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Inside Washington (05/12/2008)

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* WASHINGTON (5/13/08)--The Office of the Comptroller of the Currency Friday closed AMB Financial of Bentonville, Ark. The Federal Deposit Insurance Corp. was named as the receiver of AMB.Pulaski Bank and Trust Company, Little Rock, assumed AMB’s insured deposits. The bank’s nine offices reopened today as branches of Pulaski Bank. Depositors of ANB Financial will be depositors of the assuming bank ... * WASHINGTON (5/13/08)--The Office of Thrift Supervision (OTS) did not respond adequately to warning signs at NetBank Inc., which failed in September, indicated a Treasury Department report (American Banker May 12). The agency should have acted sooner, the report said. OTS downgraded the thrift’s Camels rating to a 3. Scott Polakoff, OTS deputy director, said the OTS’ enforcement order against NetBank was issued appropriately. The failure cost the Federal Deposit Insurance Corp. fund $150 million ... *
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WASHINGTON (5/13/08)--“Ken’s Saladbar,” a team of members from Sen. Ken Salazar’s (D-Colo.) office, posted the fastest time in the “Capitol Hill Competition” of the Credit Union Cherry Blossom 10-Mile Run April 6. Salazar’s team was presented with the Credit Union Cup to mark the achievement. Sponsors making the presentation of the cup are (top, from left) team captain Andrew Yarbrough; Susan Enis, president/CEO, U.S. Senate FCU, Alexandria, Va.; John Hayes, U.S. Senate FCU; Dillon Shea, National Association of Federal Credit Unions; and Phil Drager, Credit Union National Association. Pictured are “Saladbar” team members (from left) Hayes, Enis, Shea, Drager, Yarborough, Katharine Ferguson, Salazar, Matt Lee-Ashley, Anne Terry and James Koehler. (Photos provided by the Credit Union National Association) ...

Hikes add new issues

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WASHINGTON (5/13/08)--Members United Corporate CU and Mid-America CU Association representatives will hike Capitol Hill today and tomorrow to discuss their opposition to legislative limits on interchange fees in addition to seeking Senate co-sponsors for the Credit Union Regulatory Improvements Act (CURIA). This week, the House Judiciary Committee is expected to take up discussion on H.R. 5546, the Credit Card Fair Fee Act. The Credit Union National Association (CUNA) opposes the credit card legislation because it would “impose unnecessary regulation over the card transaction interchange fee process by establishing a costly governmental tribunal that would be authorized to impose its decisions on a system that is more appropriately governed by the market.” (See related story this issue: CUNA targets interchange issue) Next week, representatives from credit unions in South Carolina and Texas are scheduled to hike Capitol Hill. At least 24 hill hikes are scheduled through September. Members United is located in Warrenville, Ill. Mid-America, located in Bismarck, N.D., represents credit unions in the Dakotas.

iWashington Posti writer CUs great for promoting thrift

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WASHINGTON (5/13/08)—A personal finance columnist for The Washington Post backed a new idea Sunday to launch a national thrift campaign and noted credit unions should be featured as an important tool to fight consumers’ excessive reliance on credit. Michelle Singletary, who writes "The Color of Money" column for the publication, noted a movement afoot by a coalition of consumer advocates, public policy groups and academics. They want to attack the country's dependence on debt by “creating a national campaign much like the one used to curb smoking.” The organizations mounting the effort include the Institute for American Values, the Institute for Advanced Studies in Culture, the New American Foundation, Public Agenda, the Consumer Federation of American and the National Federation of Community Development Credit Unions. The coalition is holding a conference in Washington this week and has issued a 68-page report, "For a New Thrift: Confronting the Debt Culture." Eric Richard, general counsel of the Credit Union National Association, is scheduled to address the group today. The report, Singletary wrote, “merely lists the many ways debt has taken down so many people.” However, credit unions figure prominently among the report’s proposals to promote a culture of thrift to replace a reliance on too much debt. “To combat the culture of credit, the coalition has come up with a number of proposals,” Singletary wrote. They include:
* Promote the use of credit unions, which often offer lower-cost financial products. (The report also supports credit union “expansion and innovation.”) * Encourage financial institutions to move into low- to moderate-income neighborhoods and provide low-interest consumer loans. For example, in Appleton, Wis., the Prospera CU has teamed up with Goodwill Industries of North Central Wisconsin to create GoodMoney, where consumers can get short-term loans that are much cheaper than they can get from a payday lender. * Create a Financial Product Safety Commission modeled after the Consumer Product Safety Commission.

Ala. primary candidates get CUNA league backing

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WASHINGTON (5/13/08)--The Credit Union National Association and the Alabama CU League have backed state Rep. Jay Love in his race for a U.S. House seat vacated by retiring Rep. Terry Everett (R-Ala.). The groups also endorsed Wayne Packer, who is running for the seat held by Rep. Robert "BUd" Cramer, a Democrat who also announced his retirement. Each candidate received $5,000 from CUNA’s Credit Union Legislative Action Council. (CULAC), the maximum contribution allowed under federal law. Among Love’s opponents is state Sen. Harri Anne Smith, a community banker. “Rep. Love has shown tremendous knowledge of how credit unions operate, and how they serve their members, as well as the challenges they face. We are eager to work with him for years to come as a member of the United States Congress,” said President/CEO Gary Wolter, of the Alabama league in a release Monday. “For credit unions, the choice could not be more clear.” Of Parker, Wolter said, “Wayne has gone to great lengths to learn more about credit unions and their issues, and to meet with representatives from the league and individual credit unions in the district. “He has been very supportive about addressing the needs of credit unions as we work to serve our members and communities and meet their growing needs.” League board Chairman Steve Swofford said, “Developments in Congress related to CURRA (Credit Union Regulatory Relief Act) and CURIA (Credit Union Regulatory Improvements Act) prove that the credit union movement must step up its political emphasis, and just increasing campaign contributions isn't enough. “With this action, the Alabama Credit Union League states that we plan on becoming more involved in the campaigns of candidates not just favorable to credit unions, but willing to make our issues a priority.”

Audio briefing on vendor due diligence today

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WASHINGTON (5/13/08)—The Credit Union National Association (CUNA) is conducting an audio conference today on due diligence pertaining to third-party vendors—an issue which federal regulators continue to emphasize. The program is scheduled for 1:00-2:30 p.m. (CT). The telephone conference will examine requirements and solutions from practitioners that are working for credit unions. Speakers include CUNA’s Deputy General Counsel Mary Dunn, Marcia Barron, CPA and director of internal audits for CUNA and CUNA Strategic Services (CSS), Inc., and Julie Esser, director of new alliances for CSS. Dunn said Monday that the conference is intended to add to information on this subject that was highlighted during the National Credit Union Administration’s (NCUA’s) Webinar last month. “NCUA has made it clears that a key priority for its examiners in 2008 is evaluating credit unions’ due diligence with their third party vendors,” she said. The agency has stressed that it is especially interested in how credit unions handle relationships related to lending services, auditing and management consulting services, and asset liability management.

CUs reactions to new FinCEN rules sought by CUNA

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WASHINGTON (5/13/08)--The Credit Union National Association (CUNA) is asking credit unions for comments on a regulatory proposal intended to simplify current Customer Transaction Report (CTR) exemption rules for credit unions and other depository institutions. The rule changes were proposed May 6 by the Financial Crimes Enforcement Network (FinCEN) and CUNA requests comments by June 6. They are due to FinCEN by June 23. Bank Secrecy Act (BSA) regulations require that each financial institution, including every credit union, file a CTR of each transaction involving currency of more than $10,000, but exceptions are allowed. One of the major changes proposed by FinCEN to the exemption rule would excuse depository institutions from completing FinCEN Form 110, for certain Phase I members/ customers , now required for all Phase I members/customers. FinCEN proposes to exclude depository institutions, federal, state, or local governments, or entities exercising governmental authority from the requirement. Another FinCEN amendment would abolish the annual review of information supporting the listed Phase I eligible members/ customers. Additionally, FinCEN is proposing to ease its depository institution requirements for Phase II members/customers, which includes businesses that are not listed under Phase I but are eligible for exemption. Under the proposed rule, financial institutions no longer would be required to wait 12 months before designating eligible Phase II customers for exemption. Instead, institutions could 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 also is considering an alternative proposal that would set a shorter length of time to consider Phase II entities. Other issues on which CUNA asked for guidance dealt with FinCEN’s contemplated changes in such areas as, factors to be considered in conducting a risk-based assessment, and situations where there is a filing of revocation of exemption. Use the resource link below for more information on the CUNA comment call.

CUNA targets interchange issue

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WASHINGTON (5/13/08)—The House and Senate are in session this week and the upcoming hearing of interest to credit unions is the one planned by the House Judiciary Committee on credit card interchange fees. The House panel is scheduled to hear testimony Thursday on H.R. 5546, The Credit Card Fair Fee Act, which the Credit Union National Association (CUNA) strongly opposes. CUNA has been working closely with the Electronic Payments Coalition on testimony to oppose the bill under which interchange rates and terms would be determined by Electronic Payment System Judges, to be appointed by the Department of Justice Antitrust Division and the Federal Trade Commission. CUNA believes that the free market should set the interchange fees, not the government, according to Ryan Donovan, CUNA vice president of legislative affairs. He noted that interchange fees assist the growth of universal acceptance of cards and the innovation of super-fast authorization technology and enhanced security measures. Donovan said CUNA has been active on the interchange issue on the Senate side, as well. While there is no bill introduced in that body, Donovan said CUNA has participated in a Senate Judiciary Committee briefing on the issue. “The Senate is aware that the subject has generated a lot of interest in the House and is looking into the issues involved,” he explained. Donovan said that if the bill progresses through the House Judiciary Committee, other House panels may claim some authority over the legislation. He said that both the House Financial Services Committee and, perhaps, House Energy and Commerce might assert jurisdiction over the measure.