hearings this week on the economic, mortgage and housing rescue plan he unveiled last week. Frank said in a release that the hearings on April 9 and 10 will include federal regulators, academics, economists and representatives of cities and communities that are being negatively impacted by high numbers of foreclosures. Frank said he will ask witnesses to discuss the proposal he and Sen. Christopher Dodd (D-N.Y.) introduced March 14, a plan that would allow the Federal Housing Administration to insure refinanced mortgages that have been significantly written down by mortgage holders and lenders. Dodd is chairman of the Senate Banking Committee. Frank also said he will ask witnesses to provide suggestions regarding his proposal. First panel witnesses scheduled for Wednesday are: * Chairman Sheila C. Bair, of the Federal Deposit Insurance Corp.; * Comptroller John C. Dugan of the Office of the Comptroller of the Currency; * Director John M. Reich, Director of the Office of Thrift Supervision; * Dr. Randall Kroszner, member of the Federal Reserve Board; and * Assistant Secretary for Housing-Federal Housing Commissioner Brian Montgomery of the U.S. Department of Housing and Urban Development. A second panel of scheduled witnesses features:
* Brian Wesbury, chief economist, First Trust Advisors L.P.; * Dr. Alan S. Blinder, Ph.D., Gordon S. Rentschler Memorial Professor of Economics and Public Affairs, Princeton University; and * Dr. Allen Sinai, chief global economist, strategist and president, Decision Economics, Inc.
Witnesses to testify on April 10 will be announced prior to that hearing. Use the resource link below to read more details of Frank's plan.

April start for CU efforts on war vets home

 Permanent link
WASHINGTON (4/8/08)—An April 10 groundbreaking ceremony will mark the launch of a new Denver-area home for a wounded veteran of the Iraq war, part of the “Homes for Our Troops” initiative and a project of the Democratic National Convention Committee (DNCC) in Denver. The Credit Union National Association (CUNA) and state credit union representatives are participating in two upcoming events to benefit war veterans; the DNCC effort and a similar one sponsored by the Republican National Convention (RNC) in St. Paul, Minn., where the RNC will convene in Sept. The plan is to provide specially adapted homes for two severely wounded members of the American armed forces and their families under the auspices of the non-partisan non-profit group, Home for Our Troops. On Thursday, credit unions, the National Journal, DNCC convention officials and Homes for Our Troops representatives will participate in a ceremony to springboard the first project. The groundbreaking is scheduled to begin at 10:30 CT in Golden, Colo., at the site of future home
U.S. Army SSG Travis Strong will move into a home in the Denver area as part of the Homes for Troops program. (Photo provided by CUNA)
to be presented to wounded Iraq war veteran SSG Travis Strong around the 2008 Democratic National Convention. Sgt Strong lost both legs as a result of a rocket-propelled grenade attack on his Stryker vehicle. CUNA Chairman Tom Dorety and Credit Union Association of Colorado (CUAC) President/CEO John Dill will attend on behalf of their respective organizations. There will be brief remarks by DNCC CEO Leah D. Daughtry, Homes for Our Troops Founder and President John Gonsalves, as well as the national and state credit union officials. National Journal Group representatives, credit union members, and the staffs of both the Democratic and Republican National Conventions have pledged their time to complete the construction in the following months. Minnesota credit unions will team up with Homes for Our Troops and the RNC to construct a home in St. Paul for Sgt. Marcus Kuboy, 30, who was injured in an explosion while patrolling the outskirts of Fallujah. That groundbreaking is scheduled for April 28.

CUs help keep Cherry Blossom runners dry

 Permanent link
WASHINGTON (4/8/08)—Credit union volunteers, hoping to drive home the message of
>CUNA staff member Marta Trinkl, AACUL staff member Alicia Valencia, and CUNA staffers Bill Hampel and Lisa McCue hustle to check in the gear of two late comers to the CU Cherry Blossom 10-Mile Run, to be sure the gear of the two will be safe, and that they can join the race in progress. Credit union system staff members from CUNA, AACUL and ACCU joined together to help check more than 10,000 bags holding the personal gear of runners participating in the race, held Sunday, April 6, in Washington. (CUNA photo)
the credit union difference—people helping people—hit the National Mall by 6 a.m. Sunday to stow the gear of rain-weary runners in the CU Cherry Blossom 10-Mile Run. April showers seemed unable to dampen the enthusiasm of the 12,000 runners at the event, a number which included at least 600 participants representing Capitol Hill. “The most important thing I think we get out of this annual exercise is showing the people running the race the credit union difference in action,” said Pat Keefe, Credit Union National Association (CUNA) vice president of communications and media outreach, who coordinates the volunteer effort for CUNA. “This is the fifth year or so that we have volunteered to help keep runners’ valuables safe – and dry, on this year’s cool and rainy day –during the race,” said Keefe. “Our intent is to help runners – many of whom are from Capitol Hill – make a connection between credit unions and ‘people helping people.’” Among Keefe’s crew of volunteers were CUNA staff and their family members, and helpers from the National Credit Union Foundation, the American Association of Credit Union Leagues, and the Association of Corporate Credit Unions. Keefe noted that they wore jackets featuring “The Little Guy” and the “Lookoutforthelittleguy.org” website. The intent, Keefe pointed out, was to remind runners (particularly Hill staff) that credit unions really do “look out for the little guy.” Credit Union Miracle Day, Inc. (CUMD), sponsor of the 36th annual Credit Union Cherry Blossom 10-Mile Run, exceeded its 2008 goal of raising $1 million to benefit Children's Miracle Network and its 170 affiliated children's hospitals nationwide. With this year's donation, CUMC will have contributed a total of $3.6 million to children's hospitals since its inception in 2001.

CUNA call on TJX settlement issues

 Permanent link
WASHINGTON (4/7/08)—The Credit Union National Association (CUNA) is inviting affiliated credit unions affected by the recently announced settlement between MasterCard and TJX Cos., related to the largest data breach in history, to participate on a conference call today. The agreement calls for MasterCard to make alternative recovery offers to its eligible card issuers whose payment cards had claims against them as being compromised in the breach. MasterCard will recommend that eligible MasterCard issuers accept such offers. TJX will fund up to a maximum $24 million, a pre-tax figure, in alternative recovery payments, depending on the extent of acceptance by card issuers. The settlement sets one condition: Issuers of at least 90% of the accounts claimed in the breach must accept the alternative recovery offers by May 2. As with an earlier settlement agreement involving Visa, credit unions and other card issuers have a short timeframe to make a decision regarding settlement, noted Mary Dunn, CUNA deputy general counsel. The CUNA conference call is an effort to help credit unions decide what is appropriate for them, but is not intended to be a recommendation or legal advice from CUNA, she added. Today’s conference call is scheduled for 2 p.m. ET. Contact Dunn at mdunn@cuna.coop for call-in information.

NCUA highlights business continuity information

 Permanent link
ALEXANDRIA, Va. (4/7/08)—The National Credit Union Administration recently sent a letter to credit union directors alerting them that federal financial regulators have issued updated guidance for examiners, credit unions, and technology service providers regarding business continuity plans. The guidance covers how to identify business continuity risks, evaluate controls, and implement risk management practices for effective disaster planning. The guidance is an update to an original “Business Continuity Planning Booklet” issued in March 2003. The revised booklet includes enhancements to the business impact analysis, testing, and emerging threats sections and includes lessons learned in recent years. It also stresses “the responsibility of each credit union’s board of directors and management to address business continuity planning with an enterprise-wide perspective by considering technology, business operations, communication, and testing strategies for the entire credit union,” the letter noted. The revised booklet also contains an appendix addressing pandemic planning. "A pandemic outbreak would present unique business continuity challenges and all credit unions should have plans that address how they would manage during a pandemic,” the NCUA reiterates in the communication.

June 3 deadline prohibition order guidance

 Permanent link
ALEXANDRIA, Va.(4/7/08)—The National Credit Union Administration (NCUA) is asking for comments by June 3 on its recently proposed guidance on prohibition orders barring an individual from working with a federally insured credit union. At its March open board meeting, the NCUA Board issued proposed Interpretive Ruling and Policy Statement (IRPS) No. 08-1, Guidance Regarding Prohibitions Imposed by Section 205(d) of the Federal Credit Union Act. The FCUA prohibits anyone convicted of a criminal offense involving dishonesty or breach of trust, or who has entered into a pretrial diversion or similar program in connection with a prosecution for such an offense, from credit union work. However, the agency may grant written exceptions on a case-by-case basis. The agency’s IRPS is intended to clear up any confusion regarding the exception process by describing the actions that are prohibited under the statute and describing the procedures for applying for NCUA Board consent for employment.

Inside Washington (04/04/2008)

 Permanent link
* WASHINGTON (4/7/08)--Representatives of credit unions, community banks and small businesses testified at a Thursday House Committee on Small Business hearing that credit card regulations could hurt small businesses while academics said businesses who use the cards for financing are at risk (American Banker April 4). Rep. Nydia M. Velazquez (D-N.Y.) said the cards help businesses access the capital they need to grow. William Spearman, president/CEO of Mid-Hudson Valley FCU, Kingston, N.Y., said the cards help federal credit union members with their small businesses. Robert J. Lahm Jr., professor at Middle Tennessee State University’s business college, said credit card companies aggressively target small businesses--and those with business cards are just as personally liable as individuals with personal cards. David A. Walker, a business professor at Georgetown University, said credit costs are high for small businesses. When in debt, they may pay two times the interest rate that larger firms pay, he added ... * WASHINGTON (4/7/08)--Bailing out Bear Stearns Co. could turn over a profit for the government, federal regulators told lawmakers at a Senate Banking Committee hearing Thursday (American Banker April 4). Federal Reserve Board Chairman Ben Bernanke said the government “got a good deal” in assuming the company’s assets. Sen. Richard Menendez (D-N.Y.) questioned this, responding that the value of assets the Federal Reserve Board gained from Bear Stearns is unknown. Lawmakers also questioned officials about cost of fees, which the officials said have not been decided. Sen. Christopher Dodd (D-Conn.) suggested JPMorgan Chase and Co. wasn’t investing “any money” in the deal because Bear will pay $30 million to the company at the close of the deal, but Bernanke said JP Morgan is taking a $1 billion risk. James Dimon, JPMorgan chairman and CEO, said it would not have been able to buy Bear without the Fed’s help. Sen. Jon Tester (D-Mont.) asked Bernanke why JPMorgan needed the Fed to help with collateral if the assets were solid, but the Fed chairman said the company was worried about what the deal could imply for its liquidity, risk profile and capital ... * WASHINGTON (4/7/08)--The credit union community should get involved in financial literacy efforts, said National Credit Union Administration (NCUA) Chairman JoAnn Johnson in a statement Friday. April has been recognized as “Financial Literacy Month” by Congress. NCUA plays an active role through the Financial Literacy and Education Commission (FLEC), which consists of 20 federal agencies, Johnson added. She also applauded President Bush for his creation of the Advisory Council on Financial Literacy ...

Mica in iThe Hilli Doomsayers ignore history

 Permanent link
WASHINGTON (4/4/08)—The country learned a lot about addressing economic woes as a result of the Great Depression that followed World War I and its aftermath and those lessons put the country in better stead each time it has faced such troubles, wrote Credit Union National Association (CUNA) President/CEO Dan Mica in his latest column for the Washington, D.C. publication The Hill . Mica, writing his now-monthly "K Street Insiders" column, advised readers to remember that “the worst almost never happens.” He said that is likely to be the case for the country’s current economic downturn. The CUNA leader acknowledged that there is cause for concern, but cautioned the Washington lobbying community not to overreact. "This is the time for thoughtful leaders in all sectors to reach out, be creative and meet needs that address concerns of our clients, customers and constituents, while meeting the test of good public policy that helps resolve the issues at hand," he said. A key to success in these times, he added, is "acting quickly when necessary, but also knowing when the problem will be solved not by legislation, but by American resilience." “(W)e need to remember that the worst of the worst almost never happens. We have had only one Great Depression since World War I, and we have learned a lot since then about not letting things get that out of hand again,” Mica said. Since 1929, he reminded, the country has seen “a dozen recessions” and in each of these recessions, most Americans kept their jobs, Congress continued its work, the stock market remained open, the production of food, clothing, consumables and daily goods did not stop, and the regulators did not cease to regulate. “There is much more reason to expect that this latest slowdown will be another recession rather than the second Great Depression. “While doomsayers talk about a catastrophic meltdown or an economic disaster about to befall our country, if not the world, those of us on K Street need to take a deep breath and take stock of reality,” Mica said. Mica appears regularly as a guest columnist for The Hill’s K Street Insiders feature. "K Street" refers to an area in Washington, D.C. known as a base for influential lobbyists, think tanks and advocacy groups stationed in the nation's capital.

Senate tables mortgage debt forgiveness

 Permanent link
WASHINGTON (4/4/08)--The Senate yesterday continued debate over legislation that would reduce uncertainty for those embroiled in the current housing market turmoil. Yesterday’s action on The Foreclosure Prevention Act of 2008 included consideration of a Credit Union National Association (CUNA) supported amendment by House Majority Whip Richard Durbin (D-Ill.) to minimize foreclosures by allowing bankruptcy judges to forgive mortgage debts. During floor debate, Durbin blasted the mortgage banking industry for opposing his amendment, and said "credit unions support this amendment, because they never got into this crazy loan business." He also said the New York Times published an editorial in support of the amendment, which ultimately was tabled 58 to 36. Meanwhile, CUNA was following a provision that would have provided $200 million for housing counselors to help families facing foreclosure. As part of a compromise, the funding level for the bill’s financial counseling provisions was reduced from the level initially proposed. The final outcome of that provision is uncertain, as several groups, including CUNA and the National Credit Union Foundation have an interest in maximizing financial counseling efforts. “One of the virtues of a bi-cameral legislature is that a bill has to pass both the Senate and the House,” said Donovan. “The financial counseling component of this legislation will be important for the House to consider when it takes up this legislation, and we encourage the House to increase the funding of these provisions."

CU volunteers blanket Cherry Blossom Run

 Permanent link
WASHINGTON (4/4/08)—Credit Union National Association (CUNA) volunteers will be pulling together as a team this weekend to help approximately 12,000 runners stow and retrieve their valuables during the Credit Union Cherry Blossom 10-Mile Run on Sunday, April 6. Credit Union Miracle Day, Inc. (CUMD), sponsor of the 36th annual Credit Union Cherry Blossom Ten Mile Run, has exceeded its 2008 goal of raising $1 million to benefit Children’s Miracle Network and its 170 affiliated children’s hospitals nationwide. Of the 12,000 runners this weekend, hundreds are congressional staffers expected at the event, which is featured as part of the National Cherry Blossom Festival. Also, 4,800 credit union members are signed up to run. CUNA will staff the "gear check" tent before, during and after the run. In addition, 50 credit unions are sending nearly 700 volunteers to help with the race. Also providing volunteer services at the meet will be staff members from the National Credit Union Foundation, the American Association of Credit Union Leagues, and the Association of Corporate Credit Unions. With this year’s donation, CUMC will have contributed a total of $3.6 million to children’s hospitals since its inception in 2001. “We are very pleased with these results which clearly demonstrate our commitment to helping children who need it most to get quality medical treatment,” said Juri Valdov, chairman of CUMD. “It reconfirms the credit union philosophy of people helping people and the credit union cooperative spirit. Through our 130 partnering credit unions and business partners in 30 states, we were able to hit this mark,” Valdov added. He is CEO of Northwest FCU, Herndon, Va.

Rep. Waters offers two anti-foreclosure plans

 Permanent link
WASHINGTON (4/3/08)—Rep. Maxine Waters (D-Calif.), chairwoman of a House Financial Services subcommittee, this week introduced two bills intended to respond to the nation’s growing foreclosure crisis. The bills are The Foreclosure Prevention and Sound Mortgage Servicing Act (H.R. 5679) and The Neighborhood Rescue and Stabilization Act (NRSA, H.R. 5678). H.R. 5679 would create a legal duty for mortgage servicers to engage in reasonable loss mitigation activities before foreclosing. Waters, in a release, said she held off introducing the measure after a November 2007 hearing by her subcommittee on housing and community opportunity. The subcommittee heard complaints of homeowners, homeownership counselors, Legal Aid attorneys, and local government officials about the difficulties encountered in getting “prompt, reasonable action” by mortgage servicers. “At that time, however, I was still prepared to withhold final judgment on industry efforts,” Waters said, “I wanted to confirm whether the industry—as it repeatedly claimed—was still in the ramping-up phase of far more decisive and collective voluntary action by the mortgage servicers, especially through the much publicized and Bush Administration-endorsed HOPE NOW Alliance.” However, she called the results of those efforts “unimpressive.” Waters’ second bill, NRSA, would give states and large cities the resources to save devastated neighborhoods by purchasing, rehabilitating, and reselling/re-renting foreclosed and abandoned properties. Use the resource link below for more bill details.

FOIA request seeks bankers role in Blueprint

 Permanent link
WASHINGTON (4/4/08)—The Credit Union National Association (CUNA) is seeking written information on what role bank trade associations may have attempted to take to influence the U.S. Treasury Department’s recently unveiled Blueprint for a Modernized Financial Regulatory System. Specifically, CUNA has filed a request under the Freedom of Information Act (FOIA) asking Treasury to disclose bankers’ attempts to affect the Treasury’s plan in ways intended to put credit unions out of business. The request was submitted on behalf of Credit Union Magazine, which intends to publish a story based on its findings. The CUNA request covers but is not limited to information concerning the American Bankers Association, the Independent Community Bankers of America, and America’s Community Bankers, which has now merged with the ABA. “There can be no question that the information sought would contribute to the public’s understanding of government operations and activities, permit the public to better petition the government to redress grievances, and is in the public interest,” says the FOIA request. “The Treasury’s release of the Blueprint has been the subject of widespread reporting in the media, subject to widespread public outrage, and also subject to speculation regarding whether special interests influenced its development and writing,” it adds. The letter goes on to note the extensive media coverage of the impact that the Blueprint would have on America’s credit unions and on speculation concerning special interest group influence on the Blueprint’s formulation. The list includes: Wall Street Journal, The New York Times, the Associated Press, the Boston Globe,the Philadelphia Inquirer, Forbes, The Washington Post, Politico, Congress Daily, PBS’s Nightly Business Report, and Bloomberg Television.

Frank assures CUs on reg reform issue

 Permanent link
WASHINGTON (4/3/08)--Credit unions received a welcome message from a key leader in Congress Wednesday regarding the U.S. Treasury Department's proposal for financial institution regulatory restructuring: In a paraphrase, Congress backs credit unions. House Financial Services Committee Chairman Barney Frank (D-Mass.) introduced Credit Union National Association (CUNA) witness Harriet May at Wednesday's hearing on the Internet Gambling law. (See related News Now story, "CUNA: Internet gambling law's burdens need Hill's action.") May is CEO of GECU, El Paso, Tex., and a CUNA board member. Frank then said to May, "Please tell my good friend and former colleague Mr. Mica not to worry about the Treasury proposal to eliminate credit unions. We would never do that. So please tell him not to worry about that." Frank's comments came the same day an editorial in The Hillnewspaper took note of CUNA President Dan Mica’s concern that the Paulson plan would eliminate the National Credit Union Administration (NCUA) and force consumers to pay more for less. “These are serious criticisms that Congress should meet with equal seriousness,” the editorial asserted. CUNA’s Mica received nationwide press exposure when he fired off the first question at Treasury Secretary Henry Paulson's briefing Monday on the agency's regulatory restructuring blueprint. Mica explained to Paulson that the Treasury proposal could result in the demise of credit unions as they function today. Paulson explained details in the 212-page report and the thinking behind its development. A summary of the report was leaked to the media during the weekend.

Inside Washington (04/03/2008)

 Permanent link
* WASHINGTON (4/4/08)--The Federal Deposit Insurance Corp. (FDIC) will likely supervise state-chartered banks, predicted FDIC Chairman Sheila Bair (American Banker April 3). The Treasury has released a plan calling for one agency to supervise the banks, and Bair told her staff in an e-mail that the FDIC would likely be assigned the responsibility ... * WASHINGTON (4/4/08)--The Treasury Department’s plan to revise financial regulation would allow commercial firms to own and run federally insured depository institutions, or FIDIs, and has sparked debate among bankers. Camden R. Fine, president/CEO of the Community Bankers of America, said the plan would put taxpayer dollars at risk (American Banker April 3). Fine's group has fought against combining banking with commerce and attempts by large retailers to own industrial loan companies (ILCs). Others see the plan as progressive. Former Utah Banking Commissioner George Sutton, who has represented companies trying to earn ILCs, said separating commerce and banking is an outdated idea. Dan Mica, president/CEO of the Credit Union National Association, garnered press earlier this week when he questioned the Treasury plan, stating that it would result in the demise of credit unions as they function today (News Now April 3) ...

CUNA Internet gambling laws burdens need Hills action

 Permanent link
WASHINGTON (4/3/08)—Credit Union National Association (CUNA) board member
Click to view larger image CUNA board member Harriet May, CEO of GECU, El Paso, Texas, greets House Financial Services Committee member, Rep. Luis Gutierrez (D-Ill.) before testifying at that panel’s look a the Internet gambling law passed in 2006. CUNA Vice President of Legislative Affairs Ryan Donovan is far left in picture. (Photo provided by Bob Knudsen.)
Harriet May Wednesday urged Congress to address burdens that would be imposed on credit unions and other financial institutions seeking to comply with the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006. The U.S. Treasury Department and Federal Reserve Board were jointly charged under the law with drafting implementing regulations, a task the Fed has publicly called “challenging.” The Fed has noted that its challenge is to craft a role for financial institutions without having an adverse effect on the country’s payment system. The UIGEA rules have not been finalized. May, testifying before the House Financial Services Committee, reiterated CUNA’s concerns that credit unions could be swamped by the compliance burden associated with UIGEA. She stated that the proposal as issued should not be adopted. May is CEO of GECU of El Paso, Tex. Under the Internet gambling law, financial institutions must establish and implement policies and procedures to identify and block restricted transaction or rely on those established by the payments system. “We are concerned that the scope of these requirements is not realistic,” May told the House panel. She added that one of credit unions’ fundamental fears is that they already have an “extraordinary” burden with “heavy policing responsibilities” under the Bank Secrecy Act and Office of Foreign Assets Control rules. She warned that any increased policing role could interfere with financial institutions’ fundamental business to provide financial services to their communities. May said that while CUNA does not support or condone illegal Internet gambling the current statute and implementing proposal create great concerns for financial institutions, which are particularly untimely given the current economic crisis. However, the CUNA witness made the following additional points:
* Any final rule should provide a mechanism to verify when a payment transaction is intended for illegal Internet gambling; * It should define what is meant in its directive that covered entities address “due diligence;” currently it noted the term without defining or explaining what is meant by it; * It should clarify what are institutions' “due diligence” requirements, a term is which is used but not defined in the proposal; and * Because of the problems and complexities that will be association with implementation, institutions should have at least 18 months to determine how to meet the new requirements.
May also noted that CUNA backs the Internet Gambling Regulation and Enforcement Act (H.R. 2046), introduced by House Financial Services Committee Chairman Barney Frank (D-Mass.). It would require Internet gaming businesses to be licensed and pay user fees to the Financial Crimes Enforcement Network. “The bill could be a vehicle for the Department of Justice to take the lead in not only monitoring the entities that are complying with registration, but also developing a list of those businesses or individuals involved in illegal Internet gambling activities.” Remaining witnesses before the committee were Louise L. Roseman, director of the division of reserve bank operations and payment systems, of the Federal Reserve System. Valerie Abend, deputy assistant secretary for critical infrastructure protection and compliance policy, of the Treasury Department, and representatives from The Financial Services Roundtable, Wells Fargo & Co., and the American Bankers Association.

Kentucky FOM suit gets CUNA backing

 Permanent link
WASHINGTON (4/3/08)--The Credit Union National Association (CUNA) is arguing that a lower court in Kentucky got it wrong when it applied federal administrative law precedents to a credit union field of membership lawsuit in that state. CUNA this week filed an amicus brief with the Kentucky Court of Appeals in a case filed by Home Federal Savings and Loan Association in May 2006 and referred to as Home Fed. Sav. & Loan v. Kentucky. That suit against the Kentucky Office of Financial Institutions (OFI) alleges that the OFI has no authority under Kentucky law to approve geographic field of membership bylaws for Kentucky credit unions. On Oct. 25, 2007, the Kentucky Circuit Court for Franklin County sided with the plaintiff and ruled that the OFI exceeded its statutory authority when it approved geographic fields of membership for six state-chartered credit unions between 2000 and 2005. CUNA's amicus brief states that the lower court incorrectly applied federal administrative law precedent, instead of Kentucky administrative law, to deny the OFI judicial deference. And the court further erred, CUNA argues, because if correctly applied the federal precedent would have compelled the court to back the state regulator under judicial deference. Under judicial deference, if the statutory language in question is ambiguous, the court is required by law to give deference to the regulator’s interpretation unless the interpretation is unreasonable. A third point in the CUNA brief criticizes the court for failing to consider the actual facts of the case, never having investigated the actual fields of memberships of the credit unions named in the suit. The Kentucky CU League has been involved in the case since it filed an amicus brief in 2007. The plaintiff thrift's complaint was submitted by the General Counsel of the Kentucky Bankers Association. CUNA General Counsel Eric Richard Wednesday explained CUNA’s involvement in the case: “This lawsuit is part of a pattern in which bankers have been challenging community charters in state courts around the country." In addition to Kentucky, Richard noted, multiple cases have been brought in Missouri, since resolved by state legislation, and Pennsylvania. The six credit unions named in the bankers’ lawsuit are:
* Members Choice CU, a $101.7 million asset credit union based in Ashland; * $11.5 million asset C&O United CU, Edgewood; * $77.7 million asset Service One CU, Bowling Green; * $30.7 million asset Beacon Community CU, Louisville; * $57 million asset GTKY CU, Lexington; and * $43 million asset Kentucky Employees CU, Frankfort.

Inside Washington (04/02/2008)

 Permanent link
* WASHINGTON (4/3/08)--From left: U.S. Sens. Dick Durbin (D-Ill.), Lindsey
Click to view larger image Click for larger view
Graham (R-S.C.), and Evan Bayh (D-Ind.) participated in yesterday’s Power Breakfast dubbed "Super-Surrogates: The candidates biggest supporters state their case." Durbin represented Sen. Barak Obam (D-Ill.); Graham represented Sen. John McCain (R-Ariz.); and Bayh represented Sen. Hillary Clinton (D-N.Y.). The exchange included candidate’s positions on the economy, Iraq war, leadership, and housing. Linda Douglass, of the National Journal, Ron Brownstein, of Atlantic Media Company, and Chuck Todd, of NBC News moderated the event. Organized by National Journal and MSNBC, and co-sponsored by CUNA, more than 100 Capitol Hill staffers, lobbyists and reporters attended ... * WASHINGTON (4/3/08)--Information regarding economic stimulus payments created by the Economic Stimulus Act of 2008 is available on the “What’s New” section of MyMoney.gov, National Credit Union Administration (NCUA) Chairman JoAnn Johnson announced yesterday. The rebates, $600 for individuals and $1,200 for married couples, will be distributed in May. The NCUA also warned against identity theft scams involving the stimulus payments ... * WASHINGTON (4/3/08)--The Federal Reserve Board has created an interactive map that shows foreclosure and subprime loan information for each of the 50 states. Users can select one of 12 options to see how each state has been affected by the mortgage crisis ...

New fraud schemes One targets CU employees keystrokes

 Permanent link
ALEXANDRIA, Va. (4/3/08)—The National Credit Union Administration (NCUA) issued alerts to credit unions on fraud schemes, one of which is a new type of phishing scam the regulator said poses “a significant risk” to credit unions. The credit union regulator was notified by the Federal Bureau of Investigations about a new type of information attack, one that targets employees of credit unions. These schemes differ from other types of attacks in that the criminals seek to infect the employees’ computers with malicious software secretly recording their keystrokes. The scammers send out e-mails addressed to the employees by name at their credit union e-mail addresses. The e-mails fraudulently appear to be official correspondence from either a governmental agency or a vendor of the credit union, according the NCUA. The emails include an attachment appearing as an invoice or complaint letter. When the attachment is opened, malicious software is installed that records the users’ keystrokes, the agency’s director of examination and insurance, David Marquis, said in an alert. “Once downloaded, the software is designed to monitor username and password logins and record the activity entered on the compromised machine. “Credit unions should examine their computers for the presence of malicious password stealing software and take necessary steps to eradicate such software,” Marquis wrote. In a separate alert, the NCUA informed credit unions of a scam that involves falsely filing an identity theft claim for the purposes of improving one’s credit report and credit score. The perpetrators claim identity theft and file police reports, causing disputed accounts to be removed from their credit reports either permanently due to lack of investigation or conclusion, or temporarily while under dispute, the NCUA said, “While the accounts are removed, credit history improves and credit scores increase dramatically. The perpetrator then obtains credit from one or more credit grantors during the time when the credit score is inflated. The loans obtained through the use of the improved credit history and credit score subsequently go unpaid,” said the advisory.

CU stance on Treasury plan ripples

 Permanent link
Click to view larger image CUNA President/CEO Dan Mica, right, and Bloomberg Television anchor Kathleen Hays discuss the Treasury's recently released regulatory blueprint, which CUNA says will be detrimental to credit unions and consumers. The interview happened Wednesday on the Russell Senate Building rotunda balcony and was aired live by the business network. (Photo provided by CUNA)
WASHINGTON (4/3/08)—After a weeklong drumbeat of press coverage, Credit Union National Association (CUNA) President/CEO Dan Mica explained to Bloomberg Television viewers yesterday the association’s concerns about the Treasury “blueprint” for financial regulatory reform. Mica told Bloomberg anchor Kathleen Hays that the regulatory plan unveiled Monday, March 31, by Treasury Secretary Henry Paulson would essentially eliminate credit unions if its long-term recommendations were put into place. The CUNA leader also explained that credit unions were not the cause of today’s housing and credit crisis and that the not-for-profit cooperatives have been lauded by policy makers for their performance and willingness to help consumers in these troubled times. On such issues in Congress, credit unions are on the side of consumers, he said. In a related development yesterday, House Financial Services Committee Chairman Barney Frank (D-Mass.) said Congress will ensure the Treasury blueprint will not harm credit unions. (See related story.)

CUNA urges Fed on zero reserves

 Permanent link
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

 Permanent link
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.

Nationwide press report plans impact on CUs members

 Permanent link
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.

Inside Washington (04/01/2008)

 Permanent link
* 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 ...