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Inside Washington (05/10/2010)

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* WASHINGTON (5/11/10)--The Obama administration last week revealed a plan to provide additional funding to state and local programs that assist small business owners. The plan, as reported in American Banker, would provide community banks with capital that could then be used to service small business loans. Sen. Carl Levin (D-Mich) called the program “a great step forward.” The Credit Union National Association is reviewing the proposal and should comment on it soon ... * WASHINGTON (5/11/10)--The chairman of the House Financial Services subcommittee on capital markets, insurance, and government-sponsored enterprises has scheduled a hearing today to study what caused the dramatic drop last Thursday of the stock market indices, which then quickly rebounded. In announcing his panel’s hearing, Rep. Paul Kanjorski said, “Within a matter of minutes, we faced a market that seemed just as volatile as it did in the fall of 2008.” He said the country cannot allow “technological problems, regulatory loopholes, or human blunders to spook the markets and cause panic.” He said that with the current use of complex technology, ”we should be able to make sure that our financial markets are effectively monitored and investors are protected.” He urged the U.S. Securities and Exchange Commission (SEC) to investigate this occurrence. “My hearing will also ensure that we thoroughly examine this situation in a public forum to maintain the integrity of the markets and promote investor confidence,” Kanjorski said. Witnesses will include: Mary L. Schapiro, chairman, SEC; Gary Gensler, chairman, U.S. Commodity Futures Trading Commission; Lawrence Leibowitz, chief operating officer, NYSE Euronext; Eric Noll, executive vice president, NASDAQ Transaction Services; and Terrence A. Duffy, executive chairman, CME Group Inc. …

Frank bill would maintain NFIP

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WASHINGTON (5/11/10)--Rep. Barney Frank (D-Mass.) has introduced a new bill to address issues surrounding the National Flood Insurance Program (NFIP). The legislation is the second part of a two-pronged approach that Frank said is meant to assure continuity and stability" in the flood insurance program and in the nation’s housing markets, while also focusing on "the comprehensive reform and long-term reauthorization of the NFIP.” Frank’s bill would extend the NFIP through Sept. 30, giving the U.S. Congress a greater period of time to work on legislation that would lengthen coverage under the NFIP for another five years. Frank is chairman of the House Financial Services Committee. H.R. 5114, which was introduced by Rep. Maxine Waters (D-Calif.) and approved by the committee last month, would extend the NFIP for a further five years. The NFIP is currently reliant on temporary month-to-month extensions and will expire on May 31 without further congressional action. The NFIP, which the finance committee has said provides "reliable, affordable flood insurance coverage for millions of American homes and businesses," is important to credit unions because the mortgages they write for properties in a floodplain are required to have flood insurance. In a release, both Frank and Waters said that they were “hopeful” that the full House and later the Congress would “act promptly” to “provide much needed, comprehensive reform and long-term reauthorization of the NFIP.”

NMTC electronic allocation application is available

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WASHINGTON (5/11/10)--The Community Development Financial Institutions Fund (CDFI Fund) has followed its April introduction of the 2010 round of the New Markets Tax Credit (NMTC) Program by releasing the online Allocation Application and instructions. The NMTC application, which is now available through all myCDFIFund accounts, will be discussed during conference calls on May 13 and 19. Potential applicants can also learn more about the program and the application process via online instructions and an archived webcast, both of which are located on the CDFI Funds website. Credit unions are among those eligible to participate in the NMTC, which seeks to spur the investment of new private sector capital into low-income communities by permitting individual or corporate taxpayers to receive a credit against federal income taxes for making Qualified Equity Investments. Those investments must be made in designated Community Development Entities. Organizations that have received credits through the NMTC program, which has been given $5 billion in tax credit authority for 2010, have raised $15.8 billion in equity investments since the program began in 2002, the CDFI recently said. The Treasury's CDFI Fund allocates the tax credits annually through a competitive application process. For the full CDFI fund release, use the resource link.

Reg reform amendment process remains active

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WASHINGTON (5/11/10)--Debate over financial regulatory reform continues this week, and the Credit Union National Association (CUNA) continues to monitor the Senate situation for any developments of interest to credit unions. While over 180 amendments to this legislation have been filed, just under one-third of those would possibly directly impact credit unions, and many of the hundred will never come up for debate. Among the amendments being watched by CUNA are those that would significantly change the card payments system. CUNA opposes these amendments on interchange fees. CUNA President/CEO Dan Mica has said the proposed changes to current rules would "increase costs to and reduce choice for consumers" and would "give the largest merchants further leverage to harm small businesses, which are already under significant pressures in this difficult economy." CUNA has said that it would oppose the full regulatory package if these interchange provisions are added. CUNA has also opposed amendments thatwould:
* Exempt auto dealers from the regulations, examination and enforcement of a proposed new consumer bureau; and * Impose a limit on ATM fees.
CUNA strongly backs amendments that would make permanent the current increase in deposit and share insurance coverage enacted last year; would add the National Credit Union Administration chairman to the Financial Stability Oversight Council; and would increase the $10 billion examination and enforcement threshold for credit unions and community bank supervision by the consumer bureau. The full legislation should take another step toward a full Senate vote later this week if the Senate, as many are predicting, files cloture on Wednesday. Agreeing to cloture on this bill would limit the number of amendments that can be offered and would, in certain circumstances, raise the threshold necessary to secure passage to 60 votes. Elsewhere, House committees and subcommittees will hold hearings on TARP oversight, TARP-related fees, stock market conditions, and the use of credit-related information. A pair of finance-related House subcommittees will directly address regulatory reform in a Wednesday joint hearing entitled "Minorities and Women in Financial Regulatory Reform: The Need for Increasing Participation and Opportunities for Qualified Persons and Businesses."