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NCUA details latest semiannual regulatory agenda

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WASHINGTON (5/12/09)—In its latest semiannual regulatory agenda, the National Credit Union Administration (NCUA) plans to review elements of its rules regarding the confidentiality of suspicious activity reports (SARS). The regulatory agenda, published in the Federal Register, details upcoming regulatory developments within the NCUA. As part of its triennial review of existing regulations, the NCUA plans to examine its current SARS provisions to identify ways to “clarify the scope” of its current confidentiality rules. A notice of proposed rulemaking (NPRM) will be issued this June, according to the release. The Credit Union National Association (CUNA) has recently asked for comments on proposed rule changes that would clarify the scope of confidentiality prohibitions for SARs, address a prohibition against the disclosure of a SAR by the government, clarify that standards applicable to government SAR disclosures are consistent with the goals of the Banker Secrecy Act (BSA), and incorporate elements of the USA Patriot Act into current safe harbor provisions. The NCUA is also working to “update, clarify and improve existing part 705” of its rules governing its Community Development Revolving Loan Fund and to remove any “unnecessary detail” from the rule. The NPRM for these rules has already been issued, and the comment period for this NPRM will end on Nov. 30, the release said.

NCUA requests CLF CDRLF FY 2010 funding

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ALEXANDRIA, Va. (5/12/09)-- The National Credit Union Administration (NCUA) has requested $1 million in funding for its Community Development Revolving Loan Fund program (CDRLF) for 2010, which is the same level appropriated for FY 2009. The program is used to provide low-interest loans and technical assistance grants to low-income designated credit unions. These small credit unions offer services like free income tax preparation and financial literacy classes. Within NCUA, the Office of Small Credit Union Initiatives administers the fund. The NCUA has also requested that Congress approve a continuation for 2010 of the removal of the borrowing cap for the Central Liquidity Facility (CLF). That action would, in effect, mean the CLF could borrow and lend approximately $41.5 billion in liquidity for credit unions. Credit unions operate under a three-tiered approach for their liquidity needs. Credit unions can access the CLF, as a back-up liquidity provider, when corporate credit unions and other correspondent funding is unavailable. The higher funding level for the CLF in the upcoming year is particularly important because the facility has been tasked by NCUA to mitigate the effects of the housing crisis on corporate credit unions, natural person credit unions, and individual credit union members. The appropriations request must be approved by both house of the U.S. Congress to become law.

CUNA asks Senators to oppose interchange fee amendment

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WASHINGTON (5/12/2009)—The Credit Union National Association (CUNA) on May 11 joined a trio of other financial services associations in opposing potential amendments to H.R. 627 that would affect current regulations on interchange fees, which is the fee paid by merchants for the benefits of card acceptance. Sens. Richard Durbin (D-Ill.) and Kit Bond (R-Mo.) are expected to offer an amendment that its supporters claim is intended to facilitate discounts on different types of payment transactions. However, CUNA warns the amendment would actually permit merchants to discriminate against payment cards issued by a particular financial institution, including community banks and credit unions. Merchants would be able to drive consumers to use of a certain type of card--perhaps a card issued by a “preferred” institution with which the merchant has an agreement, CUNA said in a letter sent to each member of the U.S. Senate. The letter was co-signed by the National Association of Federal Credit Unions, the American Bankers Association, and the Independent Community Bankers of America. It maintained that the interchange fee amendment could “reduce credit and the choices available to consumers.” It would do so by reducing the income that covers the extensive infrastructure costs, fraud risk, and nonpayment possibilities that are assumed by financial institutions involved in the payment system and therefore possibly force credit unions and community banks out of the credit card business altogether, the letter said. Rather than simply adopting the amendment, CUNA and its cosigners have asked the Senate, at a minimum, to agree to a Government Accountability Office study of interchange fees, as detailed in Sen. Chris Dodd’s (D-Conn.) substitute amendment to H.R. 627. CUNA has previously stated its opposition to any changes to interchange fee rules, saying that allowing the government to interfere in what should be a free market issue would harm consumers, merchants and financial institutions.

Senate could finish credit bill of rights this week

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WASHINGTON (5/12/2009)—The Senate on May 11 began discussion of H.R. 627, the Credit Cardholders' Bill of Rights Act, with Sen. Chris Dodd (D-Conn.) offering a substitute version of the legislation for debate. The Senate bill would prevent lenders from making arbitrary changes to the interest rates or terms associated with a card that holds an existing balance. The bill would also require lenders to maintain any lower, so-called “teaser” rates for six months and would prevent lenders from increasing the yearly annual percentage rate (APR) on a credit card for the first year that the account is open. Additionally, card issuers would not be permitted to change the payment conditions of a given card. While the amendment, as introduced, would not take any immediate action on interchange fees, it would commission the Government Accountability Office to study interchange fees. A House version of the credit card bill did not address such things as the interest rate increases on existing balances. It did, however, propose gift card restrictions. According to the Credit Union National Association (CUNA), Sen. Richard Durbin (D-Ill.) could present amendments on interchange fees and usury ceilings. (See related story: CUNA asks Senators to oppose interchange fee amendment) It is also thought that Durbin could advocate for the creation of a financial products safety commission. This amendment, if presented, could be similar to S. 566, the Financial Product Safety Commission Act of 2009, which establishes a one-stop regulator for regulate financial products, similar to the current Consumer Products Safety Commission. CUNA is concerned that this regulatory agency could add unneeded complexity and compliance costs on top of those already imposed by the current regulatory scheme. The Senate is widely expected to complete its debate and act on this bill soon, as President Barack Obama this weekend urged Congress to take swift action on credit card legislation so that he could sign the bill into law by Memorial Day. The president will also discuss more broad credit-related issues at a town hall meeting scheduled for later this week.

Inside Washington (05/11/2009)

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* WASHINGTON (5/12/09)--The Washington Post profiled National Institutes of Health FCU President Juli Anne Callis in its May 11 edition of its ongoing series "New at the Top." Callis, a credit union movement veteran who recently joined NIHFCU from California-based KeyPoint CU, said that her goal as NIHFCU president is to “improve [the] financial health” of the employees who help the NIH improve the health of all Americans … * WASHINGTON (5/12/09)--Results of stress tests at 19 of the nation’s largest banks are raising doubts that the government’s plan to help banks get rid of bad assets may not be needed. The results indicate that 10 banks need more capital, but only a few need to raise a significant amount (American Banker May 11). This means the government program, the Public Private Investment Program (PPIP), may not be needed, said Chris Low, FTN Financial economist. Bank of America, GMAC LLC and Wells Fargo, which need the most capital according to stress tests, have not indicated they intend to participate in PPIP. However, Mark Zandi, chief economist and founder of Moody’s, said PPIP could help institutions other than the 19 that were stress tested. A lot of other banks would welcome the ability to sell their assets in a reasonable way, he said. Robert Hartheimer, former Federal Deposit Insurance Corp. director of resolutions, said PPIP could be “life-saving” for community banks ... * WASHINGTON (5/12/09)--Mary Schapiro, Securities and Exchange Commission chairman, indicated her support for a regulators council to oversee risk in the financial markets during a speech Friday. The council was proposed by Federal Deposit Insurance Corp. (FDIC) Chairman Sheila Bair last week. Regardless of the council’s form, Schapiro said “it should have access, largely through the functional regulators, to sufficient information to provide a view of the financial system as a whole. And it should have sufficient power to direct prudential regulators to strengthen capital requirements and to direct institutions they regulate to reduce leverage as circumstances require. That said, there are many important issues around the definition of authority for such a regulator... I have long been concerned about excessive concentration of point of view--in a single regulator,” she said ...